What Now?

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Duffydog1
Posts: 64
Joined: Sat Dec 03, 2016 1:42 pm

What Now?

Post by Duffydog1 » Thu Dec 06, 2018 8:26 am

As I watch the market sink I recall the advise of staying the course and waiting it out. I have no there choice. But today I observed another drop in the market due to the arrest of a Chinese executive in Canada. The stock market swings are beyond any reasonable consideration and as an older person(78) I no longer care to participate. Fortunately I have about 12% of my money in equities but the loss to dates substantial. I have a substantial cash position only because I did not listen to my Vanguard representative and other financial advisors. So I will wait it out for a year or so and then invest in CDs and short term treasuries. My question for other older folks isn't his the prudent course or should we be dependent on a market that has no rational parameters. I was advised to maintain a position of 35% in equities and I did not do so as I was uncomfortable. So where do older investors go knowing that are time for waiting is very limited. If your older like me or getting there I would appreciate your thoughts. Based on what I have observed this market is irrational.

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: What Now?

Post by livesoft » Thu Dec 06, 2018 8:29 am

I don't understand your concern. How can you have a "substantial" loss with only 12% in equities? That doesn't make sense to me unless you have a really substantial amount of money invested (say, more than $10 million). Also at age 78, you have fewer years going forward that you will need your money.

What Now? The answer is simple: Relax. Ignore the Noise. Ignore the news.
Last edited by livesoft on Thu Dec 06, 2018 8:30 am, edited 1 time in total.
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AlohaJoe
Posts: 3925
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Location: Saigon, Vietnam

Re: What Now?

Post by AlohaJoe » Thu Dec 06, 2018 8:30 am

Duffydog1 wrote:
Thu Dec 06, 2018 8:26 am
The stock market swings are beyond any reasonable consideration and as an older person(78) I no longer care to participate.
This is based on your considered mathematical analysis of the the current market versus all previous markets? Could you post those details?

Or did you just make up something that sounded good to justify an emotional reaction?

The market now is exactly like it has always been.

Valuethinker
Posts: 36662
Joined: Fri May 11, 2007 11:07 am

Re: What Now?

Post by Valuethinker » Thu Dec 06, 2018 8:38 am

Duffydog1 wrote:
Thu Dec 06, 2018 8:26 am
As I watch the market sink I recall the advise of staying the course and waiting it out. I have no there choice. But today I observed another drop in the market due to the arrest of a Chinese executive in Canada. The stock market swings are beyond any reasonable consideration and as an older person(78) I no longer care to participate. Fortunately I have about 12% of my money in equities but the loss to dates substantial. I have a substantial cash position only because I did not listen to my Vanguard representative and other financial advisors. So I will wait it out for a year or so and then invest in CDs and short term treasuries. My question for other older folks isn't his the prudent course or should we be dependent on a market that has no rational parameters. I was advised to maintain a position of 35% in equities and I did not do so as I was uncomfortable. So where do older investors go knowing that are time for waiting is very limited. If your older like me or getting there I would appreciate your thoughts. Based on what I have observed this market is irrational.
Let's say it is finely poised. There is always this tug of war between fear and greed going on. Right now fear is in the ascendant. The market is never entirely rational and least so when it has gone up (or down) a lot.

The monetary cycle is towards tightening and that usually means a bull market is in its later stages.

With 12% of your money in equities at your age you can afford to sit back and just watch the show.

Unless you have particular needs for you and your spouse into the 90s (I have 4 female relatives alive over 90 at this point) you don't need to have a lot of equities. Equities are really a minimum 10 year time horizon thing.

freedom66
Posts: 42
Joined: Thu Jan 22, 2015 2:51 pm

Re: What Now?

Post by freedom66 » Thu Dec 06, 2018 8:47 am

The Total Stock Market Index Fund (Admiral Shares), VTSAX, is still up 2.18% for the year. 1, 3, 5, 10-year returns are also well positive. Total Bond Market Index Fund is only down 1.39% YTD and Intermediate and Long-Term Tax-Exempt Bond funds are positive for the year. Where are the losses coming from?

tibbitts
Posts: 8110
Joined: Tue Feb 27, 2007 6:50 pm

Re: What Now?

Post by tibbitts » Thu Dec 06, 2018 8:57 am

Duffydog1 wrote:
Thu Dec 06, 2018 8:26 am
As I watch the market sink I recall the advise of staying the course and waiting it out. I have no there choice. But today I observed another drop in the market due to the arrest of a Chinese executive in Canada. The stock market swings are beyond any reasonable consideration and as an older person(78) I no longer care to participate. Fortunately I have about 12% of my money in equities but the loss to dates substantial. I have a substantial cash position only because I did not listen to my Vanguard representative and other financial advisors. So I will wait it out for a year or so and then invest in CDs and short term treasuries. My question for other older folks isn't his the prudent course or should we be dependent on a market that has no rational parameters. I was advised to maintain a position of 35% in equities and I did not do so as I was uncomfortable. So where do older investors go knowing that are time for waiting is very limited. If your older like me or getting there I would appreciate your thoughts. Based on what I have observed this market is irrational.
Hmm, I think if I'd written that, I'd be getting a call about now from someone saying "You remember how we talked about a time eventually coming when you wouldn't be capable of handling your finances? Well, ..."

Grt2bOutdoors
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Location: New York

Re: What Now?

Post by Grt2bOutdoors » Thu Dec 06, 2018 9:03 am

RMDs at your age represents about 5% of account value. 12% in equities represents roughly 2.3 years of RMDs, yes good on you - you invested based on your need, ability and willingness to accept risk, give yourself an “atta boy” for that. The one thing about advisors are they apply a “cookie cutter” approach,in reality they should make use of a fine paintbrush instead of a broad paint roller.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Flyer24
Posts: 453
Joined: Sun Apr 08, 2018 4:21 pm

Re: What Now?

Post by Flyer24 » Thu Dec 06, 2018 9:12 am

You stated in another post in October that 22% of your equity was in Apple stock. Apple is down 24% since October. I hope you got rid of those positions back in October.
Last edited by Flyer24 on Thu Dec 06, 2018 9:16 am, edited 1 time in total.

PolarBearMarket
Posts: 42
Joined: Thu Sep 13, 2018 11:52 am

Re: What Now?

Post by PolarBearMarket » Thu Dec 06, 2018 9:15 am

Duffydog1 wrote:
Thu Dec 06, 2018 8:26 am
But today I observed another drop in the market due to the arrest of a Chinese executive in Canada. The stock market swings are beyond any reasonable consideration
Duffydog1 wrote:
Thu Dec 06, 2018 8:26 am
I no longer care to participate.
This pair of statements is akin to saying you hate traffic while sitting in traffic. You are the traffic just like you are the market.

The current swing is, in part, due to people just like you who no longer care to participate and are parking money in 5 year T-bills instead. You cannot simultaneously say that the market downturn is irrational but that your desire to sell and get out of the market at the same time is rational. They are predicated on the same fact base. Either they are both rational, or they are both irrational.

In this case I think it's a mix of both. At 78, perfectly rational to move to more fixed income assets because you have less time to absorb volatility. Irrational to do so due so because of any recent market movements.

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midareff
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Re: What Now?

Post by midareff » Thu Dec 06, 2018 9:39 am

I'll be 71 this month so I'm not that far behind you. About 43% equities, 45% bonds and balance in CD's and bank cash @ 2% and greater interest. Portfolio still a couple of dollars positive for the year through today. It's a market, it goes up and it goes down. It has really bad days and bad years and it has really good days and good years..... even decades. I started in stocks just about 50 years ago now. On 12/31/1968 the market (S&P500) closed at 103.68, 12/31/1978 it closed at 96.11, 12/31/1988 it closed at 277.72, 12/31/1998 it closed at 1229.93, 12/31/2008 it closed at 903.25, 12/31/2018 is a number I can't supply yet but I have reason to think it will be a far greater number than the 903.25 it was on 12/31/2008, barring nuclear war in the next 3.5 weeks. As I said.... it's a market and it goes up and it goes down. Someone said the market can remain irrational longer than you can remain solvent, to which I replied, a well diversified risk appropriate retiree portfolio of equities, bonds, CD's and bank cash can remain solvent longer than the market can remain irrational. Pick an asset allocation and a WR based on your needs, ability and willingness to take risks and both forgetaboutit and go have some fun.

260chrisb
Posts: 206
Joined: Wed Apr 28, 2010 7:26 pm

Re: What Now?

Post by 260chrisb » Thu Dec 06, 2018 11:18 am

Over the years that I have followed this board (and as a Vanguard investor for years prior) it's always interesting to me that one can constantly learn from the posts and replies. I too ask; how can 12% create a "substantial" negative impact? Perhaps there is or was a need for better diversification. As I get into my late 50s and think of the amount of corrections over the years and their frequency I wonder how to best position myself so that the market noise doesn't make me lose sleep at night.The arrest of an executive at Huawei was a MSN headline this morning. They have to blame markets gyrations on something! It's easier when you're younger since you have so many more years and the markets always go back up but at 78 you frankly don't need to participate if you choose not to. The markets are flat for the year and are off their highs. So what? Not all of my assets are in the market and while it's not fun to watch my retirement and non retirement accounts go down in value I'm staying the course. That's what's next for me. I certainly won't have the same exposure when I'm 70 or 78 and won't want to participate at the level I do now even if it's only with part of my overall saving and investing plan.

Jack FFR1846
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Re: What Now?

Post by Jack FFR1846 » Thu Dec 06, 2018 11:26 am

I'm younger (61) and still working and have to say that I'm a little giddy with the market drop coinciding with my planned release of money to buy. Transfer is going on right now and I'll buy tomorrow.

However, if your 12% stake causes you this much grief with a couple percent market drop, I'd say that you need to stop watching the market. Remove all market news from your favorites, don't watch anything with market news and just stand there. If it really bothers you that much, sell all your equities right now and go into CDs. Pretend it's 2008 and this silly 2% is nothing as there's another 48% drop coming. (not that I think there is)
Bogle: Smart Beta is stupid

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