Sitting on cash....Waiting for a crash

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harvestbook
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Re: Sitting on cash....Waiting for a crash

Post by harvestbook »

I'm not smart enough to trust my feelings.
I engaged in market timing on my early purchases, always hoping or expecting some event would occur, and ended up just wasting time. Now I look at it as, "If the market drops fifty percent, my dividends will buy more shares and my new purchases will buy more shares." Now I DCA all the way, buy a little extra at a 5 percent drop, and a little more extra at a 10 percent drop. I barely even noticed February 2016--now I look at the chart and go "Hmm, I should've been afraid." Truth is, I don't care. I have faith in the long run. Also, the S & P is not 'the market.' Plenty of international markets are near historical P/E means or are undervalued.

Bogle says over long terms the market reverts to means. Of course, it all depends on what your horizon is. Bogle expects 5 percent nominal returns (in US stocks) over the next ten years, and that's plenty good enough for me. In fact, I project that out over 25 years as my expected returns. If it hits that, great. If surpasses 5 percent, I will have extra money. If it's below that, I suspect we'll all have much bigger problems than the stock market.

Bogle also says buyers and sellers equal out to zero, minus the cut Wall Street takes. I make money off the bottom sellers, speculators, and the people who "know what's going to happen next." I didn't invent the world, so I don't feel guilty about benefiting from the avoidable mistakes of others.
I'm not smart enough to know, and I can't afford to guess.
rgs92
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Re: Sitting on cash....Waiting for a crash

Post by rgs92 »

After scanning this thread, I see lot's of contrarian comments from people who are 100% in stocks or close to it. That is just as bad as the OP's strategy in my book.
kathyauburn
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Re: Sitting on cash....Waiting for a crash

Post by kathyauburn »

fundseeker wrote:You're expecting your crash to be three to five years away? If you'd had that mindset three to five years ago, you'd be hating yourself now. But, I am with you in that I expect a large dip (though in the near future, not years away). And, the only move I made was to have my TSP contributions only go into the G Fund until that time comes, so I am not buying stock in my TSP right now. If I was thinking the crash was years away, I would not have made any adjustments and would have stayed the course.
Why not at least hedge with the L income fund? The G alone makes no sense to me. In 2008 the Income fund lost only 5% and recovered that plus 2.5% the following year.
kathyauburn
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Re: Sitting on cash....Waiting for a crash

Post by kathyauburn »

David Scubadiver wrote:
ofcmetz wrote:So should those who are living off of their portfolio have 10 years of expenses allocated to cash?
That's what I have. To each his own. But the cash lets me feel like I can ride out a downturn of a decade. I can raise more if I needed to without touching the investment stash.

This business of 6 months to 1 year of cash savings is bunk, in my book.
herpfinance
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Re: Sitting on cash....Waiting for a crash

Post by herpfinance »

kathyauburn wrote:Why not at least hedge with the L income fund? The G alone makes no sense to me. In 2008 the Income fund lost only 5% and recovered that plus 2.5% the following year.
The G fund is particularly attractive as your principal is always guaranteed. In other words, there is no decline in principal due to rising interest rates.
"The intelligent investor is a realist who sells to optimists and buys from pessimists" - Benjamin Graham
kathyauburn
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Re: Sitting on cash....Waiting for a crash

Post by kathyauburn »

juliewongferra wrote:
if you're kept up late at night worrying about your investments, the money you save will be spent on antacids and sleep aids and treating your ulcer. Get your mix of money to a place, either long term or tactically, where you can sleep easy.

cheers!
jwf
Right on. Many investors, however, do not really know their comfort level until they've been through a crash or bear. It's easy to cite statistics that argue for being heavily invested in stocks.
Ivygirl
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Re: Sitting on cash....Waiting for a crash

Post by Ivygirl »

Granted if a person believed it was ever a good plan to sit on cash and wait for a crash, now would not be the right time to do it.

The best indicator to me that the market is not overvalued is the behavior of "quiet" people. There are plenty of big wheels rolling around making noise, but big wheels don't carry the load that matters right now. The people who are able to do something are on the move: people who make, mine, grow, fabricate, invent, build, and hire. Current valuations are the castles in the air; as Thoreau says, now we put the foundations under them.

Your security in investing now is the collective wisdom of many small and medium businesspeople who have left the sidelines and are determined to prosper. They've been living with tightened belts, getting leaner and fitter, while the weak or unwise players have been flushed out. And the animal spirits want to run.

If you want to market time, you should sit on cash when the true engines of wealth production become fat, careless from easy times, and bloated. Or when a speculative type of investment runs away with valuations, as dot coms did and real estate in their respective turns. That time isn't now. I believe we will have several years of uneven but increasing commercial success in America before we have to be concerned again.
wander
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Re: Sitting on cash....Waiting for a crash

Post by wander »

From the day this post was originally post until today, my portfolio gives 2% gain.
freyj6
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Re: Sitting on cash....Waiting for a crash

Post by freyj6 »

I've never understood people going 100% cash and waiting.

I'm not quite on board with the people who say "it's always a good time! Go 100% in today!" but I've never been so sure of where we are in the cycle that I'd pull everything out.

IMO, if you're the kind of person who would do some active management, what makes more sense is something like this:

If you're 100% stock, go down to 80% if valuations get above 30, go down to 60% if they go above 35 and go down to 40% stocks if they go above 40. And so on.

But sitting in cash makes little sense to me.
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HomerJ
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Re: Sitting on cash....Waiting for a crash

Post by HomerJ »

freyj6 wrote:I've never understood people going 100% cash and waiting.

I'm not quite on board with the people who say "it's always a good time! Go 100% in today!" but I've never been so sure of where we are in the cycle that I'd pull everything out.
Just go 50/50, and you're always right. That's what I do. :)
chuppi
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Re: Sitting on cash....Waiting for a crash

Post by chuppi »

I understand OP's dilema. If you decided to wait and then the market goes up, it just feels too stupid to go back in. What if there is a market crash right after.That is even worse.

More than 7/10ths of my asset is invested and I don't worry about it because I have long ways to go.
I did get a windfall mid 2016 and then another end of 2016. I asked this forum for advice. Most suggested that I go all in and some gradually. I invested a huge chunk (thanks to the advice I received on the forum) and the remaining I am investing every month. It will take more than a year for me to be fully invested. If the market goes down, I will invest at a higher percentage (I have a formula). Otherwise I will be fully invested eventually. In hindsight I should have invested everything then. But it is okay. I made a decision and I am sticking to it rain or shine.
clown
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Re: Sitting on cash....Waiting for a crash

Post by clown »

Of course, there is always another side. What if the crash doesn't come? What growth opportunities are foregone by waiting? Case in point. Last fall, before the election, there was some concern (not universal agreement) that the market was overvalued. If one sat on their cash from October until now, waiting for the crash, a large opportinity would have been missed.

Some investors might have "thought" they knew who would be elected and what would happen. But nobody knows the un-knowable for absolute certain.

Since you can't truly know in advance, the best choice (my opinion) is to move forward. If the crash comes, how big? If it is 10-20% and you have a longish horizon (given your age), you will make the money back and in the meantime buy shares periodically on the cheap.

Look to history. Immediately after 9-11, the market cratered. Now, some 16 years later, we are at all time highs. If you didn't need the money in the interim, the better choice is to hold on.
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Re: Sitting on cash....Waiting for a crash

Post by Vanguard Fan 1367 »

chuppi wrote:I understand OP's dilema. If you decided to wait and then the market goes up, it just feels too stupid to go back in. What if there is a market crash right after.That is even worse.

More than 7/10ths of my asset is invested and I don't worry about it because I have long ways to go.
I did get a windfall mid 2016 and then another end of 2016. I asked this forum for advice. Most suggested that I go all in and some gradually. I invested a huge chunk (thanks to the advice I received on the forum) and the remaining I am investing every month. It will take more than a year for me to be fully invested. If the market goes down, I will invest at a higher percentage (I have a formula). Otherwise I will be fully invested eventually. In hindsight I should have invested everything then. But it is okay. I made a decision and I am sticking to it rain or shine.
I am new to this forum but it seems like people who give great advice abound!! I am glad that you invested your "huge chunk". I would guess that you didn't invest in load mutual funds with high expense ratios due to the good advice of Bogleheads.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
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David Jay
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Re: Sitting on cash....Waiting for a crash

Post by David Jay »

I was re-reading Bernstein's "Deep Risk" on the plane Friday. Ran across a great quote:

...mistiming the market is probably the most frequent and severe form of permanent capital loss.

but hey, its a free country...
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
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EyeYield
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Re: Sitting on cash....Waiting for a crash

Post by EyeYield »

Another quote from "Deep Risk":

"Most importantly, shallow risk mandates deep liquidity. If you do not have a large amount highly liquid and safe reserves—for the average individual, Treasuries and CDs—you will not have the wherewithal to weather the employment setbacks that come with turbulent markets, to purchase stocks at low prices, and to keep your courage up when it’s needed most."
"The stock market is a giant distraction from the business of investing." - Jack Bogle
juliewongferra
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Re: Sitting on cash....Waiting for a crash

Post by juliewongferra »

HomerJ wrote:
freyj6 wrote:I've never understood people going 100% cash and waiting.

I'm not quite on board with the people who say "it's always a good time! Go 100% in today!" but I've never been so sure of where we are in the cycle that I'd pull everything out.
Just go 50/50, and you're always right. That's what I do. :)
HomerJ,

That's the glass half full perspective...the glass half-empty is that you're also always wrong!!! LOLOLOLOL :P

cheers,
jwf
If you aren't familiar with Mr. Bogle and his investment philosophy, then you don't know Jack!
unmesh
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Re: Sitting on cash....Waiting for a crash

Post by unmesh »

EyeYield wrote:Another quote from "Deep Risk":

"Most importantly, shallow risk mandates deep liquidity. If you do not have a large amount highly liquid and safe reserves—for the average individual, Treasuries and CDs—you will not have the wherewithal to weather the employment setbacks that come with turbulent markets, to purchase stocks at low prices, and to keep your courage up when it’s needed most."
Does he say how much liquidity? I'm fortunate to be able to keep 5 year's worth of burn rate in cash equivalents and still have a fair bit to invest in equities.
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SmileyFace
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Re: Sitting on cash....Waiting for a crash

Post by SmileyFace »

Folks came last year and asked this same question...and they did it the year before as well. Some of those people that sat out of the market are now regretting it I'm sure. Others probably eventually jumped in and lost out on a couple of years of gains. Others come here and pound their chest about the fact that they successfully sold and then bought on a dip - these people never seem to return and brag about the same move a second time (likely because when they tried it a second time they lost - or sold and are still waiting for some dip that might come or might not come - and might or might not give them the gains that they definitely missed by staying out of the market).

Time in the market is a better way to make money than market timing as many have learned the hard way....
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oldzey
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Re: Sitting on cash....Waiting for a crash

Post by oldzey »

Sitting on cash....Waiting for a crash....

Need some music to set to these lyrics....

Something like:

https://www.youtube.com/watch?v=5cvEVivHVsU
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
helloeveryone
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Re: Sitting on cash....Waiting for a crash

Post by helloeveryone »

Is it appropriate to rebalance your portfolio to a more conservative mix during these periods where the market is high? (i.e. - is this the equivalence of trying to time the market?)
What I am getting at is that I felt like at my age (late 30's) I felt comfortable with a 80% stock 20% bond portfolio. However I feel more comfortable re-balancing to a 60:40 or 70:30 allocation right now as I worry about the large fluctuations that will happen with an 80:20 AA. This is despite having read through this forum and many other resources that I just need to let it ride, re-adjust as I get closer to retirement age etc.... And should the market "crash" or "correct itself" then at that point I will feel more comfortable re-balancing to a 80:20 AA. Having read many of the commenters responses I think I know exactly the answer to this and should just leave things be but thank you for your comments regardless.
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Doom&Gloom
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Re: Sitting on cash....Waiting for a crash

Post by Doom&Gloom »

oldzey wrote:Sitting on cash....Waiting for a crash....

Need some music to set to these lyrics....

Something like:

https://www.youtube.com/watch?v=5cvEVivHVsU
I've been thinking this since I first saw the title of the thread. But I had envisioned Guy Clark (RIP):

https://www.youtube.com/watch?v=fSxs89qT-r0
furikake
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Re: Sitting on cash....Waiting for a crash

Post by furikake »

I'm sitting on cash, that's because this is going to be my emergency fund for when the market is down. Usually we put money into the market, but since we have accumulated enough I think, so now when we have extra, I keep it as cash to build our emergency fund. And next saving goal is for building a shed and buying a new car which I don't want to use our portfolio money for. Dh doesn't agree, he wants to put everything in the market and then withdraw 2 years of funds from the market for emergency and pay taxes when we decide to retire. Don't know who's right, but I'm keeping extra as cash right now.
gaspr
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Re: Sitting on cash....Waiting for a crash

Post by gaspr »

This blog post by Ben Carlson might be helpful. It is the story of a fictitious character named "Bob, The World's Worst Market Timer"

[urlhttp://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/][/url]

And then there is this post about Buying only at market bottoms...

[urlhttp://awealthofcommonsense.com/2014/07/bought-near-market-bottoms/][/url]
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EyeYield
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Re: Sitting on cash....Waiting for a crash

Post by EyeYield »

unmesh wrote:
EyeYield wrote:Another quote from "Deep Risk":

"Most importantly, shallow risk mandates deep liquidity. If you do not have a large amount highly liquid and safe reserves—for the average individual, Treasuries and CDs—you will not have the wherewithal to weather the employment setbacks that come with turbulent markets, to purchase stocks at low prices, and to keep your courage up when it’s needed most."
Does he say how much liquidity? I'm fortunate to be able to keep 5 year's worth of burn rate in cash equivalents and still have a fair bit to invest in equities.
Well, the answer is Deep, not being sarcastic. Dr. Bernstein offers up some various formulas and I found it to be an interesting read. He has offered his Deep Risk pamphlet on this site for free and may do it again, but the Kindle version is only $4.95.
In my opinion, five years of expenses is an adequate amount to deal with "Shallow Risk", depending on your situation, of course.
"The stock market is a giant distraction from the business of investing." - Jack Bogle
S17C
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Re: Sitting on cash....Waiting for a crash

Post by S17C »

As of 12:35pm EDT the S&P 500 has dropped about 17-18 since market open, at its lowest point since February 2017. Discount prices on S&P500!
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Doom&Gloom
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Re: Sitting on cash....Waiting for a crash

Post by Doom&Gloom »

Ask and it shall be delivered.

Is it now time? Should one wait even longer? Will a bell ring?
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Re: Sitting on cash....Waiting for a crash

Post by Vanguard Fan 1367 »

Doom&Gloom wrote:Ask and it shall be delivered.

Is it now time? Should one wait even longer? Will a bell ring?
The great Bogle thinks that you can and probably will damage your returns with market timing. Who are we to argue with him.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
GoldenFinch
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Re: Sitting on cash....Waiting for a crash

Post by GoldenFinch »

Doom&Gloom wrote:Ask and it shall be delivered.

Is it now time? Should one wait even longer? Will a bell ring?
Bells are on timers. We will have none of that here. Tsk, tsk!
ray333
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Re: Sitting on cash....Waiting for a crash

Post by ray333 »

Buy buy buy?
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blueblock
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Re: Sitting on cash....Waiting for a crash

Post by blueblock »

Doom&Gloom wrote:Will a bell ring?
I'm waiting for more (cow)bell.

https://www.nbc.com/saturday-night-live ... 1046?snl=1
Houe
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Re: Sitting on cash....Waiting for a crash

Post by Houe »

It seems like there is a lot of fear lately. Dow down 100 today.
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SmileyFace
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Re: Sitting on cash....Waiting for a crash

Post by SmileyFace »

Houe wrote: Thu Oct 19, 2017 8:15 am It seems like there is a lot of fear lately. Dow down 100 today.
You must mean the Dow Futures are down- the market doesn't open for another 5 minutes.
Houe
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Re: Sitting on cash....Waiting for a crash

Post by Houe »

DaftInvestor wrote: Thu Oct 19, 2017 8:26 am
Houe wrote: Thu Oct 19, 2017 8:15 am It seems like there is a lot of fear lately. Dow down 100 today.
You must mean the Dow Futures are down- the market doesn't open for another 5 minutes.
Yes, you are correct.
deltaneutral83
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Re: Sitting on cash....Waiting for a crash

Post by deltaneutral83 »

Houe wrote: Thu Oct 19, 2017 8:15 am It seems like there is a lot of fear lately. Dow down 100 today.
The vix is pretty much at a 25 year low or very near it. What indicator are you using to gauge fear?
Houe
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Re: Sitting on cash....Waiting for a crash

Post by Houe »

Its anecdotal. I said it "seems". People at work (two) have mentioned to me that they are selling before the market crashes.
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CyclingDuo
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Re: Sitting on cash....Waiting for a crash

Post by CyclingDuo »

Houe wrote: Thu Oct 19, 2017 8:15 am It seems like there is a lot of fear lately. Dow down 100 today.
Hopefully you noticed the Dow was up quite a bit yesterday. :twisted:
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SmileyFace
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Re: Sitting on cash....Waiting for a crash

Post by SmileyFace »

CyclingDuo wrote: Thu Oct 19, 2017 8:58 am
Houe wrote: Thu Oct 19, 2017 8:15 am It seems like there is a lot of fear lately. Dow down 100 today.
Hopefully you noticed the Dow was up quite a bit yesterday. :twisted:
And the Dow is up by thousands from when the OP started this thread back in March.
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Re: Sitting on cash....Waiting for a crash

Post by BogleBoogie »

llessac15 wrote: Wed Mar 08, 2017 10:24 pm Is there any Bogleheads out there that has decided to hold onto cash right now since valuations are so high and interest rates are so low? I know that the 'Bogle' answer is to stay the course and just keep eating my allocation plan for breakfast. But it just feels so foolish right now to put money into such an inflated market or to expects bonds to produce anything to write home about.

I'm in my late 30's and have at least 15-20 years until I retire. I'm considering putting any new investment money into my savings account for the next 3-5 years until I see some kind of dip in the market. I know it's market timing, but I'm tired of buying expensive stocks via my index funds. Anyone else drinking that my same kool-aid?
While I haven't changed my course, I will admit I've been worried about the prospect of some type of crash/correction for years. I've done nothing about these concerns and am happy about that since the market has continued to go up. The scary thing is, you might actually time something right and buy on a dip. After that you'll think you have the ability to time the buying/selling and it won't bode well long term. Go to the Wiki, read the basics. Detach emotion and remember you have a long time in the market still. Decide on whether you want to lump sum or DCA. You should do well over the long term.

The only time proven "foolish" move is to attempt to time the market. Set it and [sorta] forget it!
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Re: Sitting on cash....Waiting for a crash

Post by minesweep »

Houe wrote: Thu Oct 19, 2017 8:38 am Its anecdotal. I said it "seems". People at work (two) have mentioned to me that they are selling before the market crashes.
If you are nervous (about the stock market’s valuation) then perhaps you should reconsider your desired 80/20 stock/ bond allocation that you mentioned in an earlier posting on November of 2016. Given that you are 41 years old you might want to consider reducing your stock exposure (perhaps 60/40). That may help temper your concerns somewhat about the stock market’s current valuation. Going to 100% cash as your other coworkers may have done is stock market timing.
Time is your friend; impulse is your enemy - John Bogle | Learn every day, but especially from the experiences of others, it's cheaper! - John Bogle
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Re: Sitting on cash....Waiting for a crash

Post by goodenyou »

Investors that are kept up at night with the prospect of losing money on paper and are compelled to increase liquidity are also kept up at night with the prospect of not meeting their investment goals. Market timing does work. It is successful when you get out (reduce your position) after you have reached your investment goals.
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Re: Sitting on cash....Waiting for a crash

Post by roymeo »

People are waiting for the real estate market in San Francisco to normalize---since the early 70's.
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F150HD
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Re: Sitting on cash....Waiting for a crash

Post by F150HD »

DaftInvestor wrote: Thu Oct 19, 2017 9:06 am And the Dow is up by thousands from when the OP started this thread back in March.
:oops:
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Re: Sitting on cash....Waiting for a crash

Post by kathyauburn »

harvestbook wrote: Sun Mar 19, 2017 12:32 pm I'm not smart enough to trust my feelings.
I engaged in market timing on my early purchases, always hoping or expecting some event would occur, and ended up just wasting time. Now I look at it as, "If the market drops fifty percent, my dividends will buy more shares and my new purchases will buy more shares." Now I DCA all the way, buy a little extra at a 5 percent drop, and a little more extra at a 10 percent drop. I barely even noticed February 2016--now I look at the chart and go "Hmm, I should've been afraid." Truth is, I don't care. I have faith in the long run. Also, the S & P is not 'the market.' Plenty of international markets are near historical P/E means or are undervalued.

Bogle says over long terms the market reverts to means. Of course, it all depends on what your horizon is. Bogle expects 5 percent nominal returns (in US stocks) over the next ten years, and that's plenty good enough for me. In fact, I project that out over 25 years as my expected returns. If it hits that, great. If surpasses 5 percent, I will have extra money. If it's below that, I suspect we'll all have much bigger problems than the stock market.

Bogle also says buyers and sellers equal out to zero, minus the cut Wall Street takes. I make money off the bottom sellers, speculators, and the people who "know what's going to happen next." I didn't invent the world, so I don't feel guilty about benefiting from the avoidable mistakes of others.
I think the answer to this is all about creating an asset allocation that allows you to sleep at night, and the allocation that will allow you to sleep at night relates to your risk tolerance. See this thread:

viewtopic.php?f=10&t=229259

Find your risk tolerance, and stay the course. Personally, I'm hoping for a market downturn, but if there isn't one, I'll earn money, too.
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oldzey
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Re: Sitting on cash....Waiting for a crash

Post by oldzey »

oldzey wrote: Mon Mar 20, 2017 2:12 pm Sitting on cash....Waiting for a crash....

Need some music to set to these lyrics....

Something like:

https://www.youtube.com/watch?v=5cvEVivHVsU
This music would work too (appropriately titled, too): https://www.youtube.com/watch?v=FFDYuO53BUk
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
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Re: Sitting on cash....Waiting for a crash

Post by ruralavalon »

llessac15 wrote: Wed Mar 08, 2017 10:24 pm Is there any Bogleheads out there that has decided to hold onto cash right now since valuations are so high and interest rates are so low? I know that the 'Bogle' answer is to stay the course and just keep eating my allocation plan for breakfast. But it just feels so foolish right now to put money into such an inflated market or to expects bonds to produce anything to write home about.

I'm in my late 30's and have at least 15-20 years until I retire. I'm considering putting any new investment money into my savings account for the next 3-5 years until I see some kind of dip in the market. I know it's market timing, but I'm tired of buying expensive stocks via my index funds. Anyone else drinking that my same kool-aid?
Vanguard Total Stock Market Index Fund Admiral Shares(VTSAX) total return is up 5.32% since the initial post.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
Grt2bOutdoors
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Re: Sitting on cash....Waiting for a crash

Post by Grt2bOutdoors »

Houe wrote: Thu Oct 19, 2017 8:15 am It seems like there is a lot of fear lately. Dow down 100 today.
Sure, lots of fear....the market is down 17.03 points. Let me rephrase that for you, the market is down 0.0007% as in 7/1000th of 1 percent. OH MY!!!! The sky is falling! :confused That's not fear, that is complacency.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
ddurrett896
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Re: Sitting on cash....Waiting for a crash

Post by ddurrett896 »

llessac15 wrote: Wed Mar 08, 2017 10:24 pm I'm in my late 30's and have at least 15-20 years until I retire. I'm considering putting any new investment money into my savings account for the next 3-5 years until I see some kind of dip in the market. I know it's market timing, but I'm tired of buying expensive stocks via my index funds. Anyone else drinking that my same kool-aid?
No. Hypothetical and not getting into politics but...

Look at what happened since January. What if that continued for 7 years, then his daughter was elected for 8 years then son elected for 8 years? Effectively the same policies for the next 23 years? Sure it's all a what if, but that's what your doing now sitting on cash.
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tnbison
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Re: Sitting on cash....Waiting for a crash

Post by tnbison »

Reading this thread makes me wonder if my cash position is too heavy. DW and I max out all available tax-advantage space but still have about 10% of liquid assets sitting in a couple CDs and regular ol' checking(12 months expenses). By year end I estimate this to be closer to 18 months expenses. Obviously funding a taxable account is the next step but I guess I need to get better versed in tax consequences of doing so. Part of me wants to have it in cash to then invest into a taxable account during the next "crash"(ya I know, market timing) the other side of me says to bring cash position down to six months and get the rest in the market.
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ERMD
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Re: Sitting on cash....Waiting for a crash

Post by ERMD »

TomCat96 wrote: Wed Mar 08, 2017 10:52 pm
The literature on why simply remaining in the market staying the course is the best strategy is rather extensive. It has been shown on more than one occasion that if one had missed the top 45 days of gains since the 1960, one's market performance over the entire 50+ year period would actually be negative. The market's growth is spikey. Most of the time, it doesn't do much of anything. It drifts somewhat aimlessly. But when the market does grow however, the gains are decisive in a short periods. The graphs hide that fact pretty well. But if you look closely enough, it's there.
As David Rosenberg would say, don't worry about timing the market, worry about time in the market.
between scotch and nothing, i'll take scotch. -- faulkner
b.lock
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Re: Sitting on cash....Waiting for a crash

Post by b.lock »

Houe wrote: Thu Oct 19, 2017 8:15 am It seems like there is a lot of fear lately. Dow down 100 today.
Thank you for bringing this post back up. It's fun (and educational) to look back on what people were thinking 7 months ago.
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