Is anyone waiting until after the election?

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nigel_ht
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Re: Is anyone waiting until after the election?

Post by nigel_ht »

Robot Monster wrote: Mon Sep 21, 2020 11:00 am
wolf359 wrote: Mon Sep 21, 2020 10:54 am The stock market partially runs on emotions. Elections affect emotions. Therefore, political events can have a short-term impact on the stock market. However, you should be investing with a long-term mindset. It's not a question of where the market will be in 2 months, but where it will be in 30 years.
Well said.
In 30 years the UK went from The world power to a has been...(1915 to 1945)

History doesn’t repeat but it does rhyme.

Looking long term I’d go global market cap but I don’t. I keep international only around 20%. I don’t see the US losing preeminent status over the next couple decades...which is market timing on a slightly wider timescale...
Robot Monster
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Re: Is anyone waiting until after the election?

Post by Robot Monster »

000 wrote: Wed Sep 30, 2020 6:33 pm
bigskyguy wrote: Wed Sep 30, 2020 6:30 pm
000 wrote: Thu Sep 24, 2020 8:47 pm Where would a person choosing to defer an equity purchase until after the election put the money? USD denominated cash or bonds?
The investing world looks very different when one’s portfolio is a depository that will lie untouched for decades, and when one’s portfolio will be paying for this week’s groceries, next week’s credit card Bill, or next month’s Medicare supplement charge. For those of us in the latter category, a potential political morass can directly disrupt decades of diligent savings and planning. Risk aversion is not simply a theoretical construct, it is a reality check with potential monumental implications.
I don't disagree. But the question stands: where if not US stocks?
How about out of the frying pan, into the high yield bonds? J.P. Morgan has a high conviction about it (at least from a 12- to 18-month horizon.) I see Vanguard High-Yield Corporate Fund Admiral Shares (VWEAX) has a 4% 30 day SEC yield on it.

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000
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Re: Is anyone waiting until after the election?

Post by 000 »

Robot Monster wrote: Wed Sep 30, 2020 6:55 pm How about out of the frying pan, into the high yield bonds? J.P. Morgan has a high conviction about it (at least from a 12- to 18-month horizon.) I see Vanguard High-Yield Corporate Fund Admiral Shares (VWEAX) has a 4% 30 day SEC yield on it.
Not a bad idea for an investor worried about stock valuations but NOT worried about corporate bankruptcies, USD inflation, or liquidity within a stock crash.

How many people worried about the election are NOT worried about any of those last three things?
bigskyguy
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Re: Is anyone waiting until after the election?

Post by bigskyguy »

000 wrote: Wed Sep 30, 2020 6:33 pm
bigskyguy wrote: Wed Sep 30, 2020 6:30 pm
000 wrote: Thu Sep 24, 2020 8:47 pm Where would a person choosing to defer an equity purchase until after the election put the money? USD denominated cash or bonds?
The investing world looks very different when one’s portfolio is a depository that will lie untouched for decades, and when one’s portfolio will be paying for this week’s groceries, next week’s credit card Bill, or next month’s Medicare supplement charge. For those of us in the latter category, a potential political morass can directly disrupt decades of diligent savings and planning. Risk aversion is not simply a theoretical construct, it is a reality check with potential monumental implications.
I don't disagree. But the question stands: where if not US stocks?
For us, cash, TIPS, and I-bonds. Our I-bonds were purchased 20+ years ago, all 3% real. 2/3’s of our TIPS are our LMP portfolio thru 2039. 1/3 of our TIPS are the bond portion of our risk portfolio. The remainder of our risk portfolio is presently cash, and will be invested once we have clarity from the election - on that I will say no more.
Robot Monster
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Re: Is anyone waiting until after the election?

Post by Robot Monster »

000 wrote: Wed Sep 30, 2020 6:59 pm
Robot Monster wrote: Wed Sep 30, 2020 6:55 pm How about out of the frying pan, into the high yield bonds? J.P. Morgan has a high conviction about it (at least from a 12- to 18-month horizon.) I see Vanguard High-Yield Corporate Fund Admiral Shares (VWEAX) has a 4% 30 day SEC yield on it.
Not a bad idea for an investor worried about stock valuations but NOT worried about corporate bankruptcies, USD inflation, or liquidity within a stock crash.

How many people worried about the election are NOT worried about any of those last three things?
I'll admit it's certainly, shall we say, less than ideal, but J.P.Morgan is on-board with it, and they have a high conviction. Some years ago, there was an article entitled, "3 Investment Gurus Share Their Model Portfolios," where the three gurus were Bogle, Swensen, and lesser known Gretchen Tai who recommended an 8% allocation to high yield.

Apparently this idea will not work for bigskyguy, I see his portfolio is heavy into safe assets (which I might mention mine is, as well...lots of cash, a good amount of TIPS, but this is a permanent allocation.)
grettman
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Re: Is anyone waiting until after the election?

Post by grettman »

I am sure some people are but not me. Many “gurus”, who get paid a lot, said the market would tank after the last election. That didn’t happen. I heard someone say that guru’s prediction says more about the guru (their desired election outcome) than it does anything else. I’m staying the course.
000
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Re: Is anyone waiting until after the election?

Post by 000 »

bigskyguy wrote: Wed Sep 30, 2020 7:31 pm For us, cash, TIPS, and I-bonds. Our I-bonds were purchased 20+ years ago, all 3% real. 2/3’s of our TIPS are our LMP portfolio thru 2039. 1/3 of our TIPS are the bond portion of our risk portfolio. The remainder of our risk portfolio is presently cash, and will be invested once we have clarity from the election - on that I will say no more.
Ok. I'm not trying to be snarky, just wanting to understand. You're concerned the election may negatively impact US stocks. But not USD and US Government debt, both of which are directly controlled by the Government that will be determined by the outcome of the election?
000
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Re: Is anyone waiting until after the election?

Post by 000 »

Robot Monster wrote: Wed Sep 30, 2020 7:36 pm I'll admit it's certainly, shall we say, less than ideal, but J.P.Morgan is on-board with it, and they have a high conviction. Some years ago, there was an article entitled, "3 Investment Gurus Share Their Model Portfolios," where the three gurus were Bogle, Swensen, and lesser known Gretchen Tai who recommended an 8% allocation to high yield.

Apparently this idea will not work for bigskyguy, I see his portfolio is heavy into safe assets (which I might mention mine is, as well...lots of cash, a good amount of TIPS, but this is a permanent allocation.)
Sorry, but the part I bolded made me LOL.

I'm not sure anyone should make investment decisions based on J.P. Morgan's conviction about asset classes.
bigskyguy
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Re: Is anyone waiting until after the election?

Post by bigskyguy »

000 wrote: Wed Sep 30, 2020 7:51 pm
bigskyguy wrote: Wed Sep 30, 2020 7:31 pm For us, cash, TIPS, and I-bonds. Our I-bonds were purchased 20+ years ago, all 3% real. 2/3’s of our TIPS are our LMP portfolio thru 2039. 1/3 of our TIPS are the bond portion of our risk portfolio. The remainder of our risk portfolio is presently cash, and will be invested once we have clarity from the election - on that I will say no more.
Ok. I'm not trying to be snarky, just wanting to understand. You're concerned the election may negatively impact US stocks. But not USD and US Government debt, both of which are directly controlled by the Government that will be determined by the outcome of the election?
I will answer you privately.
rockstar
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Re: Is anyone waiting until after the election?

Post by rockstar »

I'm not. I'm hitting my ex-dividend dates right now. I have no clue what the market will do post the election.

I did find this video pretty interesting. They talk briefly about the election. This is also before COVID hit too.

https://www.youtube.com/watch?v=WNVOGSQd28A
angelescrest
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Re: Is anyone waiting until after the election?

Post by angelescrest »

FWIW: https://darrowwealthmanagement.com/blog ... in-charts/
Suggests that historically, U.S. stocks and bonds tend to perform better during an election year compared to the year after.

It’s interesting, but not actionable for me as I don’t time the markets.
Carol88888
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Re: Is anyone waiting until after the election?

Post by Carol88888 »

Nope. I have been dribbling in cash during the last month. And as more dividends come in I will add those,too.

No one knows what effect the election will have upon the market. No one.

Remember, people thought Trump was bad for the market at first, so the futures went down 800 points overnight. Then the market turned up. It can happen so fast that you will miss the rebound.

If it is money that you have allocated for the market and won't need in the next few years, then the best thing you can do is get it invested.
hoops777
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Re: Is anyone waiting until after the election?

Post by hoops777 »

Loandapper wrote: Sun Sep 20, 2020 3:29 pm I know, I know: Time in the market, not timing the market.

BUT:

I have some new cash (about 6% of total portfolio) and I'm curious whether anyone else is waiting until after the US election in 45 days?
You might have a very long wait. :annoyed
K.I.S.S........so easy to say so difficult to do.
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El Greco
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Re: Is anyone waiting until after the election?

Post by El Greco »

Waiting for what?
Robot Monster
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Re: Is anyone waiting until after the election?

Post by Robot Monster »

000 wrote: Wed Sep 30, 2020 7:54 pm
Robot Monster wrote: Wed Sep 30, 2020 7:36 pm I'll admit it's certainly, shall we say, less than ideal, but J.P.Morgan is on-board with it, and they have a high conviction. Some years ago, there was an article entitled, "3 Investment Gurus Share Their Model Portfolios," where the three gurus were Bogle, Swensen, and lesser known Gretchen Tai who recommended an 8% allocation to high yield.

Apparently this idea will not work for bigskyguy, I see his portfolio is heavy into safe assets (which I might mention mine is, as well...lots of cash, a good amount of TIPS, but this is a permanent allocation.)
Sorry, but the part I bolded made me LOL.

I'm not sure anyone should make investment decisions based on J.P. Morgan's conviction about asset classes.
So many people in this forum have very strong convictions about which asset classes in which to invest, so, if I was gonna LOL at stuff like this, I'd LOL my own head off.
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Tamarind
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Re: Is anyone waiting until after the election?

Post by Tamarind »

Nope. Outside of Bogleheads I'm a very political person with strong opinions about the election and the state of the world. But that doesn't have any bearing on the math and habit of investing. "Invest you must."

Channel your worry into doing something to help people in your area. Donate, volunteer, send meals, engage in mutual aid. Take care of a plant or a pet. Call a relative or a friend. Whatever makes you feel like you are making the world a tiny bit better.

And also follow your IPS, which I'm betting does not say to hold off during times of political uncertainty.
Robot Monster
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Re: Is anyone waiting until after the election?

Post by Robot Monster »

Tamarind wrote: Thu Oct 01, 2020 7:11 am And also follow your IPS, which I'm betting does not say to hold off during times of political uncertainty.
I updated mine just now adding that. Appreciate the suggestion.
rich126
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Re: Is anyone waiting until after the election?

Post by rich126 »

While I don't think it is bad to be careful, I think the bigger problem is still the virus. Many assume a vaccine is a given and we will return to "normal" and I don't see that happening. And I think the optimism is priced into the market and if it doesn't happen, we may see a big time correction.

Of course if you have a long time frame it may not matter.
Robot Monster
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Re: Is anyone waiting until after the election?

Post by Robot Monster »

rich126 wrote: Thu Oct 01, 2020 2:57 pm While I don't think it is bad to be careful, I think the bigger problem is still the [censored]. Many assume a [censored] is a given and we will return to "normal" and I don't see that happening. And I think the optimism is priced into the market and if it doesn't happen, we may see a big time correction.

Of course if you have a long time frame it may not matter.
What I fear is people getting stuck in cash waiting for a stock drop that never comes. What I fear is being this guy,

Why I Cashed Out of the Covid-19 Rally, published May 12, 2020
Normchad
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Re: Is anyone waiting until after the election?

Post by Normchad »

Tamarind wrote: Thu Oct 01, 2020 7:11 am Nope. Outside of Bogleheads I'm a very political person with strong opinions about the election and the state of the world. But that doesn't have any bearing on the math and habit of investing. "Invest you must."

Channel your worry into doing something to help people in your area. Donate, volunteer, send meals, engage in mutual aid. Take care of a plant or a pet. Call a relative or a friend. Whatever makes you feel like you are making the world a tiny bit better.

And also follow your IPS, which I'm betting does not say to hold off during times of political uncertainty.
Today, I have seen the perfect post. Thanks!
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Artful Dodger
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Re: Is anyone waiting until after the election?

Post by Artful Dodger »

I'm 66, and am on the way to retirement, so am around 50% equities right now. I have no plans to change this and new money is split 50/50 equities / fixed.
rich126
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Re: Is anyone waiting until after the election?

Post by rich126 »

Robot Monster wrote: Thu Oct 01, 2020 3:34 pm
rich126 wrote: Thu Oct 01, 2020 2:57 pm While I don't think it is bad to be careful, I think the bigger problem is still the [censored]. Many assume a [censored] is a given and we will return to "normal" and I don't see that happening. And I think the optimism is priced into the market and if it doesn't happen, we may see a big time correction.

Of course if you have a long time frame it may not matter.
What I fear is people getting stuck in cash waiting for a stock drop that never comes. What I fear is being this guy,

Why I Cashed Out of the Covid-19 Rally, published May 12, 2020
I've done that before and never learn my lesson :)
Actually I've never been 100% out of the market but will go to more cash. And with retirement not far down the road, I don't mind being a bit conservative.

My late friend was not a good investor and he was actually in cash for most of his TSP/gov life. Sadly he passed away earlier this year after only being retired a couple of years (at least he retired early). However he must have lost tons of money by avoiding the market. I don't know all of the details but it was a lot. Fortunately he at least had a bit of a government pension and along with social security wasn't going to starve but bogleheads would have been a help to someone like him. Although in the long run it didn't matter.
Robot Monster
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Re: Is anyone waiting until after the election?

Post by Robot Monster »

rich126 wrote: Thu Oct 01, 2020 5:25 pm
Robot Monster wrote: Thu Oct 01, 2020 3:34 pm
rich126 wrote: Thu Oct 01, 2020 2:57 pm While I don't think it is bad to be careful, I think the bigger problem is still the [censored]. Many assume a [censored] is a given and we will return to "normal" and I don't see that happening. And I think the optimism is priced into the market and if it doesn't happen, we may see a big time correction.

Of course if you have a long time frame it may not matter.
What I fear is people getting stuck in cash waiting for a stock drop that never comes. What I fear is being this guy,

Why I Cashed Out of the Covid-19 Rally, published May 12, 2020
I've done that before and never learn my lesson :)
Actually I've never been 100% out of the market but will go to more cash. And with retirement not far down the road, I don't mind being a bit conservative.

My late friend was not a good investor and he was actually in cash for most of his TSP/gov life. Sadly he passed away earlier this year after only being retired a couple of years (at least he retired early). However he must have lost tons of money by avoiding the market. I don't know all of the details but it was a lot. Fortunately he at least had a bit of a government pension and along with social security wasn't going to starve but bogleheads would have been a help to someone like him. Although in the long run it didn't matter.
Sorry to hear about your friend. It's interesting to note, though, that in certain other countries, the share of household financial assets in equities is far below that of the US. Looking at a chart from 2016, the US is about 35%, while Germany, Japan, and Switzerland are about 13-14%. So, it's far less of a strange thing not to be invested in the stock market in those countries vs in the US. (The article I'm sourcing does say that this is changing, at least in Germany.)
Source
jrbdmb
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Re: Is anyone waiting until after the election?

Post by jrbdmb »

tibbitts wrote: Sun Sep 20, 2020 4:14 pm Did you wait in 2016? What was the result?
I had to move funds from one 401K plan to another in 2016. I couldn't do a transfer-in-kind, so i knew I'd be out of the market for a bit. I ended up doing the move during the 2016 election - not on purpose, but at least I was *sure* the market would either stay the same or go down, depending on who won. So of course in my time out of the market I missed a nice post-election rally.

Timing the market is a fool's errand.
supersharpie
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Re: Is anyone waiting until after the election?

Post by supersharpie »

jrbdmb wrote: Fri Oct 02, 2020 9:33 am
tibbitts wrote: Sun Sep 20, 2020 4:14 pm Did you wait in 2016? What was the result?
I had to move funds from one 401K plan to another in 2016. I couldn't do a transfer-in-kind, so i knew I'd be out of the market for a bit. I ended up doing the move during the 2016 election - not on purpose, but at least I was *sure* the market would either stay the same or go down, depending on who won. So of course in my time out of the market I missed a nice post-election rally.

Timing the market is a fool's errand.
Yes, I made the mistake of withdrawing I sizable chunk of our investments close to the market bottom this spring.

Never again!
Broken Man 1999
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Re: Is anyone waiting until after the election?

Post by Broken Man 1999 »

The only actions I'm in for is what the market does. Until the markets offers something attractive to me, perhaps discounted equity shares, I have no plans to do anything.

Would I market time if I were offered an opportunity to take advantage of a lower price on TSM because of the election? Heavens NO! That would be a terrible choice to make.

Although, I would use such an opportunity to rebalance if it really got out of hand enough to materially affect my AA.

We have only one mutual fund in our IRAs, Short-tern Treasury Index MF and that is no accident. I can do an exchange at the end of the day to another mutual fund, without trying to manage a sell to buy sequence with our ETFs.

As well, I can do the same in our VA, as we hold only TBM and TSM sub-accounts. So I have a couple of ways to exchange quickly near the end of the day. Then, at my leisure I can convert the TSM I have exchanged into an ETF, except in the VA, as only mutual funds are available.

So, at the end of the day we have tons of cash if I squint hard enough, or zero cash if I don't. And we are never, ever out of the market. And, unlike selling Intermediate-term Treasury Index MF, sales of Short-term Treasury Index MF does not result in Vanguard slapping a thirty day no buyback restriction. I know this. One reason I converted our Intermediate-term Treasury Index MF to an ETF. I just like more options than fewer.

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1789
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Re: Is anyone waiting until after the election?

Post by 1789 »

In US, elections and who hold white house/Senate/Congress dont matter for the the direction of long term economy and stock markets. This is data proven and you can see data here: The truth about retirement plans and iras by Ric Edelman - page 77.

It matters in a 3rd world country.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
bantam222
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Re: Is anyone waiting until after the election?

Post by bantam222 »

Keeping 6% on the sidelines has very little impact to your overall portfolio.

If stock market drops 15%, keeping 6% in cash only saves you less than 1% in overall portfolio variance.

So even if you nail this decision and time the market, you are out 14% instead of 15%. Very marginal.
Valuethinker
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Re: Is anyone waiting until after the election?

Post by Valuethinker »

arcticpineapplecorp. wrote: Sun Sep 20, 2020 5:59 pm if you want to make the three mistakes investors make during election years:
Mistake 1: Investors worry too much about which party wins the election
Mistake 2: Investors get spooked by primary season volatility
Mistake 3: Investors try to time the markets around politics

source: https://www.capitalgroup.com/advisor/in ... -year.html
now find out why they're mistakes by clicking on the link above.

so do you go through this angst every 2 years because there's an election every two years, right? You gonna go through this every 2 years for the rest of your life? see how silly that is? see my signature.
That data about missing roughly half of all equity returns if you are out of the market for i think 100 days in 30 tears? ( can't remember exact details)

Imagine if on the day after the election there us a clear winner and the loser concedes?

Stock market could go up 10% on that day and would probably go up 5%.

That's why it is dangerous to try to time these sorts of events. Because the market responds so quickly to new information.
nigel_ht
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Re: Is anyone waiting until after the election?

Post by nigel_ht »

bantam222 wrote: Sat Oct 03, 2020 2:55 am Keeping 6% on the sidelines has very little impact to your overall portfolio.

If stock market drops 15%, keeping 6% in cash only saves you less than 1% in overall portfolio variance.

So even if you nail this decision and time the market, you are out 14% instead of 15%. Very marginal.
If you put your 6% into the market when it’s 50% down puts you 4% ahead...assuming you recover which you may not in a nikkei scenario.
itmaybejj
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Re: Is anyone waiting until after the election?

Post by itmaybejj »

I am waiting, but not pulling. Which is to say: I am letting my uninvested cash (usually ~1-2 months income) grow into a proper emergency fund (~6 months income).

This isn't to maximize return-- my instincts want to market time but I'm not trying to market time -- it's because multiple people [not naming/not discussing politics] have announced their full intention is to deliberately create a constitutional crisis this winter. If they do that, I could easily imagine months of protest and unrest. I don't think the odds are high AND I wouldn't expect that to directly affect me where I live, though layoffs are possible at my job if things go sideways, but as we all saw this spring...just in time supply economies are very easily disrupted.

Am I building a bunker and stockpiling MREs? No. But like I did last March, I'm over-filling my freezer and pantry with 2-6 months of staples I normally only keep a few weeks of and building up my cash reserve. Boy was that appreciated last spring. When the crisis doesn't come (hopefully), I'll go back to investing and shopping as normal.
nigel_ht
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Re: Is anyone waiting until after the election?

Post by nigel_ht »

itmaybejj wrote: Sat Oct 03, 2020 8:01 am I am waiting, but not pulling. Which is to say: I am letting my uninvested cash (usually ~1-2 months income) grow into a proper emergency fund (~6 months income).

This isn't to maximize return-- my instincts want to market time but I'm not trying to market time -- it's because multiple people [not naming/not discussing politics] have announced their full intention is to deliberately create a constitutional crisis this winter. If they do that, I could easily imagine months of protest and unrest. I don't think the odds are high AND I wouldn't expect that to directly affect me where I live, though layoffs are possible at my job if things go sideways, but as we all saw this spring...just in time supply economies are very easily disrupted.

Am I building a bunker and stockpiling MREs? No. But like I did last March, I'm over-filling my freezer and pantry with 2-6 months of staples I normally only keep a few weeks of and building up my cash reserve. Boy was that appreciated last spring. When the crisis doesn't come (hopefully), I'll go back to investing and shopping as normal.
I wonder what the ROI of building and selling bunkers would be...maybe there will be the option to crowdsource...
egrets
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Re: Is anyone waiting until after the election?

Post by egrets »

We're in a state of chaos. I am plowing ahead ignoring it, because every day things change. In my personal view, after the Inauguration, we will either continue in chaos or have a more normal situation, the feds planning intelligently, etc. Hopefully the latter would result in improved economic times and an improved stock market.

I think a terrible mess is possible at the election, if one side refuses to concede and inspires its followers to violence. I have no idea what one does if that's the case. The stock market would be the least of my worries. You will not find me out in the street with a gun, however
Ron
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Re: Is anyone waiting until after the election?

Post by Ron »

This will be my ninth presidential election that I'm going through since I started investing in 1982.

I'll follow the investment pattern I did in all the previous election years - I'll just ignore it 😜 ...

- Ron
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arcticpineapplecorp.
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Re: Is anyone waiting until after the election?

Post by arcticpineapplecorp. »

Valuethinker wrote: Sat Oct 03, 2020 5:41 am
arcticpineapplecorp. wrote: Sun Sep 20, 2020 5:59 pm if you want to make the three mistakes investors make during election years:
Mistake 1: Investors worry too much about which party wins the election
Mistake 2: Investors get spooked by primary season volatility
Mistake 3: Investors try to time the markets around politics

source: https://www.capitalgroup.com/advisor/in ... -year.html
now find out why they're mistakes by clicking on the link above.

so do you go through this angst every 2 years because there's an election every two years, right? You gonna go through this every 2 years for the rest of your life? see how silly that is? see my signature.
That data about missing roughly half of all equity returns if you are out of the market for i think 100 days in 30 tears? ( can't remember exact details)

Imagine if on the day after the election there us a clear winner and the loser concedes?

Stock market could go up 10% on that day and would probably go up 5%.

That's why it is dangerous to try to time these sorts of events. Because the market responds so quickly to new information.
don't have 30 years, but here's 20:

Image
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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hornet96
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Re: Is anyone waiting until after the election?

Post by hornet96 »

arcticpineapplecorp. wrote: Sat Oct 03, 2020 9:11 am don't have 30 years, but here's 20:

Image
This chart should be pinned to the front page of Bogleheads. Missing just the best 60 days over a 20 year period flipped your performance from a return of +10% to a loss of -4%.
itmaybejj
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Re: Is anyone waiting until after the election?

Post by itmaybejj »

hornet96 wrote: Sat Oct 03, 2020 9:20 am This chart should be pinned to the front page of Bogleheads. Missing just the best 60 days over a 20 year period flipped your performance from a return of +10% to a loss of -4%.
Would be a good site banner!

Yeah; having seen that chart around, I look at increasing cash reserves as throwing away returns to "buy" crisis insurance, rather than setting myself up to make a big win on the dip buy lottery. Measured in months rather than percent...
000
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Re: Is anyone waiting until after the election?

Post by 000 »

Due to volatility clustering the best days are usually surrounded by the worst, so the argument about "missing the best days" is itself missing something.
itmaybejj
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Re: Is anyone waiting until after the election?

Post by itmaybejj »

nigel_ht wrote: Sat Oct 03, 2020 8:29 am I wonder what the ROI of building and selling bunkers would be...maybe there will be the option to crowdsource...
I like the way you think. Market them as bunkers to the worried, root cellars to the gardeners and wine cellars to the hoi polloi.

Unfortunately this sounds suspiciously like work.
Lensvik
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Hedging the 2020 Election

Post by Lensvik »

[Thread merged into here, see below (Page 7). --admin LadyGeek]

Just wondering if anyone is going to try to hedge the 2020 election? I doubt the election will be decided quickly, and expect a lot of volitivity. Has anyone else given thought to this? I am considering moving all my 401k equity holdings to a bond fund for the duration of the volatility, and then move back to equities when things settle down.

I know I cannot time the market, but in this case I think volatility is a safe bet. I am willing to forego any market gains that might incur in order to preserve capital.

Anyone else thinking along these lines?
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Re: Hedging the 2020 Election

Post by jebmke »

Nope, no changes
When you discover that you are riding a dead horse, the best strategy is to dismount.
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JoeRetire
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Re: Hedging the 2020 Election

Post by JoeRetire »

Lensvik wrote: Sun Oct 18, 2020 4:02 am Just wondering if anyone is going to try to hedge the 2020 election?
Yes, certainly some will try.

I won't.
I am considering moving all my 401k equity holdings to a bond fund for the duration of the volatility, and then move back to equities when things settle down.

I know I cannot time the market
Hmm...
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
BV3273
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Re: Hedging the 2020 Election

Post by BV3273 »

I might move some of my 401k into bonds. Around 10-20% but I’ve been thinking about doing that for a while. I’m currently 100% equities and have quite a bit of profit from my Growth Fund. I’d like to lock in some of those gains. Not really doing it because of the election though.
Last edited by BV3273 on Sun Oct 18, 2020 7:33 am, edited 1 time in total.
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Cyclesafe
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Re: Hedging the 2020 Election

Post by Cyclesafe »

Lensvik wrote: Sun Oct 18, 2020 4:02 am Anyone else thinking along these lines?
No, no, no. What happens happens. You will be continuously second-guessing yourself about when to get back in. Mr. Market is not panicking and nor should you. Ever.
"Plans are useless; planning is indispensable.” (Dwight Eisenhower) | "Man plans, God laughs" (Yiddish proverb)
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22twain
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Re: Hedging the 2020 Election

Post by 22twain »

I'm retired. I'm spending from assets at about a 2% annual rate. I have enough cash (checking account and money market settlement fund) to keep me going for a year. My overall asset allocation is only about 55% stock. I'm not worried about a few months of volatility.
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Sufferlandrian
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Re: Hedging the 2020 Election

Post by Sufferlandrian »

What you are proposing is short-term speculation. How should a long-term investor approach this election (or any election)?

Even if increased volatility is a safe bet, to profit from it you still have to be able to accurately predict the highs and the lows. I realized that I cannot do that, so I won't try. If you think you can (despite all evidence presented to the contrary on this forum), go ahead. It's your money, do what you want.

Good luck!

"Don't just do something, stand there!" - Jack Bogle.
Learning to fish.
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Re: Hedging the 2020 Election

Post by ChinchillaWhiplash »

If you want to try it, have a written plan. Something like if S&P drops x%, buy y$ worth of fund xyz. I also would not sell all my equity holdings. Try about 10% (Maybe more depending on your age and amount you have) so if you are wrong you won’t loose out.
BV3273
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Re: Hedging the 2020 Election

Post by BV3273 »

The main issue I see with this plan is when will you know it’s time to get back in? I’ve read this in several threads. People sit on the sidelines waiting to get back in. This especially can become an issue if the ballots are not all counted and the election outcome drags on for months. Regardless of what happens I will be continuing to plow money into the market.

You’re not investing, you’re gambling.

Ultimately it’s your money and your decision.
Ron Ronnerson
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Re: Hedging the 2020 Election

Post by Ron Ronnerson »

Think about how the market has reacted to a worldwide pandemic, a huge spike in unemployment, and the ensuing financial devastation to scores of people. The market has responded to all this by deciding to continue to inch up.

Also, it may or may not be a close election. The polling seems to indicate that it may not be. However. the market could plummet if there is a clear winner right away. Why? Because it is almost as if it prides itself on being unpredictable. Many people thought the 2016 outcome would cause a massive market drop but it didn’t do that.

If you don’t believe in market timing, then don’t try to time the market. But, come on, you believe in it a little bit, don’t you? It’s okay! But admitting it is the first step as people should be true to themselves. If you decide to time it, I hope it plummets hard and you buy right before it rockets back up. You are playing against the odds with such moves but it could definitely work out.
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Re: Hedging the 2020 Election

Post by ChinchillaWhiplash »

One thing a lot of people seem to miss is that you can jump back in any time the funds you sold are at a lower price than you sold and you would be ahead of where you were. So it is quite easy to know when to put money back into equities. Saying you won’t know when to get back into the market makes no sense. This works as long as you believe that the stock market will continue to go up in the future. If you don’t believe it will go up, then why invest in equities in the 1st place. This is assuming you have no commission funds in a tax advantaged accounts. When you have capital gains to deal with, this is a deal breaker. Best to buy in a ladder structure where you buy x$ amount each time market drops a certain %. It is still a bit of a gamble and I would not sell all equities to do this.
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