A crisis is a terrible thing to waste

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spat
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A crisis is a terrible thing to waste

Post by spat » Thu Sep 22, 2011 1:58 pm

I'm curious as to what others are doing / have done to take advantage of the current economic "crisis" - adjusting asset allocation toward equities, refinance house, buying short sale properties.....

Lets see some of the more creative ideas.

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Taylor Larimore
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Re: A crisis is a terrible thing to waste

Post by Taylor Larimore » Thu Sep 22, 2011 2:05 pm

Hi spat:

Creative idea: "Don't just stand there. Do something."

Mr. Bogle's wisdom: "Don't do something. Just stand there."
"Simplicity is the master key to financial success." -- Jack Bogle

spat
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Post by spat » Thu Sep 22, 2011 2:15 pm

Taylor -

For the most part, I couldn't agree more!

However, I do think today's rates seem like a fantastic opportunity to "do something" including refinance any and all outstanding debts to lower rates if possible to accelerate repayment and minimize interest.

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Taylor Larimore
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Things to consider now.

Post by Taylor Larimore » Thu Sep 22, 2011 2:26 pm

Hi spat:
I do think today's rates seem like a fantastic opportunity to "do something" including refinance any and all outstanding debts to lower rates if possible to accelerate repayment and minimize interest.
Good point.

Tax-savvy investors may also find this is a good time to tax-loss harvest; exchange to a more desirable fund if locked in by taxes in a taxable account; and convert a Traditional IRA to a Roth IRA;
"Simplicity is the master key to financial success." -- Jack Bogle

exigent
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Post by exigent » Thu Sep 22, 2011 2:37 pm

I harvested losses back in August, and just a few minutes ago, I switched back to my original (slightly more desirable) positions since the market is back below where it was when I TLH'd.

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touchdowntodd
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Post by touchdowntodd » Thu Sep 22, 2011 3:09 pm

all im doing is sitting back and continuing with my DCA investments ..
tryin to do this right... thanks guys

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gatorking
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Post by gatorking » Thu Sep 22, 2011 3:12 pm

Maybe now is a good time to convert IRAs to Roth IRAs.

Alf 101
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Post by Alf 101 » Thu Sep 22, 2011 3:18 pm

I hit another one of my bands and rebalanced. I actually did this last night, so it was interesting seeing the bottom falling away as this gets processed. Other than that, no real plans. Hopefully I'll rebalance back from stocks into bonds at some point down the road, but otherwise will stay the course.

SamB
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Re: Things to consider now.

Post by SamB » Thu Sep 22, 2011 3:20 pm

Taylor Larimore wrote: Tax-savvy investors may also find this is a good time to tax-loss harvest; exchange to a more desirable fund if locked in by taxes in a taxable account; and convert a Traditional IRA to a Roth IRA;
This hardly amounts to "just standing there." Passive investing as it is espoused on this forum does not mean that you are in a vegetative state. There are any number of other personal financial decisions you might want to make - train for a new career, save more, put off retirement, reduce debt - that might make sense. However, market timing is not one of them.

Sam

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dratkinson
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Post by dratkinson » Thu Sep 22, 2011 3:41 pm

Thinking now might be a good time (for me) to take advantage of the stock sale and switch from 50/50 to 60/40.

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Taylor Larimore
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Changing our stock/bond allocation ?

Post by Taylor Larimore » Thu Sep 22, 2011 4:20 pm

dratkinson wrote:Thinking now might be a good time (for me) to take advantage of the stock sale and switch from 50/50 to 60/40.
Unless your personal situation has changed, it sounds to me that you may be trying to time the market which seldom works.

The Boglehead way is to decide on a long-term asset allocation plan--then stay the course.
"Simplicity is the master key to financial success." -- Jack Bogle

Manbaerpig
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Post by Manbaerpig » Thu Sep 22, 2011 4:22 pm

refi'd primary mortgage
bought some ibonds
TLH
bought some equities (falling knife style)
401k contributions are going in more conservatively (50:50 equities/bonds)
switched portfolio to more conservative from 65/35 to 60/35/5 (final 5 being cash)

and currently:

*puckering up
completely out of idle funds, just DCA'ing now w/401k contribs

MWCA
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Post by MWCA » Thu Sep 22, 2011 4:42 pm

I have kept myself amused by watching how the bond funds are doing. Other than that..nothing going to have a nice glass of Malbec shortly :)
We are all worms. But I believe that I am a glow-worm.

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wshang
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Post by wshang » Thu Sep 22, 2011 5:16 pm

I sold naked puts on brk.b 65 strike and got $2.50 for the October settlement. This is an amazing 47% annualized risk premium for a "hedge fund" which throughout the trading day remained above $65.

xerty24
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Post by xerty24 » Thu Sep 22, 2011 5:53 pm

wshang wrote:I sold naked puts on brk.b 65 strike and got $2.50 for the October settlement. This is an amazing 47% annualized risk premium for a "hedge fund" which throughout the trading day remained above $65.
I don't think you can think of this as a "risk premium", at least in the traditional sense, when you may be called to pay out many times your initial premium if the stock falls.

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wshang
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Post by wshang » Thu Sep 22, 2011 6:05 pm

xerty24 wrote:
wshang wrote:I sold naked puts on brk.b
I don't think you can think of this as a "risk premium", at least in the traditional sense, when you may be called to pay out many times your initial premium if the stock falls.
You may be right. I may be forced to buy Berkshire Hathaway at $62.50/share . . . . presuming it falls yet another $2.80 or 4.3% from the closing price today. Of course, then I don't know why anyone pays list price. Do you?

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woof755
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Post by woof755 » Thu Sep 22, 2011 7:56 pm

gatorking wrote:Maybe now is a good time to convert IRAs to Roth IRAs.
Or even recharacterize Roths previously converted, and convert again!
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise." | | --Jason Zweig, quoted in The Bogleheads' Guide to Investing

xerty24
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Post by xerty24 » Thu Sep 22, 2011 9:06 pm

If many people are excessively panicing, surely there's an opportunity for those with clearer heads to do more than just sit there. The tricky part is knowing when the panic goes from justified to excessive.

S&L1940
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Post by S&L1940 » Thu Sep 22, 2011 9:23 pm

retired.
my slow move to a larger bond percentage has sped up and I have achieved my goal of 60 Bond & 40 Equity. now, rather than selling equity and locking in losses, when the market turns I will make adjustments in a more orderly fashion. taking advantage of the Bogle advice to keep a well stocked bucket for living expenses. only planning to get some more I Bonds.
Don't it always seem to go * That you don't know what you've got * Till it's gone

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dratkinson
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Re: Changing our stock/bond allocation ?

Post by dratkinson » Fri Sep 23, 2011 5:19 am

Taylor Larimore wrote:
dratkinson wrote:Thinking now might be a good time (for me) to take advantage of the stock sale and switch from 50/50 to 60/40.
Unless your personal situation has changed, it sounds to me that you may be trying to time the market which seldom works.

The Boglehead way is to decide on a long-term asset allocation plan--then stay the course.
I have thought about it... just don't know how it will work out. I'll let you know in 10 years. :)

I should have said "... temporarily switch from 50/50 to 60/40", just as a limit to my taking advantage of the stock sale.

In my IPS, I've already decided that I would be a little flexible around the 50/50 baseline when a buying opportunity presents itself. I was thinking +-10% (absolute) would not add that much risk---bonds between 40-60%. No worse than owing Wellington or Wellesley, maybe.

I'm too young an investor to have actually lived through the market conditions that would cause such swings, so don't know how I'll react. But with my BH exposure, a down market now seems to me to be more of an opportunity than a curse. I guess we'll see.

If +-10% turns out to be too much for my nerves, I'll refine my IPS to limit my buying swings to +-5% (absolute).

Thanks for your concern and reminder of the safest path to Dublin.

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MekongTrader
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Post by MekongTrader » Fri Sep 23, 2011 5:31 am

Earlier in the year I asked for advise in this forum. It was about my bonus which came in and had to be invested. According to my AA (50/50) it should have gone into TBM but I held onto it.

I asked here 'with everybody predicting that stock markets will go up and interest rates go up (and bond funds taking a hit), shouldn't I just put the money into equities?' Bogleheads obviously told me to follow my AA plan.

Everybody in the media, on TV, etc was so bullish on stocks. And bonds were only days away from getting slaughtered...

Anyway, I held onto the money and bought stocks over the last couple of days.

It only proves to me that every forecast is for the toilet, most forecasters are wrong even gurus like Bill Gross and that nobody knows anything.

So, now I'm 100% invested. Let's hope for the best.

MT

bearcub
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Post by bearcub » Fri Sep 23, 2011 6:20 am

I have a special gift for market insights. Not. The less I tinker with my portfolio the better I do. Took me a long time to figure this out. Yes I do rebalance.

FillorKill
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Post by FillorKill » Fri Sep 23, 2011 6:21 am

I am buying across my AA. Mostly VSS this week. Bought on 20/21/22 so far. Going to buy Monday as well. Today? We shall see.

Wagnerjb
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Re: A crisis is a terrible thing to waste

Post by Wagnerjb » Fri Sep 23, 2011 7:44 am

spat wrote:I'm curious as to what others are doing / have done to take advantage of the current economic "crisis" - adjusting asset allocation toward equities, refinance house, buying short sale properties.....

Lets see some of the more creative ideas.
Just refinanced the house last month. Did some tax loss harvesting recently, and will do more as the opportunities present themselves. And I will rebalance when the need arises. Nothing more creative than that :D

Best wishes.
Andy

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