When will you backup the truck on stocks

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jebmke
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Re: When will you backup the truck on stocks

Post by jebmke » Thu Oct 11, 2018 10:49 am

Just eyeballing things, I think my re-balance point, assuming bonds hold together, would be a 30% drop in equity.
When you discover that you are riding a dead horse, the best strategy is to dismount.

Irisheyes
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Re: When will you backup the truck on stocks

Post by Irisheyes » Thu Oct 11, 2018 10:53 am

I don't own a truck but I do have a small hatchback.

I already took one small load home in it and will continue to tote small loads away as the market falls.

The "all in, now is the time to buy" approach is not in my nature...nibbling away as things fall is more my approach.

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HomerJ
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Re: When will you backup the truck on stocks

Post by HomerJ » Thu Oct 11, 2018 11:01 am

WanderingDoc wrote:
Thu Oct 11, 2018 10:30 am
HomerJ wrote:
Thu Oct 11, 2018 8:53 am
WanderingDoc wrote:
Wed Oct 10, 2018 10:05 pm
Elysium wrote:
Wed Oct 10, 2018 6:28 pm
Today is what I call a real sell off day, but not something that would make me break open the cash reserves and plung in. I have some reserves that I have earmarked for purchasing 5% more equities in case of a serious sell off. This isn't a regular re-balancing to your IPS or sleeping point plan. This is a plan to buy more than what you have allocated by backing up the truck because hamburgers went on sale. Your know the whole greedy when others are fearful thing.

To me it is 20% drop from current levels, and that inlcudes today's sell off. I would be very tempted at 10% drop to wade in.

What is your back up the truck point?

Please no what is your IPS tell you sort of thing, we already know that.
I'll start worrying mildly when there is a 80% stock market decline. I don't hold more than 20% of my portfolio in paper assets. That is asking for trouble. Buy real assets that produce income! :D
Oh yeah, because if the market drops 80%, unemployment in your area, vacancies, rent, and property values won't be affected at all. :oops:
Look up rents. They are non-volatile. They just move very slowly in a straight line slightly up over time. Secondly, markets are local.

Even property values are a lot less volatile than equities, but rental rates are incredibly stable and slow moving. In my predominant market, property values fell 5-8% and rents ROSE in 2006-2009. Don't assume what is true for paper is true for real estate.
Housing crash didn't affect rents too much in San Fran, because tech jobs were still available. Housing crash hurt the financial corporations harder than tech in 2008.

Tech crash in 2000 hurt San Francisco rents. Lots of tech people lost jobs. Median rents dropped 30%, and didn't really get back up above dot-com level rents until 2010.

An 80% stock market crash would probably affect you too. That's Great Depression II levels with 25% unemployment. Tech stocks are currently leading yesterday's decline.

The last thing you want, as a San Fran landlord, is to see tech giants lay off people.

All that said, you'd probably be fine, since you bought your houses a few years ago. If someone had just bought a house last week, at the highest prices, with a large mortgage, and this year we saw an 80% drop in stocks, and huge layoffs, they might find themselves cash-negative, with rents lower than their mortgage.

There is no risk-free investment.
The J stands for Jay

WanderingDoc
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Re: When will you backup the truck on stocks

Post by WanderingDoc » Thu Oct 11, 2018 1:12 pm

HomerJ wrote:
Thu Oct 11, 2018 11:01 am
WanderingDoc wrote:
Thu Oct 11, 2018 10:30 am
HomerJ wrote:
Thu Oct 11, 2018 8:53 am
WanderingDoc wrote:
Wed Oct 10, 2018 10:05 pm
Elysium wrote:
Wed Oct 10, 2018 6:28 pm
Today is what I call a real sell off day, but not something that would make me break open the cash reserves and plung in. I have some reserves that I have earmarked for purchasing 5% more equities in case of a serious sell off. This isn't a regular re-balancing to your IPS or sleeping point plan. This is a plan to buy more than what you have allocated by backing up the truck because hamburgers went on sale. Your know the whole greedy when others are fearful thing.

To me it is 20% drop from current levels, and that inlcudes today's sell off. I would be very tempted at 10% drop to wade in.

What is your back up the truck point?

Please no what is your IPS tell you sort of thing, we already know that.
I'll start worrying mildly when there is a 80% stock market decline. I don't hold more than 20% of my portfolio in paper assets. That is asking for trouble. Buy real assets that produce income! :D
Oh yeah, because if the market drops 80%, unemployment in your area, vacancies, rent, and property values won't be affected at all. :oops:
Look up rents. They are non-volatile. They just move very slowly in a straight line slightly up over time. Secondly, markets are local.

Even property values are a lot less volatile than equities, but rental rates are incredibly stable and slow moving. In my predominant market, property values fell 5-8% and rents ROSE in 2006-2009. Don't assume what is true for paper is true for real estate.
Housing crash didn't affect rents too much in San Fran, because tech jobs were still available. Housing crash hurt the financial corporations harder than tech in 2008.

Tech crash in 2000 hurt San Francisco rents. Lots of tech people lost jobs. Median rents dropped 30%, and didn't really get back up above dot-com level rents until 2010.

An 80% stock market crash would probably affect you too. That's Great Depression II levels with 25% unemployment. Tech stocks are currently leading yesterday's decline.

The last thing you want, as a San Fran landlord, is to see tech giants lay off people.

All that said, you'd probably be fine, since you bought your houses a few years ago. If someone had just bought a house last week, at the highest prices, with a large mortgage, and this year we saw an 80% drop in stocks, and huge layoffs, they might find themselves cash-negative, with rents lower than their mortgage.

There is no risk-free investment.
That is interesting that you assumed San Fran. May I ask why? Plenty of other markets that had similar trends during '06-'10 (0% or just 1-3% drop in rents). A few of my buddies are SF landlords but that wouldn't be my first choice as a RE investment - even though 10 and 20 year total returns have been some of the best in the U.S.

During a 50% stock market decline and 10% unemployment, I predict housing would be affected but it would be one of the most shielded assets simply due to Maslow's heirarchy of needs. If people can't pay a (basic necessity) bill, the gov't often does for them. SUVs, doggy day care, and lattes will go out the window, however, people will make damn sure they have a roof above their head.

Totally agree with your last line.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

ColoradoRick
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Re: When will you backup the truck on stocks

Post by ColoradoRick » Thu Oct 11, 2018 4:24 pm

Elysium, my outlook is exactly like yours.....I've enjoyed the ride lately and have won the game. I took some chips off the table (20% of NW). I have CDs for annual expenses 7yrs, stocks for growth; 20% in cash like. By year end cash likes will be pushing 3% to wait; compared to last few years, not bad. If stocks go up 3 years in a row = happy because 50% stock allocation. If stocks drop 10%, I would nibble, if they drop 20% buy more, 30% buy a lot more, drop 50% if any cash left spend the rest. Leave CDs alone. As you hint at, as the price drops, contrary to what most people's emotions tell them, your risk goes way down.

If you don't have the temperament (sp?) don't do it. B
But you and I are having harmless fun AND will probably make some nice money.

lukestuckenhymer
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Re: When will you backup the truck on stocks

Post by lukestuckenhymer » Thu Oct 11, 2018 5:34 pm

https://www.youtube.com/watch?v=Xy6KN5nWnTM

"Backing up the truck," illustrated.

columbia
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Re: When will you backup the truck on stocks

Post by columbia » Thu Oct 11, 2018 7:22 pm

PE Ratio is still unpleasantly high, in relation to historical average:
http://www.multpl.com/

Nothing in the last week should be a sign to load up on US equities.

100% of my bi-weekly 403b purchases is still going to TIAA Traditional at 4.25%.

Elysium
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Re: When will you backup the truck on stocks

Post by Elysium » Thu Oct 11, 2018 7:34 pm

goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don't think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Really? I mean you are saying like this thread here viewtopic.php?f=2&t=30112&p=363430#p363430 and here viewtopic.php?f=10&t=30345&p=366553#p366553

I had a smaller truck back then and I did backup as noted, this time I have a bigger truck, let's see what happens.

2015
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Re: When will you backup the truck on stocks

Post by 2015 » Thu Oct 11, 2018 7:47 pm

TomatoTomahto wrote:
Thu Oct 11, 2018 8:44 am
goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don;t think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Most of the trucks got repossessed.
+1
I thought they all backed right over the cliff.

Despite all historical evidence to the contrary, "students of investing" just love being where the action is. Trouble is, sooner or later they're always where the action is at the worst possible time, personally, financially, emotionally, psychologically, or otherwise.

Stay the course. Ignore the noise.

Dead Man Walking
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Re: When will you backup the truck on stocks

Post by Dead Man Walking » Thu Oct 11, 2018 8:15 pm

I'm waiting for a 50-60% drop, and the Bogleheads start chirping about the fantastic buying opportunity that they have been blessed with.

DMW

Elysium
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Re: When will you backup the truck on stocks

Post by Elysium » Thu Oct 11, 2018 8:46 pm

2015 wrote:
Thu Oct 11, 2018 7:47 pm
TomatoTomahto wrote:
Thu Oct 11, 2018 8:44 am
goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don;t think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Most of the trucks got repossessed.
+1
I thought they all backed right over the cliff.

Despite all historical evidence to the contrary, "students of investing" just love being where the action is. Trouble is, sooner or later they're always where the action is at the worst possible time, personally, financially, emotionally, psychologically, or otherwise.

Stay the course. Ignore the noise.
Yup, exactly right, that's what the poll said: viewtopic.php?f=10&t=30345&p=366553#p366553

2015
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Re: When will you backup the truck on stocks

Post by 2015 » Thu Oct 11, 2018 9:00 pm

Elysium wrote:
Thu Oct 11, 2018 8:46 pm
2015 wrote:
Thu Oct 11, 2018 7:47 pm
TomatoTomahto wrote:
Thu Oct 11, 2018 8:44 am
goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don;t think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Most of the trucks got repossessed.
+1
I thought they all backed right over the cliff.

Despite all historical evidence to the contrary, "students of investing" just love being where the action is. Trouble is, sooner or later they're always where the action is at the worst possible time, personally, financially, emotionally, psychologically, or otherwise.

Stay the course. Ignore the noise.
Yup, exactly right, that's what the poll said: viewtopic.php?f=10&t=30345&p=366553#p366553
Sample bias. A single poll is not a reflection of the totality of investor behavior, here or elsewhere.

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Kenkat
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Re: When will you backup the truck on stocks

Post by Kenkat » Thu Oct 11, 2018 9:09 pm

Elysium wrote:
Thu Oct 11, 2018 7:34 pm
goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don't think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Really? I mean you are saying like this thread here viewtopic.php?f=2&t=30112&p=363430#p363430 and here viewtopic.php?f=10&t=30345&p=366553#p366553

I had a smaller truck back then and I did backup as noted, this time I have a bigger truck, let's see what happens.
I bought equities in 2008 and 2009 as well, but it was very cautiously as I slowly rebalanced back to my targets. Felt like there was a possibility I was dumping more money into the pit of despair, but I did it. There was no “oh boy, back up the truck cause I’m gonna make a killing here” from me at least, I can tell you that.

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Doom&Gloom
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Re: When will you backup the truck on stocks

Post by Doom&Gloom » Thu Oct 11, 2018 9:17 pm

I am fully invested, so my truck is stalled.

If it were running, I would wait until stocks were screaming bargains rather that simply cheaper than they used to be before I would even think of shifting the truck into reverse.

Elysium
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Re: When will you backup the truck on stocks

Post by Elysium » Thu Oct 11, 2018 9:20 pm

Kenkat wrote:
Thu Oct 11, 2018 9:09 pm
Elysium wrote:
Thu Oct 11, 2018 7:34 pm
goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don't think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Really? I mean you are saying like this thread here viewtopic.php?f=2&t=30112&p=363430#p363430 and here viewtopic.php?f=10&t=30345&p=366553#p366553

I had a smaller truck back then and I did backup as noted, this time I have a bigger truck, let's see what happens.
I bought equities in 2008 and 2009 as well, but it was very cautiously as I slowly rebalanced back to my targets. Felt like there was a possibility I was dumping more money into the pit of despair, but I did it. There was no “oh boy, back up the truck cause I’m gonna make a killing here” from me at least, I can tell you that.
That's exactly how I felt too, the mood was definitely somber, but somehow kept up the courage to buy. Not saying the feeling was great, as you never really know where the end is. I think we got little bit lucky with the fast recovery.

stan1
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Re: When will you backup the truck on stocks

Post by stan1 » Thu Oct 11, 2018 9:25 pm

Kenkat wrote:
Thu Oct 11, 2018 9:09 pm
Elysium wrote:
Thu Oct 11, 2018 7:34 pm
goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don't think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Really? I mean you are saying like this thread here viewtopic.php?f=2&t=30112&p=363430#p363430 and here viewtopic.php?f=10&t=30345&p=366553#p366553

I had a smaller truck back then and I did backup as noted, this time I have a bigger truck, let's see what happens.
I bought equities in 2008 and 2009 as well, but it was very cautiously as I slowly rebalanced back to my targets. Felt like there was a possibility I was dumping more money into the pit of despair, but I did it. There was no “oh boy, back up the truck cause I’m gonna make a killing here” from me at least, I can tell you that.
That was my experience as well. The only time I celebrated a tax loss harvest was when I sold iShares EEM and vowed never to own it again due to high expense ratio.

prairieman
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Re: When will you backup the truck on stocks

Post by prairieman » Thu Oct 11, 2018 9:45 pm

I have a target AA of 50/50 equities/bonds and calculated this past weekend that it was now 55/45. I made a mental note to rebalance this month, but now I guess it is too late. I suspect I’m back within my margin now and will sell bonds and buy stocks if my AA sinks to 45/55.

goblue100
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Re: When will you backup the truck on stocks

Post by goblue100 » Fri Oct 12, 2018 7:11 am

Elysium wrote:
Thu Oct 11, 2018 7:34 pm
goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don't think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Really? I mean you are saying like this thread here viewtopic.php?f=2&t=30112&p=363430#p363430 and here viewtopic.php?f=10&t=30345&p=366553#p366553

I had a smaller truck back then and I did backup as noted, this time I have a bigger truck, let's see what happens.
"Post by Elysium » Wed Dec 31, 2008 8:36 am

I am buying now, third time I have added to equity mutual funds this year. Placed order today to buy Emerging Market, almost doubling up because it lost close to 60% in last one year and needed almost same amount as is there currently. I have no idea if I am throwing money down a hole, but I believe if there is a time to buy then this is it."


I applaud that you were buying, but this hardly sounds like a guy who is happy to be backing up the truck. I glanced at the threads and there were many people who were holding tight, others who were just continuing to do what they had always done, DCA into their retirement plans, but I don't see too many people who were optimistic about the future. I also bought, I would say my proudest moment as an investor is that I bought as much as I could from October to December of 2008 but by the end of 2008 I was mentally done. I think I just stopped checking my accounts until things started turning around.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

quantAndHold
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Re: When will you backup the truck on stocks

Post by quantAndHold » Fri Oct 12, 2018 7:25 am

My IPS never says to backup the truck. But I did hit a rebalancing band this morning, so I’ll be moving appropriately 1% of my net worth from bonds to stocks today.

FWIW, I did back up the truck in 2009, but it took the form of me running a retirement calculator after being in denial about the market for a year, then a panicky “OMG, if I don’t save more, a lot more, I’ll never be able to retire!” So I maxed my 401k and started putting money into taxable for the first time. At exactly the right time, it turned out. I had enough financial education to know that as a net saver, the market going down was actually good for me, but if I had actually been paying attention to the daily movements of the markets, I’m sure I would never have done that.

bgf
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Re: When will you backup the truck on stocks

Post by bgf » Fri Oct 12, 2018 7:35 am

WanderingDoc wrote:
Wed Oct 10, 2018 10:05 pm
Elysium wrote:
Wed Oct 10, 2018 6:28 pm
Today is what I call a real sell off day, but not something that would make me break open the cash reserves and plung in. I have some reserves that I have earmarked for purchasing 5% more equities in case of a serious sell off. This isn't a regular re-balancing to your IPS or sleeping point plan. This is a plan to buy more than what you have allocated by backing up the truck because hamburgers went on sale. Your know the whole greedy when others are fearful thing.

To me it is 20% drop from current levels, and that inlcudes today's sell off. I would be very tempted at 10% drop to wade in.

What is your back up the truck point?

Please no what is your IPS tell you sort of thing, we already know that.
I'll start worrying mildly when there is a 80% stock market decline. I don't hold more than 20% of my portfolio in paper assets. That is asking for trouble. Buy real assets that produce income! :D
this doesn't make any sense. ownership of a company through the purchase of a stock certificate is no less real than ownership of a house or condo through the purchase of a warranty deed. at the end of the day, all you really got is a piece of paper saying you own something. this is true for everything in the modern economy, even the cash you use to buy the assets.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

Elysium
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Re: When will you backup the truck on stocks

Post by Elysium » Fri Oct 12, 2018 8:27 am

goblue100 wrote:
Fri Oct 12, 2018 7:11 am
Elysium wrote:
Thu Oct 11, 2018 7:34 pm
goblue100 wrote:
Thu Oct 11, 2018 8:26 am
Kenkat wrote:
Wed Oct 10, 2018 6:44 pm
When it’s time to back up the truck, things will look bad enough that you are not going to want to back up the truck.
Best answer in the thread. I don't think there were many "back up the truck" threads on the forum in late 2008 and early 2009.
Really? I mean you are saying like this thread here viewtopic.php?f=2&t=30112&p=363430#p363430 and here viewtopic.php?f=10&t=30345&p=366553#p366553

I had a smaller truck back then and I did backup as noted, this time I have a bigger truck, let's see what happens.
"Post by Elysium » Wed Dec 31, 2008 8:36 am

I am buying now, third time I have added to equity mutual funds this year. Placed order today to buy Emerging Market, almost doubling up because it lost close to 60% in last one year and needed almost same amount as is there currently. I have no idea if I am throwing money down a hole, but I believe if there is a time to buy then this is it."


I applaud that you were buying, but this hardly sounds like a guy who is happy to be backing up the truck. I glanced at the threads and there were many people who were holding tight, others who were just continuing to do what they had always done, DCA into their retirement plans, but I don't see too many people who were optimistic about the future. I also bought, I would say my proudest moment as an investor is that I bought as much as I could from October to December of 2008 but by the end of 2008 I was mentally done. I think I just stopped checking my accounts until things started turning around.
You are right in that it wasn't a happy or exciting thing to do, however after having sufferred so much losses there wasn't anything else to do other than just buy more. I had a stash of safety money in a stable value fund that I wasn't going to use for anything (that plus some in 2008 10 year TIPS bought at aution), as that was my last bit of saving to rebuild my life in case everything just collapsed. We were talking about Money market funds breaking the dollar.

The title of this thread may give an impression that this is an exciting thing to do "backing up the truck", but in reality it isn't, as you have to hold your nose and buy. I used the phrase intentionally to get am understanding of where everyone's point of dipping in to purchase more than you would normally consider as re-balancing. This will also help us understand behavioral aspects of where we are today compared to where we will be when the real tipping point happens. It isn't meant to indicate this is an easy or enjoyable experience.

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GoldStar
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Re: When will you backup the truck on stocks

Post by GoldStar » Fri Oct 12, 2018 9:38 am

TomatoTomahto wrote:
Wed Oct 10, 2018 6:33 pm
When I have cash, I invest it.
This is my answer as well.

Holding 5% cash (or any amount) for a 10% or 20% drop statistically speaking will more likely cause you to loose money (e.g. you end up missing bigger run-ups over periods of time that don't make up for the small catches you might happen to time right).

I won't ask you what your IPS says since you said not to....but ....
You do realize you are on the Bogleheads forum, right? :wink:
(Not the place to ask about your market timing strategies)

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weltschmerz
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Re: When will you backup the truck on stocks

Post by weltschmerz » Fri Oct 12, 2018 10:44 am

AlphaLess wrote:
Wed Oct 10, 2018 10:02 pm
If stocks go down 90%, I will back up my truck.

I mean, literally, I will sell our car, and buy stocks.
It’s easy to think like this when the markets have been outperforming, but I wonder if you have the guts to really do this when times get tough.

I’m thinking if the market is down 90%, there has probably been some sort of catastrophe, a nuclear blast, a massive earthquake, etc. You, your friends, your family may be unemployed. Heck, you might need your car to escape an area of famine or to seek out water or power.

I don’t mean to single out your post, but I remember being truly scared back in 2008-9, when we didn’t know where the bottom was. Huge losses everyday. Big companies like GM and Citibank on the verge of bankruptcy. I sure wasn’t selling my cars to buy more stocks.
Last edited by weltschmerz on Fri Oct 12, 2018 10:47 am, edited 1 time in total.

WanderingDoc
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Re: When will you backup the truck on stocks

Post by WanderingDoc » Fri Oct 12, 2018 10:45 am

bgf wrote:
Fri Oct 12, 2018 7:35 am
WanderingDoc wrote:
Wed Oct 10, 2018 10:05 pm
Elysium wrote:
Wed Oct 10, 2018 6:28 pm
Today is what I call a real sell off day, but not something that would make me break open the cash reserves and plung in. I have some reserves that I have earmarked for purchasing 5% more equities in case of a serious sell off. This isn't a regular re-balancing to your IPS or sleeping point plan. This is a plan to buy more than what you have allocated by backing up the truck because hamburgers went on sale. Your know the whole greedy when others are fearful thing.

To me it is 20% drop from current levels, and that inlcudes today's sell off. I would be very tempted at 10% drop to wade in.

What is your back up the truck point?

Please no what is your IPS tell you sort of thing, we already know that.
I'll start worrying mildly when there is a 80% stock market decline. I don't hold more than 20% of my portfolio in paper assets. That is asking for trouble. Buy real assets that produce income! :D
this doesn't make any sense. ownership of a company through the purchase of a stock certificate is no less real than ownership of a house or condo through the purchase of a warranty deed. at the end of the day, all you really got is a piece of paper saying you own something. this is true for everything in the modern economy, even the cash you use to buy the assets.
That's not correct. With real estate, I control the purchase, the deal, the financing, the positioning, the management, the strategy for holding and exit, refinancing, value-add etc. etc. Also, insider information about the property or submarket is absolutely legal. None of this is the case with stocks where you have zero control. It's not an even remotely close comparison.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

delamer
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Re: When will you backup the truck on stocks

Post by delamer » Fri Oct 12, 2018 11:18 am

weltschmerz wrote:
Fri Oct 12, 2018 10:44 am
AlphaLess wrote:
Wed Oct 10, 2018 10:02 pm
If stocks go down 90%, I will back up my truck.

I mean, literally, I will sell our car, and buy stocks.
It’s easy to think like this when the markets have been outperforming, but I wonder if you have the guts to really do this when times get tough.

I’m thinking if the market is down 90%, there has probably been some sort of catastrophe, a nuclear blast, a massive earthquake, etc. You, your friends, your family may be unemployed. Heck, you might need your car to escape an area of famine or to seek out water or power.

I don’t mean to single out your post, but I remember being truly scared back in 2008-9, when we didn’t know where the bottom was. Huge losses everyday. Big companies like GM and Citibank on the verge of bankruptcy. I sure wasn’t selling my cars to buy more stocks.
Sometimes it is people just being a bit too glib when they make comments about buying in a 90% market decline.

But it is important to remember that huge drops in stocks don’t happen in a vacuum. The rest of the economy won’t be continuing on as before in the event of the stock market crashing.

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TomatoTomahto
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Re: When will you backup the truck on stocks

Post by TomatoTomahto » Fri Oct 12, 2018 1:16 pm

weltschmerz wrote:
Fri Oct 12, 2018 10:44 am
AlphaLess wrote:
Wed Oct 10, 2018 10:02 pm
If stocks go down 90%, I will back up my truck.

I mean, literally, I will sell our car, and buy stocks.
It’s easy to think like this when the markets have been outperforming, but I wonder if you have the guts to really do this when times get tough.

I’m thinking if the market is down 90%, there has probably been some sort of catastrophe, a nuclear blast, a massive earthquake, etc. You, your friends, your family may be unemployed. Heck, you might need your car to escape an area of famine or to seek out water or power.

I don’t mean to single out your post, but I remember being truly scared back in 2008-9, when we didn’t know where the bottom was. Huge losses everyday. Big companies like GM and Citibank on the verge of bankruptcy. I sure wasn’t selling my cars to buy more stocks.
I am not fragile financially, but I considered it an act of resolve to not sell back then and to keep my DCA investing going. No way was I going to go "all in." Kudos to those that can do that, but it's one thing to say it, and another to do it when you're surrounded by people being laid off, you're not so sure how secure your own job is, and you still have a mortgage/tuition/etc due.
Last edited by TomatoTomahto on Fri Oct 12, 2018 2:30 pm, edited 1 time in total.
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lukestuckenhymer
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Re: When will you backup the truck on stocks

Post by lukestuckenhymer » Fri Oct 12, 2018 1:41 pm

weltschmerz wrote:
Fri Oct 12, 2018 10:44 am
AlphaLess wrote:
Wed Oct 10, 2018 10:02 pm
If stocks go down 90%, I will back up my truck.

I mean, literally, I will sell our car, and buy stocks.
It’s easy to think like this when the markets have been outperforming, but I wonder if you have the guts to really do this when times get tough.

I’m thinking if the market is down 90%, there has probably been some sort of catastrophe, a nuclear blast, a massive earthquake, etc. You, your friends, your family may be unemployed. Heck, you might need your car to escape an area of famine or to seek out water or power.

I don’t mean to single out your post, but I remember being truly scared back in 2008-9, when we didn’t know where the bottom was. Huge losses everyday. Big companies like GM and Citibank on the verge of bankruptcy. I sure wasn’t selling my cars to buy more stocks.
[OT comment removed by admin LadyGeek]

I'm confident I can stomach a 50% decline, knowing the fundamentals of capitalism will still allow me to recoup my losses, but a 90% decline? Game over.

marcopolo
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Re: When will you backup the truck on stocks

Post by marcopolo » Fri Oct 12, 2018 2:07 pm

TomatoTomahto wrote:
Fri Oct 12, 2018 1:16 pm
weltschmerz wrote:
Fri Oct 12, 2018 10:44 am
AlphaLess wrote:
Wed Oct 10, 2018 10:02 pm
If stocks go down 90%, I will back up my truck.

I mean, literally, I will sell our car, and buy stocks.
It’s easy to think like this when the markets have been outperforming, but I wonder if you have the guts to really do this when times get tough.

I’m thinking if the market is down 90%, there has probably been some sort of catastrophe, a nuclear blast, a massive earthquake, etc. You, your friends, your family may be unemployed. Heck, you might need your car to escape an area of famine or to seek out water or power.

I don’t mean to single out your post, but I remember being truly scared back in 2008-9, when we didn’t know where the bottom was. Huge losses everyday. Big companies like GM and Citibank on the verge of bankruptcy. I sure wasn’t selling my cars to buy more stocks.
I am not fragile financially, but I considered it a act of resolve to not sell back then and to keep my DCA investing going. No way was I going to go "all in." Kudos to those that can do that, but it's one thing to say it, and another to do it when you're surrounded by people being laid off, you're not so sure how secure your own job is, and you still have a mortgage/tuition/etc due.
This.

I wrote the following on another thread:
I remember selling bonds to buy more stock several times during the 2008/2009 recession. It was very painful, and I questioned my own sanity quite often. I think some of the people cheering for a big crash either did not live through that, or have forgotten how difficult it was to follow through on rebalancing, which sounds great in theory, but can be very difficult to stick to in times like that.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: When will you backup the truck on stocks

Post by KlangFool » Fri Oct 12, 2018 2:19 pm

marcopolo wrote:
Fri Oct 12, 2018 2:07 pm
TomatoTomahto wrote:
Fri Oct 12, 2018 1:16 pm
weltschmerz wrote:
Fri Oct 12, 2018 10:44 am
AlphaLess wrote:
Wed Oct 10, 2018 10:02 pm
If stocks go down 90%, I will back up my truck.

I mean, literally, I will sell our car, and buy stocks.
It’s easy to think like this when the markets have been outperforming, but I wonder if you have the guts to really do this when times get tough.

I’m thinking if the market is down 90%, there has probably been some sort of catastrophe, a nuclear blast, a massive earthquake, etc. You, your friends, your family may be unemployed. Heck, you might need your car to escape an area of famine or to seek out water or power.

I don’t mean to single out your post, but I remember being truly scared back in 2008-9, when we didn’t know where the bottom was. Huge losses everyday. Big companies like GM and Citibank on the verge of bankruptcy. I sure wasn’t selling my cars to buy more stocks.
I am not fragile financially, but I considered it a act of resolve to not sell back then and to keep my DCA investing going. No way was I going to go "all in." Kudos to those that can do that, but it's one thing to say it, and another to do it when you're surrounded by people being laid off, you're not so sure how secure your own job is, and you still have a mortgage/tuition/etc due.
This.

I wrote the following on another thread:
I remember selling bonds to buy more stock several times during the 2008/2009 recession. It was very painful, and I questioned my own sanity quite often. I think some of the people cheering for a big crash either did not live through that, or have forgotten how difficult it was to follow through on rebalancing, which sounds great in theory, but can be very difficult to stick to in times like that.
marcopolo,

During the 2008/2009 recession, most of my portfolio was 50% in the Vanguard LifeStrategy Moderate Growth Fund (60/40) and 50% in the Wellington fund (65/35). Hence, it rebalances itself whether I like it or not.

During a crisis, most people will freeze and do nothing. Or, what they did will do a lot of harm to themselves. Hence, the system that will do fine without any explicit action is the best system.

My current portfolio still includes 40% of Wellington fund. It will take a quick 30% market drop before I need to do any rebalancing.

KlangFool

marcopolo
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Re: When will you backup the truck on stocks

Post by marcopolo » Fri Oct 12, 2018 2:23 pm

KlangFool wrote:
Fri Oct 12, 2018 2:19 pm

marcopolo,

During the 2008/2009 recession, most of my portfolio was 50% in the Vanguard LifeStrategy Moderate Growth Fund (60/40) and 50% in the Wellington fund (65/35). Hence, it rebalances itself whether I like it or not.

During a crisis, most people will freeze and do nothing. Or, what they did will do a lot of harm to themselves. Hence, the system that will do fine without any explicit action is the best system.

My current portfolio still includes 40% of Wellington fund. It will take a quick 30% market drop before I need to do any rebalancing.

KlangFool
Yeah. That is probably a good approach for many people.
Once in a while you get shown the light, in the strangest of places if you look at it right.

KlangFool
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Re: When will you backup the truck on stocks

Post by KlangFool » Fri Oct 12, 2018 2:47 pm

marcopolo wrote:
Fri Oct 12, 2018 2:23 pm
KlangFool wrote:
Fri Oct 12, 2018 2:19 pm

marcopolo,

During the 2008/2009 recession, most of my portfolio was 50% in the Vanguard LifeStrategy Moderate Growth Fund (60/40) and 50% in the Wellington fund (65/35). Hence, it rebalances itself whether I like it or not.

During a crisis, most people will freeze and do nothing. Or, what they did will do a lot of harm to themselves. Hence, the system that will do fine without any explicit action is the best system.

My current portfolio still includes 40% of Wellington fund. It will take a quick 30% market drop before I need to do any rebalancing.

KlangFool
Yeah. That is probably a good approach for many people.
That is my main criticism of the 3 funds portfolio. It assumes that the individual investor could rebalance their portfolio during the bear market and the bull market. That assumption is invalid for many people.

KlangFool

bgf
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Re: When will you backup the truck on stocks

Post by bgf » Fri Oct 12, 2018 6:00 pm

WanderingDoc wrote:
Fri Oct 12, 2018 10:45 am
bgf wrote:
Fri Oct 12, 2018 7:35 am
WanderingDoc wrote:
Wed Oct 10, 2018 10:05 pm
Elysium wrote:
Wed Oct 10, 2018 6:28 pm
Today is what I call a real sell off day, but not something that would make me break open the cash reserves and plung in. I have some reserves that I have earmarked for purchasing 5% more equities in case of a serious sell off. This isn't a regular re-balancing to your IPS or sleeping point plan. This is a plan to buy more than what you have allocated by backing up the truck because hamburgers went on sale. Your know the whole greedy when others are fearful thing.

To me it is 20% drop from current levels, and that inlcudes today's sell off. I would be very tempted at 10% drop to wade in.

What is your back up the truck point?

Please no what is your IPS tell you sort of thing, we already know that.
I'll start worrying mildly when there is a 80% stock market decline. I don't hold more than 20% of my portfolio in paper assets. That is asking for trouble. Buy real assets that produce income! :D
this doesn't make any sense. ownership of a company through the purchase of a stock certificate is no less real than ownership of a house or condo through the purchase of a warranty deed. at the end of the day, all you really got is a piece of paper saying you own something. this is true for everything in the modern economy, even the cash you use to buy the assets.
That's not correct. With real estate, I control the purchase, the deal, the financing, the positioning, the management, the strategy for holding and exit, refinancing, value-add etc. etc. Also, insider information about the property or submarket is absolutely legal. None of this is the case with stocks where you have zero control. It's not an even remotely close comparison.
none of that has anything to do with what I said, which had to do with "real" v. "paper" assets.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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Re: When will you backup the truck on stocks

Post by michaeljc70 » Sat Oct 13, 2018 12:28 pm

I don't have cash sitting around (other than EF), so I won't be backing up the truck or even a wheelbarrow. I don't leave cash sitting around just waiting for the market to drop.

On a related note, I saw David Stockman on a business show a couple days ago. He has been bearish for years. Someone asked if he was all out of stocks and he said he has been for years. They asked him several times when he sold and he dodged the question. That leads me to wonder how many years of gains people "backing up the truck" now or in the future have missed out on.

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Earl Lemongrab
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Re: When will you backup the truck on stocks

Post by Earl Lemongrab » Sat Oct 13, 2018 12:51 pm

michaeljc70 wrote:
Sat Oct 13, 2018 12:28 pm
I don't have cash sitting around (other than EF), so I won't be backing up the truck or even a wheelbarrow. I don't leave cash sitting around just waiting for the market to drop.
I don't either, although one could sell a bunch of fixed-income to buy. However, as I mentioned in another thread, all that's happened is that we've gone back to about early July in US stocks. Was anyone backing up the truck then?

Principle #1 in my IPS, "I have no talent for market-timing. I'm not sure anyone really does, but I KNOW I don't."

That makes things so much easier. Follow the plan. The plan say doesn't diddley about backing up a truck when there's 7% drop in stocks. So I don't.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

remomnyc
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Re: When will you backup the truck on stocks

Post by remomnyc » Sat Oct 13, 2018 1:02 pm

I recently retired at a 55/45 allocation. My IPS calls for +/-5% rebalancing bands and to rebalance to 60/40 by the time I'm eligible for SS, but I have been considering adding a back up the truck rule. I like the idea of increasing my equity exposure if Schiller CAPE goes below 20. I will have to sleep on it. I sleep well at 55/45.

michaeljc70
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Re: When will you backup the truck on stocks

Post by michaeljc70 » Sat Oct 13, 2018 1:05 pm

Earl Lemongrab wrote:
Sat Oct 13, 2018 12:51 pm
michaeljc70 wrote:
Sat Oct 13, 2018 12:28 pm
I don't have cash sitting around (other than EF), so I won't be backing up the truck or even a wheelbarrow. I don't leave cash sitting around just waiting for the market to drop.
I don't either, although one could sell a bunch of fixed-income to buy. However, as I mentioned in another thread, all that's happened is that we've gone back to about early July in US stocks. Was anyone backing up the truck then?

Principle #1 in my IPS, "I have no talent for market-timing. I'm not sure anyone really does, but I KNOW I don't."

That makes things so much easier. Follow the plan. The plan say doesn't diddley about backing up a truck when there's 7% drop in stocks. So I don't.
True, but my reallocation rules are designed not to require action on such small moves. In fact, I check once a year (well, look more frequently but do something once a year if needed). Bonds have also not done particularly well over the short/medium term.

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Earl Lemongrab
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Re: When will you backup the truck on stocks

Post by Earl Lemongrab » Sat Oct 13, 2018 1:17 pm

michaeljc70 wrote:
Sat Oct 13, 2018 1:05 pm
Earl Lemongrab wrote:
Sat Oct 13, 2018 12:51 pm
michaeljc70 wrote:
Sat Oct 13, 2018 12:28 pm
I don't have cash sitting around (other than EF), so I won't be backing up the truck or even a wheelbarrow. I don't leave cash sitting around just waiting for the market to drop.
I don't either, although one could sell a bunch of fixed-income to buy. However, as I mentioned in another thread, all that's happened is that we've gone back to about early July in US stocks. Was anyone backing up the truck then?

Principle #1 in my IPS, "I have no talent for market-timing. I'm not sure anyone really does, but I KNOW I don't."

That makes things so much easier. Follow the plan. The plan say doesn't diddley about backing up a truck when there's 7% drop in stocks. So I don't.
True, but my reallocation rules are designed not to require action on such small moves. In fact, I check once a year (well, look more frequently but do something once a year if needed). Bonds have also not done particularly well over the short/medium term.
I'm not sure a "but" is needed there, as it seems as though you agree with me. Follow your plan. If your plan doesn't have you checking, then no worries. I use rebalancing ranges (5/25) and check about once a month. I doubt it's anywhere near a rebalance point.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

michaeljc70
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Re: When will you backup the truck on stocks

Post by michaeljc70 » Sat Oct 13, 2018 1:26 pm

Earl Lemongrab wrote:
Sat Oct 13, 2018 1:17 pm
michaeljc70 wrote:
Sat Oct 13, 2018 1:05 pm
Earl Lemongrab wrote:
Sat Oct 13, 2018 12:51 pm
michaeljc70 wrote:
Sat Oct 13, 2018 12:28 pm
I don't have cash sitting around (other than EF), so I won't be backing up the truck or even a wheelbarrow. I don't leave cash sitting around just waiting for the market to drop.
I don't either, although one could sell a bunch of fixed-income to buy. However, as I mentioned in another thread, all that's happened is that we've gone back to about early July in US stocks. Was anyone backing up the truck then?

Principle #1 in my IPS, "I have no talent for market-timing. I'm not sure anyone really does, but I KNOW I don't."

That makes things so much easier. Follow the plan. The plan say doesn't diddley about backing up a truck when there's 7% drop in stocks. So I don't.
True, but my reallocation rules are designed not to require action on such small moves. In fact, I check once a year (well, look more frequently but do something once a year if needed). Bonds have also not done particularly well over the short/medium term.
I'm not sure a "but" is needed there, as it seems as though you agree with me. Follow your plan. If your plan doesn't have you checking, then no worries. I use rebalancing ranges (5/25) and check about once a month. I doubt it's anywhere near a rebalance point.
We agree. The "but" wasn't clear but I was referring to " although one could sell a bunch of fixed-income to buy" if that would be outside your IPS.

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Earl Lemongrab
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Re: When will you backup the truck on stocks

Post by Earl Lemongrab » Sat Oct 13, 2018 1:43 pm

michaeljc70 wrote:
Sat Oct 13, 2018 1:26 pm
We agree. The "but" wasn't clear but I was referring to " although one could sell a bunch of fixed-income to buy" if that would be outside your IPS.
Oh. I was just pointing out that you didn't have to have cash to buy a bunch of stocks. You could exchange other forms of fixed income.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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HomerJ
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Re: When will you backup the truck on stocks

Post by HomerJ » Sat Oct 13, 2018 4:39 pm

goblue100 wrote:
Fri Oct 12, 2018 7:11 am
I glanced at the threads and there were many people who were holding tight, others who were just continuing to do what they had always done, DCA into their retirement plans, but I don't see too many people who were optimistic about the future.
I was 66/33 stocks/bonds in 2008. I rebalanced into stocks, back to 66/33, once, in the Fall of 2008 (around DOW 10000), but after that I never rebalanced again.

I did put 100% of all NEW contributions into 100% stocks. That for some reason was easy.

But our old money, there was a floor where I didn't want to sell bonds anymore. We had about $250k in bonds, still owed $200k on the house, and I decided I didn't want to sell any more bonds. That $250k in bonds helped me sleep at night and ignore the stock market drops.

I never ONCE wanted to SELL stocks. I never panic-sold like others around me did. But that was because I kept that floor.

But I also never wanted to "backup the truck". Again, all new money went 100% in stocks, but I wasn't risking that last $250k in case the Great Depression II happened, and I lost my job.

I kept enough back to make sure my family would be safe, warm, and fed.
The J stands for Jay

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HomerJ
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Re: When will you backup the truck on stocks

Post by HomerJ » Sat Oct 13, 2018 4:44 pm

TomatoTomahto wrote:
Fri Oct 12, 2018 1:16 pm
I am not fragile financially, but I considered it an act of resolve to not sell back then and to keep my DCA investing going. No way was I going to go "all in." Kudos to those that can do that, but it's one thing to say it, and another to do it when you're surrounded by people being laid off, you're not so sure how secure your own job is, and you still have a mortgage/tuition/etc due.
This, Exactly the same for me. I was proud of myself for not selling... But that's about as far I could go. And Bogleheads certainly helped there.
The J stands for Jay

bhsince87
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Re: When will you backup the truck on stocks

Post by bhsince87 » Sat Oct 13, 2018 4:44 pm

Never again!

I did it in 2008-2009, when I had a big chunk of cash on hand to pay off our mortgage. That worked spectacularly well.

But I'm too close to retirement now. Just don't need take such a risk.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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HomerJ
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Re: When will you backup the truck on stocks

Post by HomerJ » Sat Oct 13, 2018 4:46 pm

remomnyc wrote:
Sat Oct 13, 2018 1:02 pm
I recently retired at a 55/45 allocation. My IPS calls for +/-5% rebalancing bands and to rebalance to 60/40 by the time I'm eligible for SS, but I have been considering adding a back up the truck rule. I like the idea of increasing my equity exposure if Schiller CAPE goes below 20. I will have to sleep on it. I sleep well at 55/45.
I would never "back up the truck" in retirement (but to fair, you only said "increase equity"). You retired, so you must have had enough. Why do you want more? It's certainly not a risk-free move.
The J stands for Jay

novemberrain
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Re: When will you backup the truck on stocks

Post by novemberrain » Sat Oct 13, 2018 4:47 pm

delamer wrote:
Wed Oct 10, 2018 6:50 pm
How will you handle these cash reserves if there isn’t a 10% or more downturn in the next, say, 2 years?

What if the market goes up 15% more and then goes down 10%? You have fewer shares than if you bought today. And you will have missed out on any dividends in the meantime.

I don’t have any such reserves, and don’t really understand the reasoning.
+1 . Although it sounds cool, "back up the truck", "wade in" strategy etc will lower your returns over the long term

Elysium
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Re: When will you backup the truck on stocks

Post by Elysium » Wed Oct 17, 2018 11:46 am

I've been backing up the truck a little bit since the last week's decline. So far moved some into US Large and Mid-Caps + Intl and out of Bonds + new funds available. This is only about 1/5th or so of the dry powder available, and then new funds will be coming, so still quite a bit to go if things move down more.

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Re: When will you backup the truck on stocks

Post by sperry8 » Wed Oct 17, 2018 12:08 pm

Elysium wrote:
Wed Oct 10, 2018 6:28 pm
Today is what I call a real sell off day, but not something that would make me break open the cash reserves and plung in. I have some reserves that I have earmarked for purchasing 5% more equities in case of a serious sell off. This isn't a regular re-balancing to your IPS or sleeping point plan. This is a plan to buy more than what you have allocated by backing up the truck because hamburgers went on sale. Your know the whole greedy when others are fearful thing.

To me it is 20% drop from current levels, and that inlcudes today's sell off. I would be very tempted at 10% drop to wade in.

What is your back up the truck point?

Please no what is your IPS tell you sort of thing, we already know that.
Down 30% from whatever top it makes. Could go down more, but I back up the truck down 30%.
Humbling BH contest results: 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

sharukh
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Re: When will you backup the truck on stocks

Post by sharukh » Thu Oct 25, 2018 3:36 pm

KlangFool wrote:
Fri Oct 12, 2018 2:47 pm
marcopolo wrote:
Fri Oct 12, 2018 2:23 pm
KlangFool wrote:
Fri Oct 12, 2018 2:19 pm

marcopolo,

During the 2008/2009 recession, most of my portfolio was 50% in the Vanguard LifeStrategy Moderate Growth Fund (60/40) and 50% in the Wellington fund (65/35). Hence, it rebalances itself whether I like it or not.

During a crisis, most people will freeze and do nothing. Or, what they did will do a lot of harm to themselves. Hence, the system that will do fine without any explicit action is the best system.

My current portfolio still includes 40% of Wellington fund. It will take a quick 30% market drop before I need to do any rebalancing.

KlangFool
Yeah. That is probably a good approach for many people.
That is my main criticism of the 3 funds portfolio. It assumes that the individual investor could rebalance their portfolio during the bear market and the bull market. That assumption is invalid for many people.

KlangFool
Hi KlangFool,

Did you use these auto-rebalancing funds even in taxable account ?
Do you have any suggestions on how to handle this for taxable accounts , just buy VSMGX and not worry about tax drag ?

Thanks.

KlangFool
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Re: When will you backup the truck on stocks

Post by KlangFool » Thu Oct 25, 2018 3:45 pm

sharukh wrote:
Thu Oct 25, 2018 3:36 pm
KlangFool wrote:
Fri Oct 12, 2018 2:47 pm
marcopolo wrote:
Fri Oct 12, 2018 2:23 pm
KlangFool wrote:
Fri Oct 12, 2018 2:19 pm

marcopolo,

During the 2008/2009 recession, most of my portfolio was 50% in the Vanguard LifeStrategy Moderate Growth Fund (60/40) and 50% in the Wellington fund (65/35). Hence, it rebalances itself whether I like it or not.

During a crisis, most people will freeze and do nothing. Or, what they did will do a lot of harm to themselves. Hence, the system that will do fine without any explicit action is the best system.

My current portfolio still includes 40% of Wellington fund. It will take a quick 30% market drop before I need to do any rebalancing.

KlangFool
Yeah. That is probably a good approach for many people.
That is my main criticism of the 3 funds portfolio. It assumes that the individual investor could rebalance their portfolio during the bear market and the bull market. That assumption is invalid for many people.

KlangFool
Hi KlangFool,

Did you use these auto-rebalancing funds even in taxable account ?
Do you have any suggestions on how to handle this for taxable accounts , just buy VSMGX and not worry about tax drag ?

Thanks.
sharukh,

I did during 2008/2009. Only in the last few years, I exchanged 40% of my portfolio into the 3 funds and keep 100% stock in my taxable account. 40% of my portfolio is still in the Wellington Fund (65/35). The Wellington fund is in my tax-advantaged account.

My taxable account is 500K. Hence, it is big enough to split into 3 funds in order to save taxes. For most people, it is not a big deal.

KlangFool

sharukh
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Re: When will you backup the truck on stocks

Post by sharukh » Thu Oct 25, 2018 5:51 pm

KlangFool wrote:
Thu Oct 25, 2018 3:45 pm
sharukh wrote:
Thu Oct 25, 2018 3:36 pm
KlangFool wrote:
Fri Oct 12, 2018 2:47 pm
marcopolo wrote:
Fri Oct 12, 2018 2:23 pm
KlangFool wrote:
Fri Oct 12, 2018 2:19 pm

marcopolo,

During the 2008/2009 recession, most of my portfolio was 50% in the Vanguard LifeStrategy Moderate Growth Fund (60/40) and 50% in the Wellington fund (65/35). Hence, it rebalances itself whether I like it or not.

During a crisis, most people will freeze and do nothing. Or, what they did will do a lot of harm to themselves. Hence, the system that will do fine without any explicit action is the best system.

My current portfolio still includes 40% of Wellington fund. It will take a quick 30% market drop before I need to do any rebalancing.

KlangFool
Yeah. That is probably a good approach for many people.
That is my main criticism of the 3 funds portfolio. It assumes that the individual investor could rebalance their portfolio during the bear market and the bull market. That assumption is invalid for many people.

KlangFool
Hi KlangFool,

Did you use these auto-rebalancing funds even in taxable account ?
Do you have any suggestions on how to handle this for taxable accounts , just buy VSMGX and not worry about tax drag ?

Thanks.
sharukh,

I did during 2008/2009. Only in the last few years, I exchanged 40% of my portfolio into the 3 funds and keep 100% stock in my taxable account. 40% of my portfolio is still in the Wellington Fund (65/35). The Wellington fund is in my tax-advantaged account.

My taxable account is 500K. Hence, it is big enough to split into 3 funds in order to save taxes. For most people, it is not a big deal.

KlangFool
Hi, thanks for quick reply. If it is not too invasive, Can you please share, how you handle monthly contributions and annual rebalancing?

If 100% taxable is stock, new monthly contribution mostly goes to taxable account, so do you move some money from Wellington to bonds in non-taxable ?

I am pretty much in the same situation, so like to follow your lead. Thanks.

KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

Re: When will you backup the truck on stocks

Post by KlangFool » Thu Oct 25, 2018 6:39 pm

sharukh wrote:
Thu Oct 25, 2018 5:51 pm
KlangFool wrote:
Thu Oct 25, 2018 3:45 pm
sharukh wrote:
Thu Oct 25, 2018 3:36 pm
KlangFool wrote:
Fri Oct 12, 2018 2:47 pm
marcopolo wrote:
Fri Oct 12, 2018 2:23 pm


Yeah. That is probably a good approach for many people.
That is my main criticism of the 3 funds portfolio. It assumes that the individual investor could rebalance their portfolio during the bear market and the bull market. That assumption is invalid for many people.

KlangFool
Hi KlangFool,

Did you use these auto-rebalancing funds even in taxable account ?
Do you have any suggestions on how to handle this for taxable accounts , just buy VSMGX and not worry about tax drag ?

Thanks.
sharukh,

I did during 2008/2009. Only in the last few years, I exchanged 40% of my portfolio into the 3 funds and keep 100% stock in my taxable account. 40% of my portfolio is still in the Wellington Fund (65/35). The Wellington fund is in my tax-advantaged account.

My taxable account is 500K. Hence, it is big enough to split into 3 funds in order to save taxes. For most people, it is not a big deal.

KlangFool
Hi, thanks for quick reply. If it is not too invasive, Can you please share, how you handle monthly contributions and annual rebalancing?

If 100% taxable is stock, new monthly contribution mostly goes to taxable account, so do you move some money from Wellington to bonds in non-taxable ?

I am pretty much in the same situation, so like to follow your lead. Thanks.
sharukh,

1) Most of my new contribution is in the tax-advantaged accounts: Roth IRAs and 401K/457.

2) My bond fund and Wellington fund is in the tax-advantaged accounts.

3) My stock is in the taxable account.

4) My portfolio split is 45/45/10 (Taxable/Tax-deferred/Roth IRAs)

<<If 100% taxable is stock, new monthly contribution mostly goes to taxable account, so do you move some money from Wellington to bonds in non-taxable ?>>

You should start a new topic. I have no idea why there is a problem. Then, we can go into the specific.

KlangFool

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