Year's worth of earnings in two months?

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DB2
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Re: Year's worth of earnings in two months?

Post by DB2 » Sun Mar 10, 2019 12:35 pm

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?
Not a bad idea given we are nearing the end of the business cycle and the negative economic data which has been trickling out. Atlanta Fed predicting .3 growth for Q1 19.

As someone else said, it's all about risk tolerance.

marcopolo
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Re: Year's worth of earnings in two months?

Post by marcopolo » Sun Mar 10, 2019 12:49 pm

jtl46 wrote:
Sat Mar 09, 2019 2:48 pm
I am currently all cash and will stay that way until I feel the market has adjusted by at least 20%. That may or may not happen but in the meantime I can live very comfortably on my meager mm interest rate and SS. Imo rolling the dice at the 10 year mark of a bull market is not a bet I care to make. I guess that makes me a market timer. I sometimes think investing in the market is closer to gambling than a lot of people care to admit. I see many negatives, like larger and larger govt deficits, very high corporate and personal debt, lofty RE valuations (at least where I live), many store closings, wages are rising but they are still low for most people, too many companies with over sized valuations compared to their earnings. Anyway, I'm sure most of you will not agree and perhaps even take exception, but that is my very conservative opinion.
When did you go to all cash?

We just adjusted by 20% late last year, did you buy back in then? If not, what are you actually waiting for?
Once in a while you get shown the light, in the strangest of places if you look at it right.

delamer
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Re: Year's worth of earnings in two months?

Post by delamer » Sun Mar 10, 2019 4:26 pm

DB2 wrote:
Sun Mar 10, 2019 12:35 pm
carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?
Not a bad idea given we are nearing the end of the business cycle and the negative economic data which has been trickling out. Atlanta Fed predicting .3 growth for Q1 19.

As someone else said, it's all about risk tolerance.
The OP is doing market timing. She’s making decisions based on short-term factors, when she should be investing based on her long-term goals. It is that simple.

Market timing and risk tolerance are two different things.

Risk tolerance might change over time as your financial circumstances change, but it doesn’t react to short-term (perceived) economic changes.

latesaver
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Re: Year's worth of earnings in two months?

Post by latesaver » Mon Mar 11, 2019 11:50 am

good thing OP got out ahead of today's massive...rally.

goblue100
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Re: Year's worth of earnings in two months?

Post by goblue100 » Mon Mar 11, 2019 12:48 pm

StandingRock wrote:
Sat Mar 09, 2019 4:12 pm

Why do you think market timers hang around on Bogleheads?
I don't know, why? They want to be talked out of it? Or they want to prove that market timing works?
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

interestediniras
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Re: Year's worth of earnings in two months?

Post by interestediniras » Mon Mar 11, 2019 1:06 pm

Market timing aside, a major issue here is the arbitrary and completely imaginary division of time into "calendar years" and the implied notion that these arbitrary boundaries have any relevance to investment decisions.

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DanMahowny
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Re: Year's worth of earnings in two months?

Post by DanMahowny » Mon Mar 11, 2019 2:43 pm

jtl46 wrote:
Sat Mar 09, 2019 2:48 pm
I am currently all cash and will stay that way until I feel the market has adjusted by at least 20%. That may or may not happen but in the meantime I can live very comfortably on my meager mm interest rate and SS. Imo rolling the dice at the 10 year mark of a bull market is not a bet I care to make. I guess that makes me a market timer. I sometimes think investing in the market is closer to gambling than a lot of people care to admit. I see many negatives, like larger and larger govt deficits, very high corporate and personal debt, lofty RE valuations (at least where I live), many store closings, wages are rising but they are still low for most people, too many companies with over sized valuations compared to their earnings. Anyway, I'm sure most of you will not agree and perhaps even take exception, but that is my very conservative opinion.
I agree completely. I'm all cash too.
Funding secured

interestediniras
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Re: Year's worth of earnings in two months?

Post by interestediniras » Mon Mar 11, 2019 2:49 pm

DanMahowny wrote:
Mon Mar 11, 2019 2:43 pm
jtl46 wrote:
Sat Mar 09, 2019 2:48 pm
I am currently all cash and will stay that way until I feel the market has adjusted by at least 20%. That may or may not happen but in the meantime I can live very comfortably on my meager mm interest rate and SS. Imo rolling the dice at the 10 year mark of a bull market is not a bet I care to make. I guess that makes me a market timer. I sometimes think investing in the market is closer to gambling than a lot of people care to admit. I see many negatives, like larger and larger govt deficits, very high corporate and personal debt, lofty RE valuations (at least where I live), many store closings, wages are rising but they are still low for most people, too many companies with over sized valuations compared to their earnings. Anyway, I'm sure most of you will not agree and perhaps even take exception, but that is my very conservative opinion.
I agree completely. I'm all cash too.
You are implicitly betting that you have superior understanding of these market fundamentals (debt, deficits, valuations) than the market as an aggregate. While that is certainly possible, not sure I would label that a 'conservative' opinion.

The absence of a consciously articulated theory/bet doesn't mean you aren't playing the game. You are always playing the game, whether you like it or not.

Silk McCue
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Re: Year's worth of earnings in two months?

Post by Silk McCue » Mon Mar 11, 2019 2:52 pm

It is a shame to see market timer's finding reinforcement in this thread for their non Boglehead decisions based upon the antithetical decision of others here doing the same.

Cheers

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climber2020
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Re: Year's worth of earnings in two months?

Post by climber2020 » Mon Mar 11, 2019 3:08 pm

jtl46 wrote:
Sat Mar 09, 2019 2:48 pm
I am currently all cash and will stay that way until I feel the market has adjusted by at least 20%. That may or may not happen but in the meantime I can live very comfortably on my meager mm interest rate and SS.
The market did drop 20% not that long ago. On December 24, it was almost exactly 20% down from the recent high in September. Did you buy any stocks during the recent dip?

goblue100
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Re: Year's worth of earnings in two months?

Post by goblue100 » Tue Mar 12, 2019 10:43 am

I was researching something else on the forum and came across this thread.

viewtopic.php?f=1&t=127304&p=1868926#p1868926
Is anybody getting out and moving to Cash?
Post by Qprkid » Thu Nov 28, 2013 11:53 am

I know, I know. You can't time the market.

Faithful Boglehead lurker here.

But I'm sitting here up 30+% for the year, having recouped all of my Great Recession losses plus some. Ahead of all of my financial goals, and thinking what's the downside?

A few extra percent that I might be able to squeeze out of this Bull market ride? Can you say Greedy?
This poster thought the bull market was over in 2013. Looking at a monthly price chart of the S&p 500, in the subsequent 6 years stocks have never been cheaper than when Qprkid posted this.
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

Independent George
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Re: Year's worth of earnings in two months?

Post by Independent George » Tue Mar 12, 2019 9:13 pm

carol-brennan wrote:
Sat Mar 09, 2019 6:23 am
I agree that it's market timing.

Around retirement age (+/- 3 years before and after), I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, especially when we're sitting at the top of a decade-long, worldwide experiment with never-before-tried quantitative easing.

For everyone involved, I hope the landing will be soft. But hope is not an investing strategy that allows me to sleep well at night.
Moving out of equities because you are near retirement is a good idea. Moving in and out of equities because you are sure you can predict market peaks and troughs are a terrible idea.

If your investing strategy doesn't let you sleep well at night through good times and bad, then your strategy is wrong.

letsgobobby
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Re: Year's worth of earnings in two months?

Post by letsgobobby » Tue Mar 12, 2019 9:24 pm

DanMahowny wrote:
Mon Mar 11, 2019 2:43 pm
jtl46 wrote:
Sat Mar 09, 2019 2:48 pm
I am currently all cash and will stay that way until I feel the market has adjusted by at least 20%. That may or may not happen but in the meantime I can live very comfortably on my meager mm interest rate and SS. Imo rolling the dice at the 10 year mark of a bull market is not a bet I care to make. I guess that makes me a market timer. I sometimes think investing in the market is closer to gambling than a lot of people care to admit. I see many negatives, like larger and larger govt deficits, very high corporate and personal debt, lofty RE valuations (at least where I live), many store closings, wages are rising but they are still low for most people, too many companies with over sized valuations compared to their earnings. Anyway, I'm sure most of you will not agree and perhaps even take exception, but that is my very conservative opinion.
I agree completely. I'm all cash too.
and you have been, for quite some time. remind us when that started, and what your long term plans are.

DonIce
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Re: Year's worth of earnings in two months?

Post by DonIce » Tue Mar 12, 2019 10:24 pm

climber2020 wrote:
Mon Mar 11, 2019 3:08 pm
The market did drop 20% not that long ago. On December 24, it was almost exactly 20% down from the recent high in September. Did you buy any stocks during the recent dip?
I did.

I put about half my investable income into the market every month regardless of price, and keep the other half in bond funds until there are "dips". If the dips never happen, then I end up with a "conservative" stock/bond allocation. If the dips do happen, then I end up with slightly lower entry points into the market. I sell 1/2 of my bonds and buy stocks if there is a 10% dip and I sell the other half and buy stocks if there is a 20% dip. I called the December dip close enough and went 100% equities at that point.

I consider this method a good one since it lets me satisfy any "market timing" itch I might have while always keeping me between 50% and 100% invested in stocks and between 0% and 50% invested in bonds, which is a sensible range of asset allocations. With what I've bought since December I'm back to about 85/15 stocks/bonds.

I don't know if I'll stick with this specific strategy or settle to something more passive but I don't think it will lead me too far astray for now.

bhsince87
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Re: Year's worth of earnings in two months?

Post by bhsince87 » Tue Mar 12, 2019 10:50 pm

What is your return from March 1 2018 to March 1 2019?

That's a year's worth of return, right?
Retirement: When you reach a point where you have enough. Or when you've had enough.

sambb
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Re: Year's worth of earnings in two months?

Post by sambb » Tue Mar 12, 2019 11:00 pm

if, at any time, your risk tolerance changes, then you should rebalance. Tons of threads on risk tolerance.

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LadyGeek
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Re: Year's worth of earnings in two months?

Post by LadyGeek » Wed Mar 13, 2019 2:54 pm

^^^ Not to mention the wiki: Risk tolerance
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cherijoh
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Re: Year's worth of earnings in two months?

Post by cherijoh » Wed Mar 13, 2019 3:27 pm

carol-brennan wrote:
Sat Mar 09, 2019 6:23 am
I agree that it's market timing.

Around retirement age (+/- 3 years before and after), I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, especially when we're sitting at the top of a decade-long, worldwide experiment with never-before-tried quantitative easing.

For everyone involved, I hope the landing will be soft. But hope is not an investing strategy that allows me to sleep well at night.
Instead of flitting in and out of the market, you should reevaluate your AA in light of your near-term retirement. If your AA is too aggressive then certainly sell enough to get back to the appropriate allocation. If the market continues to climb (or it tanks) use rebalancing bands to get back to where your new AA tells you to be.

I started adjusting my AA a few years before I retired last year. That meant sellling some stock funds, but I still had plently in stocks to take advantage of the continuing rise in markets that we have seen since 2015. I would have been kicking myself if I had gone out of the market totally. Market timing is a round trip activity (getting out of the market AND deciding when to get back in). Screw up one side and you are likely to lose out to "stay the course".

FYI - your YTD achievement of hitting your target for the year is 100% due to the correction last December. If you were omniscient you would have sold sometime last spring and repurchased at the December low. But I expect you probably would have waited to see if the market was headed lower still missing all the recent gains.

DonIce
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Re: Year's worth of earnings in two months?

Post by DonIce » Wed Mar 13, 2019 3:39 pm

I think "reevaluating your AA" is just a euphemism for market timing. At any time, someone can "reevaluate their AA" to be anywhere between 0% and 100% in stocks.

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Earl Lemongrab
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Re: Year's worth of earnings in two months?

Post by Earl Lemongrab » Thu Mar 14, 2019 8:03 pm

DonIce wrote:
Wed Mar 13, 2019 3:39 pm
I think "reevaluating your AA" is just a euphemism for market timing. At any time, someone can "reevaluate their AA" to be anywhere between 0% and 100% in stocks.
Well, depends on the reasons for it. I dropped my base allocation from 70% stocks to eventually the current 60% due to progress towards goals in the recovery from the 2008 crash. It wasn't that I felt like the market was going to do anything in particular at the time. It was just that the sharp rise had really helped my portfolio to start getting there.

In mid-2010 I had about 650k, which as much as I'd started with in 2007, (including new contributions). By late 2012 I cracked a million. It was time to look at preserving some of the growth. Nothing more. Obviously had I stayed at 70% I would have advanced even faster, but that wasn't a concern then or later.
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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