Get out now or ride it out?

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dreamrider
Posts: 39
Joined: Fri Jan 21, 2011 8:14 pm

Re: Get out now or ride it out?

Post by dreamrider » Sun Mar 22, 2020 3:51 pm

dvvader wrote:
Sun Mar 22, 2020 3:07 pm
I posted this in another thread but I'll post it again here because I think it's important to see. Below is a snippet from an article I read recently. Hold on, this could all reverse very soon, or it could not. As people like to say on this forum, nobody knows nothing.
7. “Why don’t we just sell everything and wait this out? Get back in when the dust settles?”
This is the question every financial advisor is getting this week, from at least one or two clients. They’re asking out of genuine curiosity, not just panic or fear. And it’s a great question. The great answer is that you won’t know when the dust settles. There’s no airplane writing the “all clear” in the sky above your neighborhood. And when the dust settles, do you think stocks will be at their lows? Or will they have already rallied furiously, in anticipation of this? Let me give you an example. Today is March 9th. Precisely eleven years ago today, in 2009, the stock market stopped going down. There was no reason. The dust had settled, without fanfare or any sort of official announcement. If you had polled people that day, or week or even month, most would not have agreed that we had seen the worst. The economic headlines were not improving. But there it was. And by June 1st, less than 3 months later, the stock market had climbed 41% from that March low. And even with that having happened, the majority of participants still weren’t clear that the dust had fully settled. That we had, in fact, seen the worst. There were still people calling us 3, 5 and 7 years later who had gone to cash and still hadn’t gotten back into stocks. They missed a new record-high a few years later and hundreds of percentage points in compounding on their assets.
I dont disagree. This downturn isnt like the financial crisis though. You cant fix the problem by throwing money at it. My concern is no one knows how long this disease will linger. Say we get the all clear after 2 or 4 weeks to return to work. Going back too early could cause another outbreak. Unless we test every single person in this country, this disease and shutdown could last a long time. People are not going to return to their normal habits anytime soon, whatever the government says. I dont see how a bottom would be reach if we dont stop the virus from spreading and keep unemployment in check. No one knows what's going to happen but the disease expert are expecting the situation to get worse not better.

manzanor
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Re: Get out now or ride it out?

Post by manzanor » Sun Mar 22, 2020 3:55 pm

As far as allocation, you should have been following John Bogle recommendation in which your age signifies fixed income allocation in percent.

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 3:58 pm

dreamrider wrote:
Sun Mar 22, 2020 3:51 pm


I dont disagree. This downturn isnt like the financial crisis though. You cant fix the problem by throwing money at it. My concern is no one knows how long this disease will linger. Say we get the all clear after 2 or 4 weeks to return to work. Going back too early could cause another outbreak. Unless we test every single person in this country, this disease and shutdown could last a long time. People are not going to return to their normal habits anytime soon, whatever the government says. I dont see how a bottom would be reach if we dont stop the virus from spreading and keep unemployment in check. No one knows what's going to happen but the disease expert are expecting the situation to get worse not better.
Exactly.

It's risky.

That's why you earn the risk premium!
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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2pedals
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Re: Get out now or ride it out?

Post by 2pedals » Sun Mar 22, 2020 4:03 pm

dreamrider wrote:
Sun Mar 22, 2020 3:51 pm
dvvader wrote:
Sun Mar 22, 2020 3:07 pm
I posted this in another thread but I'll post it again here because I think it's important to see. Below is a snippet from an article I read recently. Hold on, this could all reverse very soon, or it could not. As people like to say on this forum, nobody knows nothing.
7. “Why don’t we just sell everything and wait this out? Get back in when the dust settles?”
This is the question every financial advisor is getting this week, from at least one or two clients. They’re asking out of genuine curiosity, not just panic or fear. And it’s a great question. The great answer is that you won’t know when the dust settles. There’s no airplane writing the “all clear” in the sky above your neighborhood. And when the dust settles, do you think stocks will be at their lows? Or will they have already rallied furiously, in anticipation of this? Let me give you an example. Today is March 9th. Precisely eleven years ago today, in 2009, the stock market stopped going down. There was no reason. The dust had settled, without fanfare or any sort of official announcement. If you had polled people that day, or week or even month, most would not have agreed that we had seen the worst. The economic headlines were not improving. But there it was. And by June 1st, less than 3 months later, the stock market had climbed 41% from that March low. And even with that having happened, the majority of participants still weren’t clear that the dust had fully settled. That we had, in fact, seen the worst. There were still people calling us 3, 5 and 7 years later who had gone to cash and still hadn’t gotten back into stocks. They missed a new record-high a few years later and hundreds of percentage points in compounding on their assets.
I dont disagree. This downturn isnt like the financial crisis though. You cant fix the problem by throwing money at it. My concern is no one knows how long this disease will linger. Say we get the all clear after 2 or 4 weeks to return to work. Going back too early could cause another outbreak. Unless we test every single person in this country, this disease and shutdown could last a long time. People are not going to return to their normal habits anytime soon, whatever the government says. I dont see how a bottom would be reach if we dont stop the virus from spreading and keep unemployment in check. No one knows what's going to happen but the disease expert are expecting the situation to get worse not better.
I think you missed the point. The market has already reacted to your narrative and has weighed its risks based on what disease experts have been saying.

razorbacker
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Re: Get out now or ride it out?

Post by razorbacker » Sun Mar 22, 2020 4:10 pm

watchnerd wrote:
Sun Mar 22, 2020 2:35 pm
over45 wrote:
Sun Mar 22, 2020 2:18 pm
I just came across this website which shows quite a bit of information / statistics on everything from stocks, commodities, currencies, etc. There is a "forecasts" section link at the top that projects out 4 quarters - though the information may not be completely updated. Seems legit. Might be worth a look for anyone who may be interested in forecasts:

https://tradingeconomics.com/stocks
[Removed -- mod oldcomputerguy] I really need to invest in Venezuela and Tehran.
Zimbabwe looks good also at 295% year end. :mrgreen:

Topic Author
jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 4:16 pm

manzanor wrote:
Sun Mar 22, 2020 3:55 pm
As far as allocation, you should have been following John Bogle recommendation in which your age signifies fixed income allocation in percent.
60/40 Balanced fund is not that out of line for someone with 6-8 years until retirement. Hindsight is 20/20.
Last edited by jasperhobbs on Sun Mar 22, 2020 4:19 pm, edited 1 time in total.

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 4:18 pm

razorbacker wrote:
Sun Mar 22, 2020 4:10 pm
watchnerd wrote:
Sun Mar 22, 2020 2:35 pm
over45 wrote:
Sun Mar 22, 2020 2:18 pm
I just came across this website which shows quite a bit of information / statistics on everything from stocks, commodities, currencies, etc. There is a "forecasts" section link at the top that projects out 4 quarters - though the information may not be completely updated. Seems legit. Might be worth a look for anyone who may be interested in forecasts:

https://tradingeconomics.com/stocks
[Removed -- mod oldcomputerguy] I really need to invest in Venezuela and Tehran.
Zimbabwe looks good also at 295% year end. :mrgreen:
If only there was a way to invest!
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

Indexer99
Posts: 19
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Re: Get out now or ride it out?

Post by Indexer99 » Sun Mar 22, 2020 4:21 pm

My advice is not to sell at a loss now.

In a few years, get into a safer allocation: more bonds, more cash.

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sergeant
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Re: Get out now or ride it out?

Post by sergeant » Sun Mar 22, 2020 4:30 pm

4) Stand pat and stick with your current allocation.
Lincoln 3 EOW! AA 40/60.

dvvader
Posts: 39
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Re: Get out now or ride it out?

Post by dvvader » Sun Mar 22, 2020 4:33 pm

dreamrider wrote:
Sun Mar 22, 2020 3:51 pm
dvvader wrote:
Sun Mar 22, 2020 3:07 pm
I posted this in another thread but I'll post it again here because I think it's important to see. Below is a snippet from an article I read recently. Hold on, this could all reverse very soon, or it could not. As people like to say on this forum, nobody knows nothing.
7. “Why don’t we just sell everything and wait this out? Get back in when the dust settles?”
This is the question every financial advisor is getting this week, from at least one or two clients. They’re asking out of genuine curiosity, not just panic or fear. And it’s a great question. The great answer is that you won’t know when the dust settles. There’s no airplane writing the “all clear” in the sky above your neighborhood. And when the dust settles, do you think stocks will be at their lows? Or will they have already rallied furiously, in anticipation of this? Let me give you an example. Today is March 9th. Precisely eleven years ago today, in 2009, the stock market stopped going down. There was no reason. The dust had settled, without fanfare or any sort of official announcement. If you had polled people that day, or week or even month, most would not have agreed that we had seen the worst. The economic headlines were not improving. But there it was. And by June 1st, less than 3 months later, the stock market had climbed 41% from that March low. And even with that having happened, the majority of participants still weren’t clear that the dust had fully settled. That we had, in fact, seen the worst. There were still people calling us 3, 5 and 7 years later who had gone to cash and still hadn’t gotten back into stocks. They missed a new record-high a few years later and hundreds of percentage points in compounding on their assets.
I dont disagree. This downturn isnt like the financial crisis though. You cant fix the problem by throwing money at it. My concern is no one knows how long this disease will linger. Say we get the all clear after 2 or 4 weeks to return to work. Going back too early could cause another outbreak. Unless we test every single person in this country, this disease and shutdown could last a long time. People are not going to return to their normal habits anytime soon, whatever the government says. I dont see how a bottom would be reach if we dont stop the virus from spreading and keep unemployment in check. No one knows what's going to happen but the disease expert are expecting the situation to get worse not better.
I 100% agree that the outlook is grim, but things change fast (see the last month, for example). You said it yourself, "no one knows". The only way to ensure you ride the recovery in it's entirety is to stay invested every day at an allocation you are comfortable with. Speaking of asset allocation, current events clearly demonstrate the importance of of having a well thought out IPS. A major benefit of an IPS is that it will prevent you from making an emotional decision (if adhered to). For my own part, I plan to ride this through, maintaining my asset allocation and continuing with my regular scheduled contributions to retirement accounts. It's going to suck, but I will emerge from the other side wealthier than I am now. If I don't, then we have bigger problems than our 401k and IRA accounts being down.

aristotelian
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Re: Get out now or ride it out?

Post by aristotelian » Sun Mar 22, 2020 4:39 pm

What was your plan before the crisis hit? Knowing that there is always a risk of a bear market, how does the reality of a bear market change your plan?

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 4:52 pm

aristotelian wrote:
Sun Mar 22, 2020 4:39 pm
What was your plan before the crisis hit? Knowing that there is always a risk of a bear market, how does the reality of a bear market change your plan?
The plan was to go 40/60 allocation in 3 years as retirement is not far off at that point. The revised plan probably 30/70 allocation if/when we somehow get back to high levels we were at.

The real crystal ball question is, should a person sell out now and not wait for the bottom to happen. And then wait until we get some stability and get back in the market albeit a far more conservative allocation.

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Raybo
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Re: Get out now or ride it out?

Post by Raybo » Sun Mar 22, 2020 4:53 pm

My plan is to do both.

I plan to get out(side) and ride it out (on my bicycle).
No matter how long the hill, if you keep pedaling you'll eventually get up to the top.

aristotelian
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Re: Get out now or ride it out?

Post by aristotelian » Sun Mar 22, 2020 5:15 pm

jasperhobbs wrote:
Sun Mar 22, 2020 4:52 pm
aristotelian wrote:
Sun Mar 22, 2020 4:39 pm
What was your plan before the crisis hit? Knowing that there is always a risk of a bear market, how does the reality of a bear market change your plan?
The plan was to go 40/60 allocation in 3 years as retirement is not far off at that point. The revised plan probably 30/70 allocation if/when we somehow get back to high levels we were at.

The real crystal ball question is, should a person sell out now and not wait for the bottom to happen. And then wait until we get some stability and get back in the market albeit a far more conservative allocation.
What is your current allocation and what was your plan if a bear market hit before retirement?

Topic Author
jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 5:41 pm

aristotelian wrote:
Sun Mar 22, 2020 5:15 pm
jasperhobbs wrote:
Sun Mar 22, 2020 4:52 pm
aristotelian wrote:
Sun Mar 22, 2020 4:39 pm
What was your plan before the crisis hit? Knowing that there is always a risk of a bear market, how does the reality of a bear market change your plan?
The plan was to go 40/60 allocation in 3 years as retirement is not far off at that point. The revised plan probably 30/70 allocation if/when we somehow get back to high levels we were at.

The real crystal ball question is, should a person sell out now and not wait for the bottom to happen. And then wait until we get some stability and get back in the market albeit a far more conservative allocation.
What is your current allocation and what was your plan if a bear market hit before retirement?
60/40 a good chunk in wellington

Hyperchicken
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Re: Get out now or ride it out?

Post by Hyperchicken » Sun Mar 22, 2020 5:44 pm

Good chance to see S&P 500 at 2100 tomorrow.
OP might have not been that far off in his market predictions. :twisted:

am
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Re: Get out now or ride it out?

Post by am » Sun Mar 22, 2020 5:47 pm

Hyperchicken wrote:
Sun Mar 22, 2020 5:44 pm
Good chance to see S&P 500 at 2100 tomorrow.
OP might have not been that far off in his market predictions. :twisted:
They might Agree on the bill today and we’ll see a huge day tomorrow only to be followed by a much larger loss :annoyed

I don’t think we’ll see an end to the bleeding until there is an effective treatment, vaccine, cases start dropping. Makes me think why I’m staying the course if it’s so easy to predict?

Kagord
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Re: Get out now or ride it out?

Post by Kagord » Sun Mar 22, 2020 5:52 pm

What does DOW futures limit down hit mean on Google news, does that mean it will sky rocket tomorrow because it's at the bottom? We really need the recovery now, hoping for a massive 5K up day tomorrow. If the bill passes, maybe 6K up?

Hyperchicken
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Re: Get out now or ride it out?

Post by Hyperchicken » Sun Mar 22, 2020 5:55 pm

Futures at the down limit means they would have gone even lower if they were allowed to. Which means the market will probably plummet tomorrow at the opening, unless something really positive happens between now and then.

am
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Re: Get out now or ride it out?

Post by am » Sun Mar 22, 2020 5:58 pm

Hyperchicken wrote:
Sun Mar 22, 2020 5:55 pm
Futures at the down limit means they would have gone even lower if they were allowed to. Which means the market will probably plummet tomorrow at the opening, unless something really positive happens between now and then.
Can they agree on a bill tonight you think? Seems like even if tomorrow is up, it’ll be down even more the day after as news will get worse. :annoyed We will bleed until medical progress is made and cases drop.

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 6:00 pm

Kagord wrote:
Sun Mar 22, 2020 5:52 pm
What does DOW futures limit down hit mean on Google news, does that mean it will sky rocket tomorrow because it's at the bottom? We really need the recovery now, hoping for a massive 5K up day tomorrow. If the bill passes, maybe 6K up?
Highly unlikely.

Hyperchicken
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Re: Get out now or ride it out?

Post by Hyperchicken » Sun Mar 22, 2020 6:02 pm

am wrote:
Sun Mar 22, 2020 5:58 pm
Can they agree on a bill tonight you think? Seems like even if tomorrow is up, it’ll be down even more the day after as news will get worse. :annoyed We will bleed until medical progress is made and cases drop.
If I knew what happens tomorrow, everyone would know the same, and that knowledge would have been priced into the futures. In other words, no one knows.

yoyo6713
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Re: Get out now or ride it out?

Post by yoyo6713 » Sun Mar 22, 2020 6:03 pm

Kagord wrote:
Sun Mar 22, 2020 5:52 pm
What does DOW futures limit down hit mean on Google news, does that mean it will sky rocket tomorrow because it's at the bottom? We really need the recovery now, hoping for a massive 5K up day tomorrow. If the bill passes, maybe 6K up?
It's not healthy to pin one's hope on a single day. Maybe reassess your risk profile?

Hyperchicken
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Re: Get out now or ride it out?

Post by Hyperchicken » Sun Mar 22, 2020 6:14 pm

am wrote:
Sun Mar 22, 2020 5:58 pm
Can they agree on a bill tonight you think?
Aaand... that did not take long. Voting failed.
Brace for the impact.

mathguy3021
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Re: Get out now or ride it out?

Post by mathguy3021 » Sun Mar 22, 2020 6:40 pm

What I am seeing is not a bear market. This is a collapse in stock prices tied to an event that has no quick fix with no end in sight. The virus is not likely to peak for several months, and at this rate stocks will be near zero in a matter of weeks. I am calling a depression so why not prevent another 50% loss from here? Currently, I still have gains from 2017. It would be like I moved to cash after some gains back then.

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 7:09 pm

mathguy3021 wrote:
Sun Mar 22, 2020 6:40 pm
What I am seeing is not a bear market. This is a collapse in stock prices tied to an event that has no quick fix with no end in sight. The virus is not likely to peak for several months, and at this rate stocks will be near zero in a matter of weeks. I am calling a depression so why not prevent another 50% loss from here? Currently, I still have gains from 2017. It would be like I moved to cash after some gains back then.
I hear what you are saying and I bet a lot of others feel the same way. Now pulling the trigger and bailing out is another story.

Sometimes I feel I should flip a coin. Heads I ride it out and tails, I bail out.

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 8:10 pm

mathguy3021 wrote:
Sun Mar 22, 2020 6:40 pm
What I am seeing is not a bear market. This is a collapse in stock prices tied to an event that has no quick fix with no end in sight. The virus is not likely to peak for several months, and at this rate stocks will be near zero in a matter of weeks.
And yet the number of shares I own will still be the same.

I can't imagine how many shares I could buy if the stock market went to zero.

I could buy infinity shares!!!
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

Hyperchicken
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Re: Get out now or ride it out?

Post by Hyperchicken » Sun Mar 22, 2020 8:15 pm

watchnerd wrote:
Sun Mar 22, 2020 8:10 pm
I can't imagine how many shares I could buy if the stock market went to zero.

I could buy infinity shares!!!
Gives the words "buying the market" a whole new meaning.

SandysDad
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Re: Get out now or ride it out?

Post by SandysDad » Sun Mar 22, 2020 8:21 pm

To quote barry ritholtz.. Too late to sell, too early to buy.

Wellington is a good choice.

Given your age and timeframe hard to argue with the choice.

I "THINK" there is an opt to make some money by selling at Friday close price point, AND buying back in lower. DO NOT TIME THE BOTTOM.

So IF thats IF you do adjust don't time the bottom. Just sell and buy back in! got it?

You need some nerve to do this!

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 8:22 pm

Hyperchicken wrote:
Sun Mar 22, 2020 8:15 pm
watchnerd wrote:
Sun Mar 22, 2020 8:10 pm
I can't imagine how many shares I could buy if the stock market went to zero.

I could buy infinity shares!!!
Gives the words "buying the market" a whole new meaning.
I know!

I love getting shares from weaker hands.

It's like adopting homeless puppies.....so cute, and they grow up so big.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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Sandtrap
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Re: Get out now or ride it out?

Post by Sandtrap » Sun Mar 22, 2020 8:44 pm

Read about “Life Cycle Investing” by Bernstein
(Not Bernstein Bears)
j🏝
Wiki Bogleheads Wiki: Everything You Need to Know

Valueinvestor2
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Re: Get out now or ride it out?

Post by Valueinvestor2 » Sun Mar 22, 2020 9:17 pm

jasperhobbs wrote:
Sun Mar 22, 2020 10:28 am
I'm sure a similar question has been asked but I will throw out my situation and perhaps someone in the same age and retirement timeframe can share their thoughts. I do understand no one knows how low the market will go.

59 years old with plans to retire in 6-8 years. My portfolio is in a 60/40 stock/bond mix. A good chunk in Wellington. Options I see are posted below.

1) Sell everything and go with the money market until things stabilize.
2) Sell a portion of the portfolio
3) Stand pat and wait for things to recover.

Hindsight is 20/20 and most would have sold off when DOW made the first major drop. Now the question is sell now if/before DOW drops to 15,000 or less.

Thoughts appreciated
J
None of those are legitimate options. Seriously! Now is not the time to be thinking of selling.

You have 6-8 years until retirement.

I have been a longtime reader of these forums and I cannot just read passively anymore! People need to get a grip.

Let me tell you the reality. If the s and p is not above 2000 in next 6-8 years we all have more problems than our stupid retirement accounts!

A HUGE flaw of the boglehead philosophy is that those of this “religion” do not take business (market) valuations into account. Asset allocation should not be a set “60/40”. It should change as market valuations change.

When we were at extreme valuations we should move towards fixed income and away from securities. Now is the time to start increasing asset allocation to securities and not fixed income! Why is this so hard to understand?

The 4th option that makes the most mathematical sense is to start moving fixed income to stocks. Maybe wait 1-2 weeks because it’s going to get worse but then act! What is there to lose? Is the s and p going to 0? If so, retirement accounts don’t matter. At that point guns, food, and shelter matter. Period.

Get a grip folks.

Bama12
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Re: Get out now or ride it out?

Post by Bama12 » Sun Mar 22, 2020 9:46 pm

Ride and buy

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Mon Mar 23, 2020 5:17 pm

Valueinvestor2 wrote:
Sun Mar 22, 2020 9:17 pm
jasperhobbs wrote:
Sun Mar 22, 2020 10:28 am
I'm sure a similar question has been asked but I will throw out my situation and perhaps someone in the same age and retirement timeframe can share their thoughts. I do understand no one knows how low the market will go.

59 years old with plans to retire in 6-8 years. My portfolio is in a 60/40 stock/bond mix. A good chunk in Wellington. Options I see are posted below.

1) Sell everything and go with the money market until things stabilize.
2) Sell a portion of the portfolio
3) Stand pat and wait for things to recover.

Hindsight is 20/20 and most would have sold off when DOW made the first major drop. Now the question is sell now if/before DOW drops to 15,000 or less.

Thoughts appreciated
J
None of those are legitimate options. Seriously! Now is not the time to be thinking of selling.

You have 6-8 years until retirement.

I have been a longtime reader of these forums and I cannot just read passively anymore! People need to get a grip.

Let me tell you the reality. If the s and p is not above 2000 in next 6-8 years we all have more problems than our stupid retirement accounts!

A HUGE flaw of the boglehead philosophy is that those of this “religion” do not take business (market) valuations into account. Asset allocation should not be a set “60/40”. It should change as market valuations change.

When we were at extreme valuations we should move towards fixed income and away from securities. Now is the time to start increasing asset allocation to securities and not fixed income! Why is this so hard to understand?

The 4th option that makes the most mathematical sense is to start moving fixed income to stocks. Maybe wait 1-2 weeks because it’s going to get worse but then act! What is there to lose? Is the s and p going to 0? If so, retirement accounts don’t matter. At that point guns, food, and shelter matter. Period.

Get a grip folks.
I get what are saying about moving money to fixed income when valuations are high. However, the market was on such a roll, who knew when to move out of equities and into fixed.

If the coronavirus did not happen, who knows the Dow could have went well over 30,000. If/when the market recovers, you bet I will be moving most out of equities. Probably way too conservative for my age but that is my plan

Valueinvestor2
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Re: Get out now or ride it out?

Post by Valueinvestor2 » Thu Mar 26, 2020 7:40 am

jasperhobbs wrote:
Mon Mar 23, 2020 5:17 pm
Valueinvestor2 wrote:
Sun Mar 22, 2020 9:17 pm
jasperhobbs wrote:
Sun Mar 22, 2020 10:28 am
I'm sure a similar question has been asked but I will throw out my situation and perhaps someone in the same age and retirement timeframe can share their thoughts. I do understand no one knows how low the market will go.

59 years old with plans to retire in 6-8 years. My portfolio is in a 60/40 stock/bond mix. A good chunk in Wellington. Options I see are posted below.

1) Sell everything and go with the money market until things stabilize.
2) Sell a portion of the portfolio
3) Stand pat and wait for things to recover.

Hindsight is 20/20 and most would have sold off when DOW made the first major drop. Now the question is sell now if/before DOW drops to 15,000 or less.

Thoughts appreciated
J
None of those are legitimate options. Seriously! Now is not the time to be thinking of selling.

You have 6-8 years until retirement.

I have been a longtime reader of these forums and I cannot just read passively anymore! People need to get a grip.

Let me tell you the reality. If the s and p is not above 2000 in next 6-8 years we all have more problems than our stupid retirement accounts!

A HUGE flaw of the boglehead philosophy is that those of this “religion” do not take business (market) valuations into account. Asset allocation should not be a set “60/40”. It should change as market valuations change.

When we were at extreme valuations we should move towards fixed income and away from securities. Now is the time to start increasing asset allocation to securities and not fixed income! Why is this so hard to understand?

The 4th option that makes the most mathematical sense is to start moving fixed income to stocks. Maybe wait 1-2 weeks because it’s going to get worse but then act! What is there to lose? Is the s and p going to 0? If so, retirement accounts don’t matter. At that point guns, food, and shelter matter. Period.

Get a grip folks.
I get what are saying about moving money to fixed income when valuations are high. However, the market was on such a roll, who knew when to move out of equities and into fixed.

If the coronavirus did not happen, who knows the Dow could have went well over 30,000. If/when the market recovers, you bet I will be moving most out of equities. Probably way too conservative for my age but that is my plan
IMO this is one of the biggest flaws of the BH philosophy (for those who can control their emotions). I started moving larger percentage to cash in 2018 and by mid 2019 I was 100% cash. I sat in 100% cash for 9 months as the market went straight up. That was painful but I was able to separate my emotions with logical thinking. All metrics pointed to extreme overvaluation. I committed to going 100% cash and would not get back until stocks got back to fair value or cheap.

This is not the BH philosophy and would be considered “market timing”. I am willing to be in a basket of stocks if valuations are fair or cheap. I am not willing to stay in a basket of overpriced stocks and that’s why I made the decision. I committed to it and it worked out for me. I did not know when to move out of the market, I did choose a specific valuation and at that point I moved out. Eventually stocks reach fair value.

Topic Author
jasperhobbs
Posts: 23
Joined: Sat Jan 18, 2020 7:41 pm

Re: Get out now or ride it out?

Post by jasperhobbs » Sat Mar 28, 2020 6:40 am

I wanted to give an update. I did sell off $20,000 Thursday with the bounce. A couple of reasons I did it was.
1) Money is in a Roth and I just turned 59 and in a 1/2 a year I can pull the money out without penalty if I really need to (Job loss, emergency ETC)
2) I can take the 20K and jump back in the market if we see a drastic drop which is very possible.

In any event, I did sell in a down market but the money has been in the market a long time so probably sold at 2018 level so still a gain from the original investment.

Conclusion, I am still at 60/40 mix which is probably too heavy in stocks for my age but the plan is to get way more conservative if/when the recovery happens.

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