I moved to cash on March 13th and I’m regretting my decision now

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harrington
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I moved to cash on March 13th and I’m regretting my decision now

Post by harrington » Thu Mar 26, 2020 2:47 pm

I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
Last edited by harrington on Thu Mar 26, 2020 2:53 pm, edited 1 time in total.

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FelixTheCat
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by FelixTheCat » Thu Mar 26, 2020 2:50 pm

This is why everyone should have an IPS https://www.bogleheads.org/wiki/Investm ... _statement
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Call_Me_Op » Thu Mar 26, 2020 2:52 pm

As Felix has said, you should write an IPS, and it should assume major market dislocations will occur and it should define how you should behave in those case when (not if) they happen. FWIW, my IPS states that should the market crash, I have two options. Either I can hold-on and ride it down, or if I have the guts, I can buy more stocks until my SAFE allocation hits a FLOOR.

I have been executing the first option for the most part.
Last edited by Call_Me_Op on Thu Mar 26, 2020 2:56 pm, edited 1 time in total.
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Noobvestor
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Noobvestor » Thu Mar 26, 2020 2:54 pm

Thanks for sharing your story. If it's any consolation, I think it will help other people now and in the future contemplating similar decisions. As for what to do now: well, you've missed what you missed, so it's time to come up with a plan that you're able to follow in the future. A few ideas:

1) Hire a (good, passive, cost-minded) financial advisor to put a decision-making layer between you and your money

2) Find a balance that you can live with and get back in at that level - maybe your (looks like 60/40?) allocation was too aggressive. 40/60? 30/70?

3) Once you have a plan, you could DCA in, but that extends your time on the sidelines, for better or worse. I would personally suggest that once you're sincerely confident in your new plan, you pull the trigger. Any day you're not in the market you're not in your plan.

You say you have enough to live on, so maybe you want to go really conservative - a mix of annuities, TIPS (fund or ladder) and just a small amount of stocks, something like 25%, because diversification is good regardless. That seems like a solid wealth-preservation strategy to me.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Sandtrap » Thu Mar 26, 2020 3:01 pm

Suggestions:

1. Post a "portfolio review" and work with our most esteemed portfolio reviewers to come up with a long term comprehensive investment finance strategy going forward. You can edit your original post using the "pencil icon", add the words "Portfolio Review" to your title.
Here is the format:
Portfolio Review Request
https://www.bogleheads.org/forum/viewt ... =1&t=6212

2. Until you do #1, do nothing.

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BL
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by BL » Thu Mar 26, 2020 3:02 pm

What is your stock/bond ratio now? Is it more suitable to your age and experience with the stock market now? If so, don't buy back. When you have won the game, there is no urgent need to "keep playing". You don't need to answer if you prefer not to, but others might give better suggestions if they know more.

If you don't have at least 20-30% stocks, you might want to consider buying back some/all to cover inflation somewhat for the future.

Many of us like to keep being aggressive for heirs or just the challenge. The problem with selling is exactly what you are facing now: when/if to buy back.

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harrington
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by harrington » Thu Mar 26, 2020 3:02 pm

FelixTheCat wrote:
Thu Mar 26, 2020 2:50 pm
This is why everyone should have an IPS https://www.bogleheads.org/wiki/Investm ... _statement
Great idea.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by MikeG62 » Thu Mar 26, 2020 3:33 pm

harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
The market may still be lower today than when you sold (if indeed you sold at the close on March 13th). So if you have so much regret, why not go back into those investments? Personally, I think you’ll get a better entry point in the next 30 days than today’s close, but nonetheless you can undo what was done.

I’m not sure I understand your comment about locking in $220K in losses. Are you referring to the decline in the value of those funds from the peak through March 13th?
Real Knowledge Comes Only From Experience

mouses
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by mouses » Thu Mar 26, 2020 3:43 pm

If I knew I had enough money to provide for myself the rest of my life without being in the stock market, I would not be in the stock market. However, maybe your assumption is wrong. I thought that for myself some years ago and had everything in CDs. CDs were paying 6%. Now they're paying 2%. I just throw this tidbit out there for thought.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Rosencrantz1 » Thu Mar 26, 2020 3:44 pm

harrington wrote:
Thu Mar 26, 2020 3:02 pm
FelixTheCat wrote:
Thu Mar 26, 2020 2:50 pm
This is why everyone should have an IPS https://www.bogleheads.org/wiki/Investm ... _statement
Great idea.
I think having an IPS is a good idea. Having said that, I think there were at least a few folks on BH that "threw the rules out the window" when they capitulated.

What you really need to do, IMHO, is to carefully assess your own personal risk tolerance.... and, then act on that assessment and stay with it.

Personally, I don't have a "written" IPS - but, then I've long been (decades long) a 'buy and hold' type of investor. It has served me well over the decades. Bogleheads has taught me the value of low cost index funds. Prior to that, I was almost exclusively in individual stocks and managed mutual funds (high expense ratios). I still dabble in individual stocks here and there, though. :shock:
/0.02 cents
Best of luck to you.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Housedoc » Thu Mar 26, 2020 4:00 pm

I understand your initial decision with all the news chatter. I find it best to limit CNBC viewing during these times. Fox Biz a tad better but all media want to scare you to not change the channel. Your cash on hand should have put you at ease. Best of luck and hope you get back in. But, there may be a new low or record highs made Average in.

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harrington
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by harrington » Thu Mar 26, 2020 4:03 pm

MikeG62 wrote:
Thu Mar 26, 2020 3:33 pm
harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
The market may still be lower today than when you sold (if indeed you sold at the close on March 13th). So if you have so much regret, why not go back into those investments? Personally, I think you’ll get a better entry point in the next 30 days than today’s close, but nonetheless you can undo what was done.

I’m not sure I understand your comment about locking in $220K in losses. Are you referring to the decline in the value of those funds from the peak through March 13th?
The 220K was off the highs. The Dow is about 1000 points higher than when I sold.

manatee2005
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by manatee2005 » Thu Mar 26, 2020 4:07 pm

harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
You’ve been a member for 9 years. I don’t know what to tell you.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Triple digit golfer » Thu Mar 26, 2020 4:07 pm

Sometimes emotions get the best of us. Best thing you could do now is forget what happened, really reflect and decide what your true, tolerable AA is, and get to it immediately, whether it's staying at 100% cash or getting back in the market with some money. Chalk it up to a learning experience. The loss occurred already. You tried to time the market and failed. Waiting to get back in on another low is trying to time it again. Don't get burned again.

On March 12, I rebalanced because I hit a band, selling $32k of bonds to buy $32k of equities. This kept me at 80/20 AA.

I soon thereafter realized that I would have preferred to stay at 75/25, and regretted rebalancing.

Yesterday, I sold the $32k back to bonds. I basically broke even, perhaps coming out a bit ahead. Bonds were down 1-2% in that time and equities were down around 0.25%, so I think I actually came out ahead of where I have been.

Today, of course, seeing a 6% market increase, has me regretting "undoing" my rebalance.

The way I look at it is I got lucky. Here's what happened to me:

1. I initially overestimated my risk tolerance I wanted a bond/cash floor that rebalancing didn't allow me.
2. I rebalanced anyway, forcing myself to use the IPS I created, without acknowledging that maybe the IPS was wrong!
3. I regretted rebalancing because I lost my bond/cash floor.
4. The market came back up to right at the level that I rebalanced, so I did the opposite and "unrebalanced" back.
5. Now, my portfolio is sitting at where it would have been had I never rebalanced in the first place, at 75/25.
6. I plan on staying at 75/25 indefinitely. It allows me a bond/cash floor and lets me sleep well at night.

If the market shoots up, will I rebalance into even more bonds? Yes. The logic is I don't just want a bond floor. I will rebalance on the way up always, but I will never again rebalance below my bond floor in dollars.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Rosencrantz1 » Thu Mar 26, 2020 4:25 pm

harrington wrote:
Thu Mar 26, 2020 4:03 pm
MikeG62 wrote:
Thu Mar 26, 2020 3:33 pm
harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
The market may still be lower today than when you sold (if indeed you sold at the close on March 13th). So if you have so much regret, why not go back into those investments? Personally, I think you’ll get a better entry point in the next 30 days than today’s close, but nonetheless you can undo what was done.

I’m not sure I understand your comment about locking in $220K in losses. Are you referring to the decline in the value of those funds from the peak through March 13th?
The 220K was off the highs. The Dow is about 1000 points higher than when I sold.
I wouldn't worry about that too much. I'm not entirely convinced we've seen the bottom just yet. But, of course, I'm guessing on direction... :beer

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cheese_breath
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by cheese_breath » Thu Mar 26, 2020 4:35 pm

harrington wrote:
Thu Mar 26, 2020 2:47 pm
.... because I have enough to live on for the rest of my life....:sharebeer
Is that at subsistence level or your desired standard of living?
The surest way to know the future is when it becomes the past.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Iridium » Thu Mar 26, 2020 4:36 pm

harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
Get back in. :D Or maybe take this as a lesson that your risk tolerance didn't match your asset allocation and tweak your allocation. Regardless, the market is still below the point where you sold, so you can actually get all the shares you had before back and still have a little money left over. Most in your position do not have the opportunity to reverse themselves so easily and cheaply (in your case, it looks to be negative cost).

Don't worry about "locking in losses". I tolerate the paper losses aren't real crowd if it helps people stay the course. However, that thinking is leading you astray and causing you unnecessary mental anguish. Let's work though two scenarios:

Scenario A: Lock in loss

Let's say you had 1000 shares @ $100 of some hypothetical fund in January. Then, in February it goes down to $70 and you sell all of it. You get $70,000 and "locked in a loss of $30,000". In March, the price is still $70 and you realize your mistake and buy back in. You spend $70,000 to buy 1000 shares. 10 years later, the shares are at $250. How much do you have? $250,000.

Scenario B: Buy and Hold

You had 1000 shares @ $100 in January. The price went down to $70, but you didn't sell. 10 years later, the shares are at $250. How much do you have? $250,000.

Conundrum: If you have the same amount of money either way, where did the $30,000 loss in scenario A go?

Answer: Both scenarios lost the $30K. The loss was more than made up for by gains in the following decade, so it isn't as obvious in scenario B, but it exists none the less.

Caveat: The scenarios are only the same if you buy back in at the same price as you sold. If the price had gone up, you would not have been able to afford as many shares, which would impact the ultimate value of the account. You currently have an opportunity to follow scenario A. That time the window will be open for is unknown. Figure out how much you are comfortable investing and then do so immediately. You won't have to regret your decision last week, because you won't actually be worse off for it (because you were lucky in that you quickly recognized the error and the market happened to go down sightly since then).

Edit: if this was in taxable, then there is a tax consequence difference between scenarios A and B. However, we would need more information to estimate the impact.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by UpperNwGuy » Thu Mar 26, 2020 4:39 pm

harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
Can you give us more details on why you moved to cash? I'm not piling on. I'm just trying to understand what you were thinking.

dh
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by dh » Thu Mar 26, 2020 4:40 pm

manatee2005 wrote:
Thu Mar 26, 2020 4:07 pm
harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
You’ve been a member for 9 years. I don’t know what to tell you.
I am a bit confused as well. Did you need the $750,000 for something? Obviously, money you need in the near future shouldn't have been in the stock market. No one is going to "pile on," I think we are just trying to figure out what you are asking. :sharebeer

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Abe
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Abe » Thu Mar 26, 2020 4:44 pm

I don't see where you have $220k in losses.
It looks like the S&P was at 2711 when you sold on March 13th. Even with todays 6% gain, it looks like you could get back in below what you sold for, assuming it doesn't go up a lot tomorrow.
Slow and steady wins the race.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by MotoTrojan » Thu Mar 26, 2020 4:47 pm

harrington wrote:
Thu Mar 26, 2020 4:03 pm


The 220K was off the highs. The Dow is about 1000 points higher than when I sold.
Buy back in to your AA (either your prior one, or something you are now comfortable with) tomorrow regardless of the market conditions. You lost a lot less than $220K, but an expensive lesson none-the-less.

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harrington
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by harrington » Thu Mar 26, 2020 5:10 pm

dh wrote:
Thu Mar 26, 2020 4:40 pm
manatee2005 wrote:
Thu Mar 26, 2020 4:07 pm
harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
You’ve been a member for 9 years. I don’t know what to tell you.
I am a bit confused as well. Did you need the $750,000 for something? Obviously, money you need in the near future shouldn't have been in the stock market. No one is going to "pile on," I think we are just trying to figure out what you are asking. :sharebeer
That was the amount of the entire balance in those two funds. Those were the only funds I owned and I sold all the shares and moved to cash. I do have a $200,000 IRA that I left alone.

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Toons » Thu Mar 26, 2020 5:12 pm

I could actually stay out of the market all together because I have enough to live on for the rest of my life."

There ya go,,,,,forget about it
Move on
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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harrington
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by harrington » Thu Mar 26, 2020 5:12 pm

Abe wrote:
Thu Mar 26, 2020 4:44 pm
I don't see where you have $220k in losses.
It looks like the S&P was at 2711 when you sold on March 13th. Even with todays 6% gain, it looks like you could get back in below what you sold for, assuming it doesn't go up a lot tomorrow.
I’m sorry not losses. Off the high back in Feb.

Explorer
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Explorer » Thu Mar 26, 2020 5:16 pm

OP - Don't worry. I think what we are seeing this week is a bear market rally, we will retest the lows we recently saw. Just be patient, and get back in when we revisit the lows (or the prices where you sold).

Good luck.

negwtg
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by negwtg » Thu Mar 26, 2020 5:19 pm

if you are sure, absolutely sure, that you have enough for the rest of your life, then stop playing the game- you have already won

dh
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by dh » Thu Mar 26, 2020 5:25 pm

harrington wrote:
Thu Mar 26, 2020 5:10 pm
dh wrote:
Thu Mar 26, 2020 4:40 pm
manatee2005 wrote:
Thu Mar 26, 2020 4:07 pm
harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
You’ve been a member for 9 years. I don’t know what to tell you.
I am a bit confused as well. Did you need the $750,000 for something? Obviously, money you need in the near future shouldn't have been in the stock market. No one is going to "pile on," I think we are just trying to figure out what you are asking. :sharebeer
That was the amount of the entire balance in those two funds. Those were the only funds I owned and I sold all the shares and moved to cash. I do have a $200,000 IRA that I left alone.
I think you did the right thing. You still didn't say why you did it. If you needed the money, then you were right to take it out. If you sold because you were scared, then you were over invested for your personality. Just set the allocation you can live with (perhaps you are at that given the 200K in the IRA) regardless. You may want to read a book by Jack Bogle - he says create a plan, build your resolve, and stick to to your plan. Put fear in it's proper place (Fantasied Events Appearing Real, or False Evidence Appearing Real). Good luck and be well! :sharebeer

Thesaints
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Thesaints » Thu Mar 26, 2020 5:29 pm

harrington wrote:
Thu Mar 26, 2020 2:47 pm
I could actually stay out of the market all together because I have enough to live on for the rest of my life.
Forget about the IPS. That might have helped you in the past, maybe. The above line is the only thing that matters now. Nobody knows if the market will recover in a relatively short time, or will lose another half of its value, or anything in between.

What you can control now is safety of your assets and protection from inflation.
Last edited by Thesaints on Thu Mar 26, 2020 8:22 pm, edited 2 times in total.

srt7
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by srt7 » Thu Mar 26, 2020 5:29 pm

Meh! It happens. Just DCA back your way in.
I can't think of anything more luxurious than owning my time. - remomnyc

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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Starfox » Thu Mar 26, 2020 5:53 pm

A lot of really good replies here!

Topic Author
harrington
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by harrington » Thu Mar 26, 2020 6:08 pm

UpperNwGuy wrote:
Thu Mar 26, 2020 4:39 pm
harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
Can you give us more details on why you moved to cash? I'm not piling on. I'm just trying to understand what you were thinking.
Panic move.

Rosencrantz1
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Rosencrantz1 » Thu Mar 26, 2020 6:17 pm

negwtg wrote:
Thu Mar 26, 2020 5:19 pm
if you are sure, absolutely sure, that you have enough for the rest of your life, then stop playing the game- you have already won
I've heard this mentioned a few times on this site. It's an interesting 'take' on investing - but, it wouldn't work for me. We have secure COLA pensions that are about 2X our expenses. But, I wouldn't consider stopping playing the game - it's too interesting and, frankly, I enjoy 'playing'. IDK...maybe that's just me :beer

OP: If I had moved to cash ( I didn't), I'd DCA my way back in - at an AA you can feel comfortable with. No serious harm done.

jello_nailer
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by jello_nailer » Thu Mar 26, 2020 6:18 pm

srt7 wrote:
Thu Mar 26, 2020 5:29 pm
Meh! It happens. Just DCA back your way in.
I vote for this ^

In 100 years it isn't going to matter, don't beat yourself up. Unless of course your whole family are hardcore BH's: "Here lies Harrington, a great person, parent, dog lover... but gosh darn it, the knucklehead- Harrington Went to CASH during the largest market beating in his lifetime! Can you believe it? We pray they understood when he arrived at the pearly gates."

Even if you round tripped tomorrow what would the impact be, on your life, 10 years from now? Congrats, you won the game.

Topic Author
harrington
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by harrington » Thu Mar 26, 2020 6:35 pm

jello_nailer wrote:
Thu Mar 26, 2020 6:18 pm
srt7 wrote:
Thu Mar 26, 2020 5:29 pm
Meh! It happens. Just DCA back your way in.
I vote for this ^

In 100 years it isn't going to matter, don't beat yourself up. Unless of course your whole family are hardcore BH's: "Here lies Harrington, a great person, parent, dog lover... but gosh darn it, the knucklehead- Harrington Went to CASH during the largest market beating in his lifetime! Can you believe it? We pray they understood when he arrived at the pearly gates."

Even if you round tripped tomorrow what would the impact be, on your life, 10 years from now? Congrats, you won the game.
:D

marcwd
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by marcwd » Thu Mar 26, 2020 6:37 pm

harrington wrote:
Thu Mar 26, 2020 6:08 pm
UpperNwGuy wrote:
Thu Mar 26, 2020 4:39 pm
harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
Can you give us more details on why you moved to cash? I'm not piling on. I'm just trying to understand what you were thinking.
Panic move.
If the market hadn’t risen the last couple of days would you still be regretting your decision?

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Phineas J. Whoopee
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Phineas J. Whoopee » Thu Mar 26, 2020 6:53 pm

I followed my plan I wrote for myself, turning the crank. On Monday I rebalanced into stocks, because on Friday they'd ventured outside my rebalancing tolerance band. With today's action, I'll evaluate tomorrow, maybe I'll have ventured outside my tolerance band on the other side. If so I'll turn the crank some more.

I'm neither happy nor sad. I'm just following the plan I wrote at a time when markets were relatively calm.

Best of luck to you, OP.

PJW

panhead
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by panhead » Thu Mar 26, 2020 6:55 pm

Triple digit golfer wrote:
Thu Mar 26, 2020 4:07 pm
Sometimes emotions get the best of us. Best thing you could do now is forget what happened, really reflect and decide what your true, tolerable AA is, and get to it immediately, whether it's staying at 100% cash or getting back in the market with some money. Chalk it up to a learning experience. The loss occurred already. You tried to time the market and failed. Waiting to get back in on another low is trying to time it again. Don't get burned again.

On March 12, I rebalanced because I hit a band, selling $32k of bonds to buy $32k of equities. This kept me at 80/20 AA.

I soon thereafter realized that I would have preferred to stay at 75/25, and regretted rebalancing.

Yesterday, I sold the $32k back to bonds. I basically broke even, perhaps coming out a bit ahead. Bonds were down 1-2% in that time and equities were down around 0.25%, so I think I actually came out ahead of where I have been.

Today, of course, seeing a 6% market increase, has me regretting "undoing" my rebalance.

The way I look at it is I got lucky. Here's what happened to me:

1. I initially overestimated my risk tolerance I wanted a bond/cash floor that rebalancing didn't allow me.
2. I rebalanced anyway, forcing myself to use the IPS I created, without acknowledging that maybe the IPS was wrong!
3. I regretted rebalancing because I lost my bond/cash floor.
4. The market came back up to right at the level that I rebalanced, so I did the opposite and "unrebalanced" back.
5. Now, my portfolio is sitting at where it would have been had I never rebalanced in the first place, at 75/25.
6. I plan on staying at 75/25 indefinitely. It allows me a bond/cash floor and lets me sleep well at night.

If the market shoots up, will I rebalance into even more bonds? Yes. The logic is I don't just want a bond floor. I will rebalance on the way up always, but I will never again rebalance below my bond floor in dollars.
Excellent post. We see so many flippant, "stay the course" threads these days, but this shows clearly what people are going through, even people with a plan. I would bet that having that plan kept you from doing anything too crazy, but at the same time these crazy markets made you realize you slightly overestimated your risk tolerance. I hope the OP sees this post, I think it's very valuable...

jjface
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by jjface » Thu Mar 26, 2020 6:55 pm

harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
Markets are still down from 13th March. No losses locked in that you can't undo. Pick an AA you can stick with and jump back in if you think you made a mistake selling.

panhead
Posts: 414
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by panhead » Thu Mar 26, 2020 7:02 pm

Rosencrantz1 wrote:
Thu Mar 26, 2020 6:17 pm
negwtg wrote:
Thu Mar 26, 2020 5:19 pm
if you are sure, absolutely sure, that you have enough for the rest of your life, then stop playing the game- you have already won
I've heard this mentioned a few times on this site. It's an interesting 'take' on investing - but, it wouldn't work for me. We have secure COLA pensions that are about 2X our expenses. But, I wouldn't consider stopping playing the game - it's too interesting and, frankly, I enjoy 'playing'. IDK...maybe that's just me :beer

OP: If I had moved to cash ( I didn't), I'd DCA my way back in - at an AA you can feel comfortable with. No serious harm done.
If I had secure COLA'd pensions that paid 2x my expenses I'd be 100% stocks and wouldn't think twice about it, why would you? You're not investing for yourself at that point. It's when you're trying to put food on the table and pay your property taxes out of a decimated portfolio and maybe some social security that you feel the pain. You have no pain. For you, this is an opportunity to make a huge killing for your heirs or charities. I agree that for you it is a game, but one with no stakes.

Topic Author
harrington
Posts: 200
Joined: Tue Jun 21, 2011 9:09 am

Re: I moved to cash on March 13th and I’m regretting my decision now

Post by harrington » Thu Mar 26, 2020 7:03 pm

marcwd wrote:
Thu Mar 26, 2020 6:37 pm
harrington wrote:
Thu Mar 26, 2020 6:08 pm
UpperNwGuy wrote:
Thu Mar 26, 2020 4:39 pm
harrington wrote:
Thu Mar 26, 2020 2:47 pm
I’m age 59 and have been retired for 10 years. I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses although my overall ROR was about 7.5% over the last 20 years or so. At this point I’m not sure what to do going forward. I could actually stay out of the market all together because I have enough to live on for the rest of my life. All opinions are welcome, and I already feel bad enough so no piling on :sharebeer
Can you give us more details on why you moved to cash? I'm not piling on. I'm just trying to understand what you were thinking.
Panic move.
If the market hadn’t risen the last couple of days would you still be regretting your decision?
Yes.

cloneman33
Posts: 86
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by cloneman33 » Thu Mar 26, 2020 7:12 pm

Thanks for sharing. We have all had a lot of market angst over the years and for sure the last month. My thought is like many others have posted about setting a AA you feel you can live with in any market, be it 50/50, 40/60 or even 30/70. You have to assess what you can handle on the next market craziness, which could be next week!

Also, I think we are going to have some more big down days before this is over, maybe look for a down day in the next week or so and start DCA maybe that same day each week for a month or so, might help to DCA back in. All the best and don’t beat yourself up, you stated you have enough for a lifetime so you have done very well in life!!

Luckywon
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Luckywon » Thu Mar 26, 2020 7:13 pm

harrington wrote:
Thu Mar 26, 2020 2:47 pm
I moved $350,000 out of Wellington and $400,000 out of Life Strategy Moderate into Vanguard MM. I had plenty of cash to weather the storm and realize now I made a mistake locking in about $220,000 in losses
harrington wrote:
Thu Mar 26, 2020 5:12 pm
Abe wrote:
Thu Mar 26, 2020 4:44 pm
I don't see where you have $220k in losses.
It looks like the S&P was at 2711 when you sold on March 13th. Even with todays 6% gain, it looks like you could get back in below what you sold for, assuming it doesn't go up a lot tomorrow.
I’m sorry not losses. Off the high back in Feb.
If I'm understanding this, the loss you are regretting is the opportunity cost of not perfectly timing the market, and you could theoretically get back in the market now and be in the same position as you were before you sold. So there is no substantial difference between the loss you are regretting and literally an infinite number of opportunity costs from not guessing the market correctly every day, even every minute. It seems to me you are torturing yourself for no good reason.

If you have won the game, my advice to you is to put your money in a 20:80 fund and do your very best not to pay any attention to the market at all. The stress of being in the market for you probably far outweighs the benefit of any potential financial gains.
Last edited by Luckywon on Thu Mar 26, 2020 7:14 pm, edited 1 time in total.

CT-Scott
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by CT-Scott » Thu Mar 26, 2020 7:14 pm

Don't worry. Doing anything now would be market-timing. Stay the course! We've got a long way to go before we hit the bottom.

Rosencrantz1
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Rosencrantz1 » Thu Mar 26, 2020 7:39 pm

panhead wrote:
Thu Mar 26, 2020 7:02 pm
Rosencrantz1 wrote:
Thu Mar 26, 2020 6:17 pm
negwtg wrote:
Thu Mar 26, 2020 5:19 pm
if you are sure, absolutely sure, that you have enough for the rest of your life, then stop playing the game- you have already won
I've heard this mentioned a few times on this site. It's an interesting 'take' on investing - but, it wouldn't work for me. We have secure COLA pensions that are about 2X our expenses. But, I wouldn't consider stopping playing the game - it's too interesting and, frankly, I enjoy 'playing'. IDK...maybe that's just me :beer

OP: If I had moved to cash ( I didn't), I'd DCA my way back in - at an AA you can feel comfortable with. No serious harm done.
If I had secure COLA'd pensions that paid 2x my expenses I'd be 100% stocks and wouldn't think twice about it, why would you? You're not investing for yourself at that point. It's when you're trying to put food on the table and pay your property taxes out of a decimated portfolio and maybe some social security that you feel the pain. You have no pain. For you, this is an opportunity to make a huge killing for your heirs or charities. I agree that for you it is a game, but one with no stakes.
Oh, I don't know that I'd go so far as to say "no stakes" or "no pain". Like anyone, I'm not too keen on seeing my assets reduced. I grew up dirt poor and think very carefully about investments and portfolio direction. You're right, though, in that I do think of this (current market) as an opportunity to make a 'killing' (and, if the market should fall further, that opportunity will grow). I anticipate that one day my heir (only child) spends it all on 1st class educations for my grandkids.

Disclosure: I've been buying 25 share increments of VOO and several seriously beaten down individual stocks with the market fall. 70/30 retirement portfolio.

nanameg
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by nanameg » Thu Mar 26, 2020 8:18 pm

I did the same ...cashed out...because I didn’t have a IPS and panicked.

I will take the advice to do nothing until I have an IPS but I’m locked out of reinvesting into the total bond and total stock for 4 weeks. Is that the true for all Vanguard mutual funds?

jello_nailer
Posts: 166
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by jello_nailer » Thu Mar 26, 2020 8:39 pm

I think you have to call them to transfer back in instead of doing an online transfer. I sort of remember seeing that on my Vanguard 401k account. I've never called them.

Oakwood42
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Location: Philadelphia

Re: I moved to cash on March 13th and I’m regretting my decision now

Post by Oakwood42 » Thu Mar 26, 2020 8:41 pm

FelixTheCat wrote:
Thu Mar 26, 2020 2:50 pm
This is why everyone should have an IPS https://www.bogleheads.org/wiki/Investm ... _statement
+1

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mrspock
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by mrspock » Thu Mar 26, 2020 8:41 pm

nanameg wrote:
Thu Mar 26, 2020 8:18 pm
I did the same ...cashed out...because I didn’t have a IPS and panicked.

I will take the advice to do nothing until I have an IPS but I’m locked out of reinvesting into the total bond and total stock for 4 weeks. Is that the true for all Vanguard mutual funds?
That’s correct. You’d have to buy ETFs instead.
VTI, VV and VOO are all fine and are highly correlated. You can also check if there are MF versions of the funds you can buy into immediately.

dcw213
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by dcw213 » Thu Mar 26, 2020 9:10 pm

You are likely regretting it because we have had 3 days when markets are up. 3 days. You need to realize that you are being very emotional here and try to be honest with yourself. Did you really learn a lesson over the last 3 days or will your mind change again if we drop another 30% from here?

I am not saying it is easy, but I truly believe that ALL retail equity investors need to be comfortable with the idea that your assets WILL drop by 50% multiple times in your lifetime. I dont personally like it but I have concluded that in the system we live in (fiat currency, inflationary forces, precedents of government rescuing failed systems) there is no choice but to participate. The movement is beyond our control and we cant time it. Making emotional or gut decisions based on news, events, or short term market trends may work out well, but are nearly certain to work out poorly over the long run. You are not smarter than the collective market. Set your asset allocation at the appropriate level. This includes an emergency fund to cover an extended period of expenses in case of unemployment. If you dont have that, you have no business investing in stocks. After this, relax about your investments. Seems many have forgotten these principles over the last 6 years or so.

ge1
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Re: I moved to cash on March 13th and I’m regretting my decision now

Post by ge1 » Thu Mar 26, 2020 9:12 pm

The worst thing you could do is immediately invest all the money in stocks again... And then maybe the markets tanks another 20% and you will panic again... I would suggest you invest some of the money back in the market tomorrow, maybe 30%? That way you are back in the market and participate in any upside, but you are also protected should the market drop again.

An IPS doesn’t work for me. I’m more of a “trial and error” guy, I need to learn from acting in the market and it took me many years to get to a place where I know what allocation is right for me. And even that allocation is not static, I adjust it based on market levels. People here call it market timing (which it is), but I firmly believe that everybody needs to find their own investing style which they can stick with, whatever that may be. The worst thing is trying to copy someone else‘s investing style / philosophy, you will be sure to abandon it at the worst time.

Good luck

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