Time to invest

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Time to invest

Post by learnfinance » Tue Feb 28, 2017 3:24 am


I know that no one can time the market and I didn't intend to either. Last year in September I moved money (>100K) from my old employer's 401k to IRA account. Considering the election volatility I thought to keep it as it is rather than investing during a very upcoming volatile time.

Then during election night when results were coming, I thought I made the right decision of parking my money. Next day and next week after election when dust was settling I thought better to keep money like that. From the time of election results till the new administration took charge market went up by 10-15%. Then I thought may be when new administration take charge from 21st January then there will be 5-10% correction but again mark went up 10-15%. So now when I look back from the election day till date market has gone up 20-30% and my IRA account has still the same amount of money :(

So I had fear of 10-20% downside after election so I have kept my IRA money like that without investing it and this strategy didn't work for me.

With that said is it good time to allocate that money?

I would appreciate your views regarding staying put or going in with all in or partially investing now and waiting for some correction (I should have used this strategy before :( ).


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Re: Time to invest

Post by boglephreak » Tue Feb 28, 2017 3:49 am

yes, statistically now is the time. but, given your concerns, maybe you should dollar cost average it $10,000 a month for the next 10 months. in a year, this will be the best advice you ever received, or the worst. no one knows.

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Re: Time to invest

Post by Sheepdog » Tue Feb 28, 2017 3:50 am

There are others like you. Here is one active conversation, one of many over the last 5 years who thought that the stock market was too high and the bond market is too bloated, viewtopic.php?f=1&t=212329&newpost=3259097. Your question is the same as that person's "Where to go when stocks/bonds overpriced" Read it as the answers will be for you too.
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Re: Time to invest

Post by AlohaJoe » Tue Feb 28, 2017 3:57 am

learnfinance wrote:I know that no one can time the market [...] With that said is it good time to allocate that money?
I don't really know what you're expecting here. You say that no one can time the market but you want someone who can time the market to tell you what to do. What makes you think the random anonymous people on some internet site know what they're talking about?

I mean...really? You'd invest >$100,000 just because AlohaJoe says to or says not to?

Joe isn't even my real name!! (And I've heard rumors that Sheepdog isn't a dog!)

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Re: Time to invest

Post by digarei » Tue Feb 28, 2017 4:07 am

This conundrum was a presentation topic at our last meeting: 'Awaiting the Bear'.

Here are some excerpts that examine the problem and a suggestion: *

Some investors don't want to be invested because they fear that

the economy is preparing to go over a cliff,

worried that prices will collapse or

revert to the mean and that it could be months or years before recovery .
In a Bogleheads forum topic entitled,

“What would you do if you were SURE of impending decline in the markets?”

(Jan 23, 2017) Bogleheads advisory board member, nisiprius responded,

“The devil of investing is not in being wrong, it's in staking too much.

It's not in misjudging the market, it's in misjudging one's ability to judge.”

Source: viewtopic.php?f=10&t=208945#p3205728
“The problem is that if you're out (of the market) longer than a few months,

there is nothing that can happen subsequently that will provide

you with any reassurance…”

“If the market keeps going up, you think the next crash will be even
more devastating, so you stay out.

“If the market is volatile or declines, you take that as a signal to sell...
and stay out.

“DO note that this is exactly the same outcome.”
Here's the suggestion:

Invest 20% right now. The worst that can happen if the market crashes tomorrow is that you'll (temporarily) lose half of this amount. In a few months, invest another 20%.

The timing and percentages matter less than taking some action now. If you'd like the entire presentation, send me a PM. I hope this helps a bit!

* Please note that the presentation pertains to the equity portion of your portfolio. The best advice is always to invest according to a specific asset allocation, as defined in your investment plan (aka 'Investment Policy Statement' (IPS))
Connect with Bogleheads in Northern California! Click the link under my user info/avatar.

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Re: Time to invest

Post by Toons » Tue Feb 28, 2017 7:07 am

Today :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Time to invest

Post by livesoft » Tue Feb 28, 2017 7:26 am

learnfinance wrote:With that said is it good time to allocate that money?
Your story confirms pretty well that you certainly don't know. But that makes you just like everybody else. No one can predict the future of stock and bond markets, but some invest anyways.
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Re: Time to invest

Post by Jack FFR1846 » Tue Feb 28, 2017 7:37 am

learnfinance wrote: I know that no one can time the market.....
With all due respect, no, you don't know this.

An example. We moved my wife's 401k from an old employer last Friday because in my periodic check of the plan, I found that the company had shifted the management cost from them to us to the tune of 0.5%. We immediately rolled this over to her Fidelity IRA which took all of 12 minutes online. This morning when I got up, I checked and indeed the money had settled. A bit over a quarter of a million dollars. I put in a buy order to buy in when the market opens.

That's what "not timing the market" looks like.
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Re: Time to invest

Post by GoldenFinch » Tue Feb 28, 2017 7:46 am

AlohaJoe wrote:
I mean...really? You'd invest >$100,000 just because AlohaJoe says to or says not to?

Joe isn't even my real name!! (And I've heard rumors that Sheepdog isn't a dog!)
Not true! Sheepdog is a dog. Look at his picture. He's just a really smart dog that can use a computer.

Regarding the OP, you are just like many of us. We zero in on something that makes us nervous and we think we know something when we don't. This is a behavioral finance issue and why having written personal investment rules are key to sticking to your investment plan. Otherwise decisions are made based on what comes down to emotional reaction to noise. I would six or 12 month dollar cost average the money back in, but only after you write down that is what you are going to do.

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Re: Time to invest

Post by BlackStrat » Tue Feb 28, 2017 8:09 am

You're not alone - plenty of people did the same thing. It's times like these where we finally realize that none of us can accurately 'time' the market.

All you need to do is review many other posts referencing the so-called experts who are published calling for a huge drop in the market. With a little research, you may discover that these experts have called for the same thing repeatedly throughout prior bull markets and that sooner or later they'll be correct in their forecast.

Since you're looking for someone to convince you of the future, you can hire an investment advisor who will appear full of confidence and perhaps settle your unease. However you can then be sure that he'll hit you with fees and diminish your future portfolio earning power (while most likely not matching the index market returns after his fees and capital gains are factored in).

Or... you could start realizing that we're in it for the long term (and I assume you're a little younger than many of us), and that with a simple 3-fund portfolio of low cost index funds you can come up with an asset allocation that calms your nerves but also is able to ride the peaks and valleys that we're sure to experience in the future.

I went through both the 2000 bubble and 2008 housing crisis and hardly looked at my portfolio - sometimes ignorance is bliss. It didn't matter that I lost 40% of my portfolio value because I was in it for the long term and in actuality didn't lose anything because I didn't sell!

Remember that what you're saving is going to be used over a 30+ year retirement timeframe and that you're not going to be withdrawing it all on day 1 of retirement - you'll still have an allocation and investment risk in order for your portfolio to survive and (hopefully) thrive.

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Re: Time to invest

Post by NibbanaBanana » Tue Feb 28, 2017 8:29 am

IIRC, it was Shelby Davis who when asked "When is the best time to invest?" made the incredibly brilliant reply, "Whenever you have the money. Because you don't know what the market's going to do."

My personal system provides 100% predictability of the market: When I buy, the market drops. When I sell, the market goes up.

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Re: Time to invest

Post by bighatnohorse » Tue Feb 28, 2017 9:03 am

I keep wondering; "What if the market goes up, with the Dow reaching 30,000 in five years."
We don't know. And sitting on the sidelines could be a real self-asskicking.

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Re: Time to invest

Post by ff4930 » Tue Feb 28, 2017 9:04 am

I think you need to increase your bond allocation to the level of your comfort i.e. The level that you won't lose any sleep.

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Re: Time to invest

Post by Artisan » Tue Feb 28, 2017 6:04 pm

You think you can still time the market even after you admit you made a mistake by trying to time the market.

Here is my advice.

Rather then asking others here to time the market for you, you should spend the same time and effort to educate yourself.

Read the getting started part of the forum and the forum wiki.

Read several books on investing such as the Bogleheads guide to investing.

If after doing the above you still have hesitation, you should consider that investing in the market will interfere with your ability to sleep well at night.

Consider investing in safer alternatives like CDs.
Last edited by Artisan on Tue Feb 28, 2017 6:07 pm, edited 1 time in total.

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Re: Time to invest

Post by knpstr » Tue Feb 28, 2017 6:06 pm

The absolute best time to invest is... when you have the money available.
Ignore the markets.

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Re: Time to invest

Post by Good Listener » Tue Feb 28, 2017 7:26 pm

OP, hidden benefit. At a young age you learned a few things when not that much was at stake....1. you know nothing that the pros don't. 2. Don't let your political feelings interfere with your investments.

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Re: Time to invest

Post by kolea » Tue Feb 28, 2017 7:54 pm

I can tell you that 15 years back I remember agonizing over whether I was buying into a market high with a chunk of money I came into and I did it anyway. The funny thing is I cannot even remember what it was when I bought; it has grown so much over the years it doesn't really matter.

It will be the same for you - in 10,15 years you won't even remember why you agonized over this. It will be a small blip in the rear view mirror.
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Re: Time to invest

Post by learnfinance » Wed Mar 01, 2017 3:15 pm

Thanks everyone for replying and providing your valuable views.

Thanks @kolea, @boglephreak, @GoldenFinch, @digarei, @BlackStrat and @Good Listener and others for replying and bringing up some very good points.

@digarei - I have PM you requesting that presentation which you have mentioned in your post.

I will start investing in piecemeal and spread it over a period of 1 to 1.5 years.


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Re: Time to invest

Post by munemaker » Wed Mar 01, 2017 3:18 pm

AlohaJoe wrote:
Joe isn't even my real name!! (And I've heard rumors that Sheepdog isn't a dog!)
..and MonEMaker is no longer a money maker

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