Anyone here mostly cash in portfolio?

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kareysue
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Anyone here mostly cash in portfolio?

Post by kareysue »

Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
minimalistmarc
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Re: Anyone here mostly cash in portfolio?

Post by minimalistmarc »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Hi Sue, there were many on this forum who made the exact same mistake, but none of them still post (as they spent a lot of time trying to convince others to do the same during the bottom of the market).

There is not enough information in your post to advise what to do. From the limited info you need to chose an asset allocation that will stop you from selling in a future crash. Probably something between 40:60 and 60:40 equities:bonds. Once you have chosen an allocation then get back into the market either with a lump sum or clearly defined dollar cost average plan over no more than 12 months.
Osterix
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Re: Anyone here mostly cash in portfolio?

Post by Osterix »

I’ve only been investing for a few years now. I got fortunate with some timing for my contributions to my retirement accounts, so some nice gains have been made. Didn’t take anything off the table. The ridiculousness of 2020 has proven to me that I cannot predict what the market is going to do.
stimulacra
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Re: Anyone here mostly cash in portfolio?

Post by stimulacra »

Nope. I looked back on my posts to see what I was thinking back in March.
stimulacra wrote: Sat Mar 14, 2020 7:01 pm Yes. Bought more of it this past week to get my allocations somewhat close to normal.

I was previously 70/25/5 but am probably closer to 62/32/6 today.

I might do a hard rebalance if stocks drop another 10-15% but am totally cool to stay the course.

My main priority now is to stay gainfully employed.
My new target asset allocation now after all of this is 65/30/5. It lets me sleep at night, thick and thin.

The 5% is in gold.
David Althaus
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Re: Anyone here mostly cash in portfolio?

Post by David Althaus »

The past is the past. Seems logical you can benefit from developing your Investment Policy Statement--one you can live with and stick to. Wiki site has examples. You will want to outline your long term goals, develop asset allocation you can live with, and then stay the course. In 30 years you may look back on this with appreciation that you no longer seek to time the market.

All the best
markjk
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Re: Anyone here mostly cash in portfolio?

Post by markjk »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Hi Kareysue.

First off, know you are not alone. This has happened to the best of us over the years. It is part of the learning process and sometimes the only way to learn is to go through it. The hardest part about investing is staying the course when everything is dropping, pundits are screaming, and it seems like the world is going to collapse with all the bad news. Unfortunately, that is just part of how this all works. Investing in equities goes through cycles. There are good days, weeks, months, years and bad days, weeks, months, and years. History shows we see around 3 good years for every 1 bad year (roughly) but like everything else in investing, that isn't a perfect measure. It's an average over time. So what that tells us is if you have a long term time horizon (10+ years) and you invest in equities, you will probably do fine. But, there are caveats. For this to work in your favor you must be diversified across many equities and you must to stay invested when things are going badly.

Use this situation as a learning experience. You now understand your temperament and you also have seen a sharp drop return to a big gain. You've now lived it. Experience is the best teacher. Don't waste this experience. The best advice I can give is to get back in ASAP. Don't wait and try to time the market. No one can do that effectively over time. Even though things seem expensive now, get back in. When you do, diversify through low cost indexed mutual funds/etf and keep it simple. Now that you know yourself a bit, I would agree with other posters here that you should go with a stock/bond mix that might mute your downside in another large drop situation. Keep in mind that will also limit your upside but if it prevents you from selling and allows you to sleep at night, that is much better than selling it all the next time this type of drop happens. Remember, it's a when, not if this type of drop happens again. This type of drop will happen again and again and again, etc. But over time, the upside should outweigh the downside.

Best of luck to you!
hudson
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Re: Anyone here mostly cash in portfolio?

Post by hudson »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
I bailed out of stocks in 2008 and moved to fixed income.
I'm comfortable with where I am. I learned that I did not want to own any stocks ever.
dcabler
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Re: Anyone here mostly cash in portfolio?

Post by dcabler »

A lot of us have done this. In fact, I did this late in 2008, after most of the damage was already done. If I had stayed there, I would have locked in the losses permanently (though I did have $3K loss carryover for taxes that lasted for years afterwards). I started reading up more on investing, diversification, and the like starting with Scott Burns (I didn't know about bogleheads then). A month or so later, I decided to get back in the saddle, so to speak. And from what I can tell, any permanent damage was minimized. And I learned a lot about how markets have historically behaved, how diversification works, and I learned a lot about my own risk tolerance and how to better ignore noise.
minimalistmarc
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Re: Anyone here mostly cash in portfolio?

Post by minimalistmarc »

hudson wrote: Tue Nov 17, 2020 6:46 am
kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
I bailed out of stocks in 2008 and moved to fixed income.
I'm comfortable with where I am. I learned that I did not want to own any stocks ever.
Interesting, how did you come to learn that? Seems like all the evidence would teach you otherwise.
BabaWawa
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Re: Anyone here mostly cash in portfolio?

Post by BabaWawa »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Kareysue,

I took the liberty of searching your previous posts here. What I see is someone who is undisciplined without an investment plan and seems to over react to market volatility and hype. Your first post was in the middle of the 2008 downturn where you asked about going to 100% cash. Then not another post for 7 years. That should have been a great learning experience, but it appears the lesson was lost again. I also noticed you asked about shorting the market this year on March 23, at the very bottom of this current downturn. You are still in cash and have missed a tremendous run up in equity value. You should now realize that your instincts can't be trusted.

You are young, but you can't afford to keep duplicating these mistakes. Please learn from this experience. Spend more time here learning how to write an Investment Policy Statement and develop an asset allocation you can stay the course with (its not 100% equities). Learn how to rebalance when the market gives you the opportunity to sell assets at a high price and buy when they are low (not the other way around as you have done previously). Your previous posts also seem to show a propensity towards individual stocks. For you I truly believe the 3 fund portfolio would benefit you and give you a solid foundation upon which to build.

I apologize if this seems harsh, but offer this only in your best interest.
Tamalak
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Re: Anyone here mostly cash in portfolio?

Post by Tamalak »

No matter how tempted I am to bail, or tilt, or buy individual stocks, I always ask myself: "What if I'm wrong? What if the market goes UP after I decided to bail? What will I do then?" And I get stuck. With buying and holding, you can get into a bind when the market drops. But by market timing, you can get into a much worse double bind.
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goodenyou
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Re: Anyone here mostly cash in portfolio?

Post by goodenyou »

Not mostly cash, but a large cash position. I anticipate building a custom home in the next year or two, but haven’t finalized anything. The low 2% fixed interest rates are very tempting, however, I have enjoyed a paid off home for the past 10 years. The new home will be likely 2x the price as the old home, so I would need a lot of cash if I were to pay cash for the new home. If I don’t build, I may start to redeploy the cash. I have almost 25% cash right now.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.
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birdog
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Re: Anyone here mostly cash in portfolio?

Post by birdog »

minimalistmarc wrote: Tue Nov 17, 2020 4:57 am There is not enough information in your post to advise what to do. From the limited info you need to chose an asset allocation that will stop you from selling in a future crash. Probably something between 40:60 and 60:40 equities:bonds. Once you have chosen an allocation then get back into the market either with a lump sum or clearly defined dollar cost average plan over no more than 12 months.
Solid advice.
260chrisb
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Re: Anyone here mostly cash in portfolio?

Post by 260chrisb »

BabaWawa wrote: Tue Nov 17, 2020 7:57 am
kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Kareysue,

I took the liberty of searching your previous posts here. What I see is someone who is undisciplined without an investment plan and seems to over react to market volatility and hype. Your first post was in the middle of the 2008 downturn where you asked about going to 100% cash. Then not another post for 7 years. That should have been a great learning experience, but it appears the lesson was lost again. I also noticed you asked about shorting the market this year on March 23, at the very bottom of this current downturn. You are still in cash and have missed a tremendous run up in equity value. You should now realize that your instincts can't be trusted.

You are young, but you can't afford to keep duplicating these mistakes. Please learn from this experience. Spend more time here learning how to write an Investment Policy Statement and develop an asset allocation you can stay the course with (its not 100% equities). Learn how to rebalance when the market gives you the opportunity to sell assets at a high price and buy when they are low (not the other way around as you have done previously). Your previous posts also seem to show a propensity towards individual stocks. For you I truly believe the 3 fund portfolio would benefit you and give you a solid foundation upon which to build.

I apologize if this seems harsh, but offer this only in your best interest.
Well stated for a new guy!! :D All kidding aside this is great advice and the kind of advice that should come from this forum.
KlangFool
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Re: Anyone here mostly cash in portfolio?

Post by KlangFool »

OP,


You should choose a target retirement fund and/or a Vanguard Life Strategy fund.


KlangFool
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midareff
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Re: Anyone here mostly cash in portfolio?

Post by midareff »

It's a market and markets go up and down. Sometimes they go up or down very significantly, or to use another term, violently. To be successful in the market set an asset allocation that enables you to sleep well at night and stay with it. If you are in the accumulation stage and one asset class is too low that's the one you buy with your periodic purchases. If you are in decumulation (retired) you draw from the one that's too high. Own your index funds, invest as much as you can and forgetaboutit. ... or do as Klangfool has recommended. Instincts and emotions have no place here.
Last edited by midareff on Tue Nov 17, 2020 10:06 am, edited 1 time in total.
investnoob
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Re: Anyone here mostly cash in portfolio?

Post by investnoob »

I was all cash for a while, but not because I sold equities.

I got a promotion in 2010, and began to get ahead and save some money. This was two years after the crash, and there was talk of budget cuts and lay offs at work. Those lay offs happened in 2012 through 2014. About 6% of positions were cut and a few hundred people were laid off.

Due to this, I never actually bought any equities. Finally, in 2015/2016, I began to buy equities. About half of my savings went to equities, and the other half stayed in cash. I slowly reduced my cash position until last year. Last year I put a large chunk of it into my mortgage and into home repairs.

I now have a decent nest egg in my RRSP (similar to 401k) and TFSA (similar to IRA?). And I only have 4 months left to pay off the house.

Pre-paying the mortgage helped me feel like I was doing something with my money. I know that some would rather have liquidity, but I felt like I had a plan in case of unemployment. I do still have about 4 months of bare bones expenses in cash.

If the volatility of stocks are too much, you could consider fixed income or pre-paying a mortgage.

Hope that helps.
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arcticpineapplecorp.
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Re: Anyone here mostly cash in portfolio?

Post by arcticpineapplecorp. »

hudson wrote: Tue Nov 17, 2020 6:46 am
kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
I bailed out of stocks in 2008 and moved to fixed income.
I'm comfortable with where I am. I learned that I did not want to own any stocks ever.
this post makes it seem like it's an either/or rather than both, which backs up what the OP did (went all OUT of stocks to ALL in fixed income).

a Portfolio is comprised of different assets (stocks, fixed income mostly, but could contain real estate, commodities, etc).

Roger Ibbotson has said the majority of your returns are derived from your asset allocation. That not only determines your return largely, but also the amount of risk you accept.

Hudson may not need stocks provided Hudson's won the game and can stop playing. But most can not and/or have legacy needs and are concerned about inflation (which long term stocks have buffered above most other assets).

To the OP, others have said get a plan (IPS). see my signature to get a plan. or go here: https://www.bogleheads.org/wiki/Investm ... _statement

Without one, you're like a ship without a rudder.

Ideally, once you establish your plan you'll understand what your potential losses/declines may be based on your chosen asset allocation.

Even with a plan, you may need some hand holding if such losses you've chosen to accept on paper may still be frightening in reality. Avoiding behavioral errors (panic selling) may be worth paying an advisor if they can get you to stay the course. It's called buy and hold, not buy and sell in a panic. See Vanguard's low cost personal advisory services if you need help: https://investor.vanguard.com/financial ... r-services

making a mistake is fine. learning from it is better. not repeating it is best.

if/when you get back into the market, what will keep you from repeating the mistake from the past?

don't fool yourself and just say, "We won't have another pandemic".

That's not the point. Markets can fall 32% for other reasons.

What will you do the next time the market falls 32% is what you should be asking yourself.

When the market falls by a certain amount (whatever that percentage), you should be able to understand how much you stand to "lose" or see your portfolio decline. You should not have to check your balance and say "Oh my! I lost so much". I know based on my asset allocation how much I stand to lose whether the market falls 10%, 20%, 30% and so on. I'm not surprised when I look at my balance online. So I don't panic and sell. Because I was prepared for what might happen. Doesn't mean I didn't lose money. I did. But I was mentally prepared for those losses so I was not shocked/surprised and acted out of emotion which is what you did. Emotions won't help you in investing. Do the work in building a plan and then stay the course.

The market's returned 10.1% CAGR since 1926. That included the bad times. You didn't have to get out of the market to get good returns. You just had to buy and hold. Stay the course. It works. If only more would believe it.

Dig?
Last edited by arcticpineapplecorp. on Tue Nov 17, 2020 10:45 am, edited 2 times 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
Monsterflockster
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Re: Anyone here mostly cash in portfolio?

Post by Monsterflockster »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
You made a decision that was best for you at the time. If the market took a 50-80% cut you’d be feeling good. And it could crash tomorrow... who knows?
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HomerJ
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Re: Anyone here mostly cash in portfolio?

Post by HomerJ »

I have been basically 50/50 for years and years because I'm never wrong.
  • If stocks go up, I'm smart for owning stocks, and enjoy the gains.
  • If stocks go down, I'm smart for owning bonds, and love that my portfolio is not dropping that fast.
When my portfolio becomes 55/45, I rebalance back to 50/50 (selling stocks to buy bonds - always feels good to "lock in" those gains).

This may not work for you.
  • Some people, if stocks are going up will be mad that they don't have enough in stocks.
  • Some people, if stocks are going down, will be mad that have too much in stocks.
I don't have a good answer for those feelings. They are legitimate and understandable. But it's nearly impossible to predict the future, so it's very hard for one to be in stocks only during the good times and out of stocks during the bad times.

So knowing this, 50/50 it works for me because even stocks gains in 50% of my portfolio is pretty good, and having the other 50% fairly safe gives me peace of mind.

I can handle waiting long-term for stocks to rebound because of the 50% I have in bonds and CDs.

And then I don't have to think about it. I don't have to try to predict the near-term future and constantly make changes to my portfolio.
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.”
Robot Monster
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Re: Anyone here mostly cash in portfolio?

Post by Robot Monster »

My inclination was to sell my equities! The idea didn't seem so nutty at the time, with articles like "Why I Cashed Out of the Covid-19 Rally" published May 12th by Bloomberg. At a certain point I did sin by selling some stock...it was a painful biting of the tongue experience to buy back in after it had significantly rallied. I had to set aside my emotions, and do the logical thing; it was as simple, and difficult, as that.
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1210sda
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Re: Anyone here mostly cash in portfolio?

Post by 1210sda »

KlangFool wrote: Tue Nov 17, 2020 9:49 am OP,


You should choose a target retirement fund and/or a Vanguard Life Strategy fund.


KlangFool
I second this !!!
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KingRiggs
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Re: Anyone here mostly cash in portfolio?

Post by KingRiggs »

BabaWawa wrote: Tue Nov 17, 2020 7:57 am
kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Kareysue,

I took the liberty of searching your previous posts here. What I see is someone who is undisciplined without an investment plan and seems to over react to market volatility and hype. Your first post was in the middle of the 2008 downturn where you asked about going to 100% cash. Then not another post for 7 years. That should have been a great learning experience, but it appears the lesson was lost again. I also noticed you asked about shorting the market this year on March 23, at the very bottom of this current downturn. You are still in cash and have missed a tremendous run up in equity value. You should now realize that your instincts can't be trusted.

You are young, but you can't afford to keep duplicating these mistakes. Please learn from this experience. Spend more time here learning how to write an Investment Policy Statement and develop an asset allocation you can stay the course with (its not 100% equities). Learn how to rebalance when the market gives you the opportunity to sell assets at a high price and buy when they are low (not the other way around as you have done previously). Your previous posts also seem to show a propensity towards individual stocks. For you I truly believe the 3 fund portfolio would benefit you and give you a solid foundation upon which to build.

I apologize if this seems harsh, but offer this only in your best interest.
THIS is a post that OP should take to heart. Time for a long, hard look in the mirror.

Best of luck going forward.
Advice = noun | Advise = verb | | Roth, not ROTH
musicagogo
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Re: Anyone here mostly cash in portfolio?

Post by musicagogo »

I did not sell in March. Instead I bought-not as much now as I wish I had as I thought the drop was going to be steeper. But I am happy I did; and should the market drop a lot again, I’m sure I’ll be tempted to buy more-although I feel good about my asset allocation (+/-5% for me is ok with how I am allocated) But I did sell BND etc last summer and my non-stock position is now cash as I think the risk from bonds compared to the gains is not worthwhile. I prefer what I consider (for now) to be a lower inflation risk on my cash-and so use cash as my ballast. I am 55 stock/35% cash/5% gold and since I am retired, I am happy with my allocation and sleep well.
Marseille07
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Re: Anyone here mostly cash in portfolio?

Post by Marseille07 »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Boglehead style of investing is (more or less) so-called "buy and hold." Now, I'm using my own signal to DCA; but that's for my dry powder and I do not time the market after my money is deployed.
hudson
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Re: Anyone here mostly cash in portfolio?

Post by hudson »

minimalistmarc wrote: Tue Nov 17, 2020 7:15 am
hudson wrote: Tue Nov 17, 2020 6:46 am
kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
I bailed out of stocks in 2008 and moved to fixed income.
I'm comfortable with where I am. I learned that I did not want to own any stocks ever.
Interesting, how did you come to learn that? Seems like all the evidence would teach you otherwise.
minimalistmarc,
I've read all of the Boglehead books and most of the discussions. I realize that I "should" own some equities.
I know about the evidence that you are talking about.
I don't sleep well owning stocks. I doubt if I'll ever own any.
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ohboy!
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Re: Anyone here mostly cash in portfolio?

Post by ohboy! »

hudson wrote: Tue Nov 17, 2020 6:46 am
kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
I bailed out of stocks in 2008 and moved to fixed income.
I'm comfortable with where I am. I learned that I did not want to own any stocks ever.
I guess this is like hanging out at a bar and not drinking then.
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1789
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Re: Anyone here mostly cash in portfolio?

Post by 1789 »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Generally what worked for me was to accept that i am less smart than an average investor.

Warning: This is extremely hard for a human being to accept as they always think they are smarter than a person next to them.

Once you break this ego you will stop doing things like going to cash, changing stuff around your portfolio and such... but you will be surprised to see the outcome.
"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)
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HomerJ
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Re: Anyone here mostly cash in portfolio?

Post by HomerJ »

1789 wrote: Tue Nov 17, 2020 1:19 pm
kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Generally what worked for me was to accept that i am less smart than an average investor.

Warning: This is extremely hard for a human being to accept as they always think they are smarter than a person next to them.

Once you break this ego you will stop doing things like going to cash, changing stuff around your portfolio and such... but you will be surprised to see the outcome.
Actually, I think most of us feel like we are SMARTER than the average investor BECAUSE we don't trade.

But it IS counter-intuitive... Learning more, studying more, reading stock reports, watching the news, reading the blogs, and trying to trade on that information usually gives WORSE portfolio returns.

Different from most things in life. Smart Engineers and Doctors, etc. have a real problem with this. They think if they just study enough, like their profession, they can become real good at trading.

But buy and hold, doing nothing actually beats most investors. So being dumb, and doing nothing, is actually the smart move.

(The truth is, there's just not enough data points, and too many variables, to figure it all out. Plus Human emotions are involved. Economics, and financial investing are NOT a hard science)
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.”
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gr7070
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Re: Anyone here mostly cash in portfolio?

Post by gr7070 »

KlangFool wrote: Tue Nov 17, 2020 9:49 am OP,


You should choose a target retirement fund

KlangFool
Agreed. OP shouldn't be looking at their accounts ever. Choose one Target Dated fund and leave it be. Probably choose one at retirement year less ten years for a more risk averse allocation, too.
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FelixTheCat
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Re: Anyone here mostly cash in portfolio?

Post by FelixTheCat »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
You have the wrong asset allocation since you got nervous and sold. Your AA should allow you to weather all storms.
Felix is a wonderful, wonderful cat.
jtdavid
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Re: Anyone here mostly cash in portfolio?

Post by jtdavid »

1210sda wrote: Tue Nov 17, 2020 10:38 am
KlangFool wrote: Tue Nov 17, 2020 9:49 am OP,


You should choose a target retirement fund and/or a Vanguard Life Strategy fund.


KlangFool
I second this !!!
+1000. Look at Target Retirement Income fund or Life strategy Conservative Growth.
minimalistmarc
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Re: Anyone here mostly cash in portfolio?

Post by minimalistmarc »

hudson wrote: Tue Nov 17, 2020 1:11 pm
minimalistmarc wrote: Tue Nov 17, 2020 7:15 am
hudson wrote: Tue Nov 17, 2020 6:46 am
kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
I bailed out of stocks in 2008 and moved to fixed income.
I'm comfortable with where I am. I learned that I did not want to own any stocks ever.
Interesting, how did you come to learn that? Seems like all the evidence would teach you otherwise.
minimalistmarc,
I've read all of the Boglehead books and most of the discussions. I realize that I "should" own some equities.
I know about the evidence that you are talking about.
I don't sleep well owning stocks. I doubt if I'll ever own any.
If I was mega wealthy, and risk averse I might feel the same as you.
hudson
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Re: Anyone here mostly cash in portfolio?

Post by hudson »

Count me frugal and very conservative.
My theory is that socking away savings is more effective than depending on the equity market.

Back to Kareysue,
Have you read Bernstein's The Four Pillars of Investing: Lessons for Building a Winning Portfolio?
or The Ages of the Investor: A Critical Look at Life-cycle Investing (Investing for Adults Book 1)?
If not, consider reading both.
Last edited by hudson on Tue Nov 17, 2020 7:32 pm, edited 3 times in total.
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ruralavalon
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Re: Anyone here mostly cash in portfolio?

Post by ruralavalon »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
I did not go to cash. Many people did that, so you are not alone.

First, restart contributions to your tax-advantaged accounts like any 401k or IRAs.

Second, decide on an asset allocation that is suitable for you. An allocation to bonds or other fixed income investments (like CDs, savings accounts, money market fund) is expected to substantially reduce portfolio volatility (risk) Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio";
4) White Coat Investor (9/23/2016), "In Defense of Bonds"; and
5) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?"

Third, then reinvest your cash in the desired asset allocation.

If you want help in picking a suitable asset allocation, then post your personal and financial details in this format: Asking Portfolio Questions. You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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AerialWombat
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Re: Anyone here mostly cash in portfolio?

Post by AerialWombat »

For the past few months, I've actually been moving significant cash into total market equity index funds. My AA got way out of whack this summer, due to an increase in net business profits. At one point, I was at 15/85, and my target AA is 30/70. I'm not complaining about "buying in at high valuations" because I know this is a good problem to have.
7eight9
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Re: Anyone here mostly cash in portfolio?

Post by 7eight9 »

Depending on your need, willingness and ability to take risk you may find yourself in a position where you don't reinvest in equities. Right now we are app. 10/90. Around 80% of the 90 (71.6 of 100) is a mix of money market, CDs, stable value fund and bank accounts. We never had more than 20% equities and likely never will.
I guess it all could be much worse. | They could be warming up my hearse.
nz_flyfishr
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Re: Anyone here mostly cash in portfolio?

Post by nz_flyfishr »

Long time lurker- first post because I can totally relate to this post about going to cash. :oops:

I am a recent "early" retiree (41M) with about 8M in total assets. I have been investing since the ripe age of 16. After seeing the grim jobs report, lowered economic forecast and widespread lockdowns in late March '20, I sold about a third of my portfolio after the market rebounded. At the time the world only had 48k Covid19 cases, but it seemed like containment was unlikely. Based on that the world GDP, consumer spending, jobs, energy, etc would all go down and credit risk would go up. All of those trends came to pass, but I suppose government stimulus, 0% interest and cheap capital won out in the market tug-of-war. Today, my money is just sitting around losing value with the US dollar while I look at the market and wonder whether/where I can/should increase my investment risk tolerance and buy back in at elevated prices-- or simply wait it out until I see opportunities that make sense to me.

As I look back, it was my capital allocation more so than my actual decision to sell that was the principle issue. I realized a big chunk of the money in what I sold might be tapped in the next 5-10-15 years. After a decade of putting that money in the market while I had income from work, I neglected to reallocate it once I decided to retire because I hadn't thought about my risk tolerance while I was seeing years of gains.

These days, I just console myself by looking at random charts and numbers when I get seller's regret:
https://www.multpl.com/s-p-500-pe-ratio/table/by-month
https://www.imf.org/en/Publications/WEO ... tober-2020
http://www.yardeni.com/pub/spearnrevalgrpeg.pdf
https://www.worldometers.info/coronavirus/

For the most part they tell the same story about the economy, the virus spread, and the relative price of the stock market vs earnings. I still am uncertain about the market and it feels like many stock prices are inflating without earnings growth (LT or SR). In the long-run (30-40+ years), it probably won't matter, but in the short term I can't help but feel like we're in an abnormally risky period.

So my two cents in summary (advice for me as well):

1) If you're holding for another 20-30 years, I wouldn't even worry about missing out this year...just buy in anytime and it'll look fantastic.

2) If you're looking at something shorter for some portion of those funds, I would really assess your capital allocation vs risk tolerance before committing the funds as it may be that you aren't properly allocated and it's causing you more stress to sell when the prices go down in the interim.

3) Write down your Investment Policy Statement and capital allocations. It'll keep you on track.

4) When you are down about how a trade went remember that: health, happiness, friends, family > money. Letting the equation flip is a recipe for some of the greatest regrets in life.
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Re: Anyone here mostly cash in portfolio?

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (general question).
nz_flyfishr wrote: Tue Nov 17, 2020 7:16 pm Today, my money is just sitting around losing value with the US dollar while I look at the market and wonder whether/where I can/should increase my investment risk tolerance and buy back in at elevated prices-- or simply wait it out until I see opportunities that make sense to me.
Welcome! I assume you are outside the US. If you want assistance with your portfolio, please start a new thread in the Non-US Investing forum using the My portfolio: seeking advice format. It will make you think about the "big picture" while giving us the information we need to point you in the right direction.
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000
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Re: Anyone here mostly cash in portfolio?

Post by 000 »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
I'm not in a similar situation, but that's never stopped me from commenting before.

The fact that you sold equities in/since March likely indicates your stock allocation was too high then.

The fact that you are now feeling FOMO (fear of missing out) likely indicates your stock allocation is too low now.

Have you thought about splitting the difference and setting the stock allocation to the average of your allocation before March and your allocation today?
frugalor
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Re: Anyone here mostly cash in portfolio?

Post by frugalor »

This topic is near and dear to my heart. I started buying stocks around 1997. I was quickly shaken out. Then I was shaken out by dot bomb at 2000. Then I was shaken out by financial meltdown at 2008. Then I was shaken out at 2016 thinking it was a repeat of 2008 only to see the market going to new high after I cashed out at the bottom.

I am still doing my $3000 tax deduction every year :(

I used my cash from 2016 to pay off my mortgage. And then slowly get into the market again. I put in small amounts using automatic investment to dollar cost average. That turned out to be a worse approach to lump sum.

But I wasn't shaken out in March. However, I didn't jump in to buy more either, which I should have considering I had a lot of cash on the side. I was just doing my regular small amount automatic investment.

Then around 10/13/2020, I was seriously about building a big portfolio to "try out" FIRE. I move about 400K cash into the market in big chunks. Then there was a small meltdown. Some people were concerned about a 60% drop and some were saying moving to cash. But this time I was determined to be unshaken. In the end, I didn't get in at the lowest of the market. But I am on top as of now.

The way I see it, if you are content with 7% annual return in the next 20+ years, and you don't need to cash for the next 20+ years. I think anytime is a good time to put the cash into total market fund.

But I know it's easier said than done. I still have $30K cash I can deploy today but am looking for better bargains.
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Rowan Oak
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Re: Anyone here mostly cash in portfolio?

Post by Rowan Oak »

kareysue wrote: Tue Nov 17, 2020 4:40 am Since the March lows I've made a mistake of selling almost all of my equities. With everything up now, I realized I made a big mistake. Anyone in a similar situation and what did you end up doing?
Based on your past behavior it could be you have a low risk tolerance.
Have you ever considered the Vanguard LifeStrategy Conservative Growth Fund (VSCGX)
It's 40% stocks 60% bonds and rebalances automatically.
It may be a good choice given your low risk tolerance.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger
PowderDay9
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Re: Anyone here mostly cash in portfolio?

Post by PowderDay9 »

I truly believe that some people would benefit from a financial advisor if they helped the client from selling low when large drops happen. Obviously AUM advisors can have high fees but that may be better than selling at the bottom every time the market crashes 30%.

Investing is more about controlling your emotions and behavior than anything else.
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Leif
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Re: Anyone here mostly cash in portfolio?

Post by Leif »

jtdavid wrote: Tue Nov 17, 2020 3:40 pm
1210sda wrote: Tue Nov 17, 2020 10:38 am
KlangFool wrote: Tue Nov 17, 2020 9:49 am OP,

You should choose a target retirement fund and/or a Vanguard Life Strategy fund.

KlangFool
I second this !!!
+1000. Look at Target Retirement Income fund or Life strategy Conservative Growth.
This was not my first thought. But I think this is a great idea for the OP. Research has shown that people in target date funds are more likely to stay the course when the market drops.
hayman
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Re: Anyone here mostly cash in portfolio?

Post by hayman »

I was mostly cash/bonds until March. I got lucky to buy in lower than when I went out, but after watching the market go up for months while I was out, it was a big relief to have a chance to get to a reasonable allocation.

I would suggest that you set an upper and lower bound on your stock %. Don't go out of those bounds. Rebalance as needed. Increase to the upper bound if the market drops, then sell out at higher prices as it rebounds (keeping taxes, etc. in mind).

Right now I would be at the lower bound because of valuations and the economy (e.g. the Buffett Indicator), but I suspect the market will continue up because of the Fed.

You can have your lower and upper bounds match if you'd like.

When the market drops, you might have a different attitude toward it now. If it were to drop tomorrow, wouldn't you be relieved and want to buy?
oken
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Re: Anyone here mostly cash in portfolio?

Post by oken »

I'm a new-ish investor. Started about a year and a bit ago.
Went all in about Dec 2019. Took some out in Feb 2020.
Bought into the dip in March 2020. Sold it all in Apr 2020 expecting another crash.

Stayed mostly out since then. Rode a bit of the gold rally in August. Then all out again.
Then all in at end Oct, just in time to my portfolio dip 1 week later in end Oct.
Held on tight and lasted through the early Nov rallies.

I guess its early days still, but I feel more secure right now.
Don't think I'll be selling anymore, and will just keep on DCAing into my AA.

My takeaways from the roller-coaster ride of 2020:
1) You can't be right all the time.
2) it's terribly stressful trying to be right all the time.
3) If I recognise that enough is enough, and stop chasing Alpha, I feel a lot less stressed.
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gr7070
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Re: Anyone here mostly cash in portfolio?

Post by gr7070 »

oken wrote: Wed Nov 18, 2020 12:09 am
1) You can't be right all the time.
Unless one chooses to buy and hold at all times.
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dogagility
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Re: Anyone here mostly cash in portfolio?

Post by dogagility »

gr7070 wrote: Wed Nov 18, 2020 10:26 am
oken wrote: Wed Nov 18, 2020 12:09 am
1) You can't be right all the time.
Unless one chooses to buy and hold at all times.
:sharebeer
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firebirdparts
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Re: Anyone here mostly cash in portfolio?

Post by firebirdparts »

I know the OP's feeling. Market flying high and you're in cash. I haven't always been right.

As to what I did or "would do" I had to decide what I wanted my portfolio to be (absent market timing) and then I had to decide how quickly I was willing to take it there, and then I had to do it. It was one of the hardest things I've ever done with money. You can't just "wait for a dip". I would certainly suggest you don't do that. It may come, but if it doesn't, you'll be in an even worse place.

I was lucky in that I always felt very secure in my job. I never really was worried about that.
A fool and your money are soon partners
Carol88888
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Re: Anyone here mostly cash in portfolio?

Post by Carol88888 »

Back in the early 90s I had invested in the S&P 500. After a short, sharp run off I was absolutely sure it couldn't go higher so I sold. I think, but don't quote me, I sold somewhere in the high 80s.

It took me a long time to find Bogleheads and set up an indexed (mainly) portfolio. Now, what I tell myself is that these indexed investments are buy and hold forever investments.

Playing the Boglehead contest wherein we guess where the S&P 500 will end the year has taught me that I haven't a clue.

I think you might be happy in a balanced fund that you never had to touch. VBIAX maybe.
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