Why not stand on the sidelines for a little while?

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Wed Mar 25, 2020 4:23 pm

[/quote]
I haven't read through the thread but that is patently false. Miami has a shelter in place order for one.
[/quote]

Quick update on what's been going on in your state:

https://www.politico.com/states/florida ... us-1268818

https://edition.cnn.com/2020/03/23/poli ... index.html

https://www.miamiherald.com/opinion/edi ... 03236.html

Topic Author
fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Wed Mar 25, 2020 4:32 pm

You asking question based on an very bad scenario for a future that is unknown. What if you are wrong and investing in this discounted market is an opportunity for a lifetime, wouldn't you want to be in?
Sure I would. I looked at '08 exactly that way. This one I'm not so sure about. I'm not predicting any given outcome, but it seems like the downside risk - the opportunities for people in position to influence the outcome to make it much worse that it would otherwise be - are much more plausible than upside risk/opportunity (e.g., we get a vaccine in mass production in 6 months).

bovineplane
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Re: Why not stand on the sidelines for a little while?

Post by bovineplane » Wed Mar 25, 2020 4:33 pm

In the end the market only has three possibilities in the next 9 months.

Higher
Lower
The same

You have all the advice you need in telling you to do what you want with your money. Nothing else to discuss really.

CrankAddict
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Re: Why not stand on the sidelines for a little while?

Post by CrankAddict » Wed Mar 25, 2020 4:38 pm

fitterhappier wrote:
Wed Mar 25, 2020 7:05 am
This is where I get my ~9 month idea. I'm not looking to make money on market timing (though obviously that'd be nice), just get out and then re-bet on something I understand better.
The thought I have is, in 9 months, the only way you are going to understand anything better is if we're back to some kind of normalcy. If we're in total free fall or having some worldwide breakdown of industry and civilization, you'll (and we'll) have no clue how to invest. You won't be able to better understand a world that is truly different from any world we've ever known, studied, documented, etc. If things are rational, however, then why not be in the game between now and then and keep DCA'ing your contributions? I just can't see the angle where the world is understandable by you in 9 months, but where you wish you were disconnected between now and then. If we were having this discussion in early Feb, sure. Markets at an all time high, yeah, let's contemplate this. But now?

And the biggest problem is you won't be "on the sidelines". You'll be losing your mind. You sell today, then let's say next week the Dow is at 24000... "Ugh, did I miss it? Is it going back up? Nah, this is a dead cat bounce". Next week, it's at 25000. "Damn, I'm getting back in!" Then China gets a resurgence of cases just when we are starting to look better here and bam - 20000 again. Or you stay out and it just slowly walks back up. The point should be obvious. That "on the sidelines" game is still a game. And knowing when and how to get back in is as impossible as knowing when to get out (which you didn't, nor did I, etc).

Also, I see posters in here talking about markets going back up and gaining 30%. Don't forget, we went from 30k to 20k. To get back to 30k we have to go up 50%, not 30%. But the upside of that is that every dollar you pour in now is going to get that 50% bump - most likely, at some point. Well, that is unless you are on the sidelines :)
Last edited by CrankAddict on Wed Mar 25, 2020 4:41 pm, edited 1 time in total.

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HomerJ
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Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Wed Mar 25, 2020 4:40 pm

fitterhappier wrote:
Wed Mar 25, 2020 3:27 pm
HomerJ wrote:
Wed Mar 25, 2020 11:07 am
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
I'm just having a hard time seeing the scenario in which the market rockets in that time and I miss out on some massive gain. The downside risk, however, seems...titanic.
I see it the opposite.

The downside risk is very small... What titanic downside risk? In the long-run, the stock market will almost certainly be higher.

Sure it could drop a LOT in the next 1-2 years... but if it's higher than today in 10 years who cares?
I don't have any worry about the market coming back eventually, for some value of eventually. I've tried to be pretty careful to not say such things. I'm sure that at retirement I will have returned some amount of money that's pretty decent, compounded over time, and all that. I get that people want me to man up and weather the hard times, and every time I read this I wonder what it is I'm writing to lead people to believe this is even an issue.

The challenge I'm posing is a little more fundamental. To put it in terms of a hypothetical, if investing experience were more often situations like this and not "what will the fed do in its next meeting" or like "are the Germans gonna bail out the Greeks", there would be no Bogleism. I've brought up actuaries because this is how I think about the current crisis: there's no model for it, no predictability about how down the downside might just be. Sure, all the major actors are heavily incentivized to bring the market back, but as we see, stupidity also matters - there are serious suggestions in certain quarters that ignoring the virus and opening businesses again is some kind of option (?). If a combination of idiocracy and an unfortunate moment in the history of pandemics causes a massive downside effect that gets you to break even in several decades, wouldn't you want to be out?
So the titanic downside risk you want to avoid is that we take 20 years to break even?

Sure, that's possible.

But are you not going to invest any more money in the next 20 years?

Look, I'll say it again, the 9%-10% nominal long-term annual average of the stock market INCLUDES the 50% crashes... Read that again. No, seriously, read it again and let it soak in. That's why we "buy and hold".

You didn't have to avoid the crashes in the past to become wealthy.

Could this time be different? Sure... Go ahead and bet on it being different. You might be right.

Something you're not getting though with the "dogma" comments.

We were just like you guys at one point. We thought we could time the market too, we thought we could tell when it was different. And we were mostly wrong. So we lost money, or made less than the market.

Then we switched over to "buy and hold" because it makes sense. Logical sense. And then we watched people come on these boards for the past 12-15 years, and continually post how "This time it's different", and how timing the market WAS possible, and how they'll just get out until things go back to normal. And then we'd watch them lose money or make less than the market.

Just like we did.

So you coming on here and posting these things isn't new to us. We've seen it before. Maybe you're right this time. Someday someone might be right. Maybe even you.

But it's not dogma. There are good reasons we believe in "buy and hold", and good reasons we don't think it's a good idea to sit out for 9 months.

It could work.. Sitting out for 9 months might be very profitable. We don't know.

We're smart enough to know that we don't know. It's hard to predict the future. And since just investing in the market over the long-term makes you wealthy even with the crashes, we choose to do that. Get wealthy without trying so hard. It's nice.

Good luck to you! :sharebeer
Last edited by HomerJ on Wed Mar 25, 2020 4:44 pm, edited 1 time in total.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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HomerJ
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Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Wed Mar 25, 2020 4:43 pm

CrankAddict wrote:
Wed Mar 25, 2020 4:38 pm
And the biggest problem is you won't be "on the sidelines". You'll be losing your mind. You sell today, then let's say next week the Dow is at 24000... "Ugh, did I miss it? Is it going back up?"
This. If you're paying so much attention now that you want to make a huge change to your portfolio, then you will be paying attention for the next 9 months too, and second-guessing your moves as well.

Look, just go 50/50 stocks/bonds.

Then you're always right. That's what I do.

If you're 100% stocks or 100% cash, there will be times when you think you made a mistake.

50/50, you're never wrong.

Stocks are going up... Awesome... I'm so smart to be in stocks
Stocks are going down... Awesome... I'm so smart to have a huge chunk in safe bonds.

But you do you.... :)
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

Elysium
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Re: Why not stand on the sidelines for a little while?

Post by Elysium » Wed Mar 25, 2020 4:55 pm

fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
To recap: we are facing a world-historic crisis situation, much of which depends on how the US pandemic plays out, and various economic vicious cycles play out after an unprecedented small-business wipeout and massive unemployment...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. The line "what everyone will agree.." is a giveaway into the thinking. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.

Randolph Mortimer
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Re: Why not stand on the sidelines for a little while?

Post by Randolph Mortimer » Wed Mar 25, 2020 4:57 pm

Elysium wrote:
Wed Mar 25, 2020 4:55 pm
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
To recap: we are facing a world-historic crisis situation, much of which depends on how the US pandemic plays out, and various economic vicious cycles play out after an unprecedented small-business wipeout and massive unemployment...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.
Bingo.

PinotGris
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Re: Why not stand on the sidelines for a little while?

Post by PinotGris » Wed Mar 25, 2020 5:00 pm

I am staying the course. I am home bound, one of the old ones refusing to do the patriotic thing by giving my life for the market, and it is gray and yucky outside. They are even closing the parks and trails.
I sold some shares of Wellington, a correction I needed to make in my taxable account when the market was still normal, and exchanged into VTSAX. Then the market went down and everything went red.
My AA is 0ff by 6% and I am not concerned as I was last year when I was TLHing and what not. Now, I am just on the sidelines. Bought a few shares of Mid-cap VIMAX from the recent dividend distributions sitting in the MM acct. to balance my Equity AA a bit. Then I will just watch as my AA takes its time get back to alignment.

nanameg
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Re: Why not stand on the sidelines for a little while?

Post by nanameg » Wed Mar 25, 2020 5:03 pm

This. If you're paying so much attention now that you want to make a huge change to your portfolio, then you will be paying attention for the next 9 months too, and second-guessing your moves as well.

Look, just go 50/50 stocks/bonds.

Then you're always right. That's what I do.

If you're 100% stocks or 100% cash, there will be times when you think you made a mistake.

50/50, you're never wrong.

Stocks are going up... Awesome... I'm so smart to be in stocks
Stocks are going down... Awesome... I'm so smart to have a huge chunk in safe bonds.

But you do you.... :)

Thanks but is that TRUE? Hasn’t the inverse relationship between stocks and bonds been decoupled? I see people on the forum questioning and wondering about returns on their bond funds

nanameg
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Re: Why not stand on the sidelines for a little while?

Post by nanameg » Wed Mar 25, 2020 5:08 pm

Ok...I’m sorry... I’m using an iPad ...I don’t know how to get the post I’m referring to in yellow like others are doing.

I just joined bogleheads last week and stumbling around.

I tried to paste homer j’s post and then ask my question which is ...is it TRUE that as stocks go down bonds go up and vice versa? It doesn’t seem to be that simple.

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Wed Mar 25, 2020 5:08 pm

The thought I have is, in 9 months, the only way you are going to understand anything better is if we're back to some kind of normalcy. If we're in total free fall or having some worldwide breakdown of industry and civilization, you'll (and we'll) have no clue how to invest.
Smoot-Hawley didn't precede a breakdown in civilization (though many historians credit FDR with subsequently preventing the US from flying apart), but the response to the '29 crash was extremely painful for a looong time. I think there are stopping points between 5% average return and the end of civilization, many of which, if normal, would make Bogleism silly.
You won't be able to better understand a world that is truly different from any world we've ever known, studied, documented, etc. If things are rational, however, then why not be in the game between now and then and keep DCA'ing your contributions?
The difference is that if something really titanically stupid and bad happens then I have the option of buying into good companies at a lower price than even today.

Markets have really been running up over the past few years, and I'm sure it's not news to anyone here that many think they're overvalued. We're only giving back returns since, what, 2017 at this point?

I can see the case that a recovery gets us to somewhere in the 2012-2015 range of valuations. But between now and December...the risk that things could get worse, given how obviously stupid the market has been in the past month...just seems like the better story to me. We'll only know with hindsight. Folks are obviously right about the difficulty of timing the market and I respect that.
And the biggest problem is you won't be "on the sidelines". You'll be losing your mind. You sell today, then let's say next week the Dow is at 24000... "Ugh, did I miss it? Is it going back up? Nah, this is a dead cat bounce". Next week, it's at 25000. "Damn, I'm getting back in!" Then China gets a resurgence of cases just when we are starting to look better here and bam - 20000 again. Or you stay out and it just slowly walks back up. The point should be obvious. That "on the sidelines" game is still a game. And knowing when and how to get back in is as impossible as knowing when to get out (which you didn't, nor did I, etc).
Regarding the you're-going-to-freak-out argument:
a) I've been though a lot of ups and downs and I seriously doubt that I'd freak. I mean, I can easily rule it out. Saying that doesn't seem to end the barrage of posts accusing me of it, even digging into my post history. It's just what a couple of posters here deeply want to be true. I seriously don't care, I just want to not do things that are dumb because of stupid dogmas. Bogleism, I've discovered, is just screaming "I'm a textbook dogma" at me after this experience. It's fortunate for most people here that it mostly works and their chosen dogma isn't gold or BTC.
b) I don't find this argument to be compelling (I'm choosing to respond to you, but it's been put forward several times here) because it can easily be turned around as an argument against buy and hold or whatever strategy you want to name. There's no such thing as not betting no matter what you do, FOMO is in effect 100% of the time, a fact of life, IMO.

ososnilknarf
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Re: Why not stand on the sidelines for a little while?

Post by ososnilknarf » Wed Mar 25, 2020 5:13 pm

The thing is by the time you feel like things have calmed down and normalized, the market will have already made a big comeback, and you'll have missed it. The market won't stay down if things seem like they are getting better.
What did Warren Buffett say? Something like, I'm paraphrasing, "You pay a hefty premium for a rosy outlook."

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watchnerd
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Re: Why not stand on the sidelines for a little while?

Post by watchnerd » Wed Mar 25, 2020 5:24 pm

People really don't like to admit it's super hard to beat the market.

A "touch the stove" moment is sometimes required.

Or as Will Rogers said:

"There are three kinds of men.

The one that learns by reading.

The few who learn by observation.

The rest of them have to pee on the electric fence for themselves."
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

the way
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Re: Why not stand on the sidelines for a little while?

Post by the way » Wed Mar 25, 2020 5:29 pm

While standing on the sidelines, maybe you can buy some call options on SPY and that way still profit on a recovery, while controlling your downside risk.

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Wed Mar 25, 2020 5:33 pm

the way wrote:
Wed Mar 25, 2020 5:29 pm
While standing on the sidelines, maybe you can buy some call options on SPY and that way still profit on a recovery, while controlling your downside risk.
Ha, so simple, I feel dumb for not thinking of this immediately...

(Or stay in and buy puts)

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Wed Mar 25, 2020 5:47 pm

Elysium wrote:
Wed Mar 25, 2020 4:55 pm
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
To recap: we are facing a world-historic crisis situation, much of which depends on how the US pandemic plays out, and various economic vicious cycles play out after an unprecedented small-business wipeout and massive unemployment...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. The line "what everyone will agree.." is a giveaway into the thinking. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.
Lol you're only a few posts down from where I get outed as late-gen-x, facts guy, go play Ben Shapiro on FB threads and don't clog up my discussion please.

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2pedals
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Re: Why not stand on the sidelines for a little while?

Post by 2pedals » Wed Mar 25, 2020 6:01 pm

fitterhappier wrote:
Wed Mar 25, 2020 4:32 pm
You asking question based on an very bad scenario for a future that is unknown. What if you are wrong and investing in this discounted market is an opportunity for a lifetime, wouldn't you want to be in?
Sure I would. I looked at '08 exactly that way. This one I'm not so sure about. I'm not predicting any given outcome, but it seems like the downside risk - the opportunities for people in position to influence the outcome to make it much worse that it would otherwise be - are much more plausible than upside risk/opportunity (e.g., we get a vaccine in mass production in 6 months).
I think you are saying the market valuations today does not support the downside fat tail risks that people or you should be taking. Your prediction is by re-risking now for the short term (a few months) even though you are a long term investor you will be better off because the odds in your favor. I think you should ponder carefully over what Andrew Lo believes. Andrew Lo, the Adaptive Market Hypothesis theory founder, believes that people are mainly rational, but sometimes can overreact during periods of heightened market volatility. Are you overreacting? I think you are.

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Wed Mar 25, 2020 6:03 pm

I think you are saying the market valuations today does not support the downside fat tail risks that people or you should be taking. Your prediction is by re-risking now for the short term (a few months) even though you are a long term investor you will be better off because the odds in your favor. I think you should ponder carefully over what Andrew Lo believes. Andrew Lo, the Adaptive Market Hypothesis theory founder, believes that people are mainly rational, but sometimes can overreact during periods of heightened market volatility. Are you overreacting? I think you are.
That is really exactly what I'm saying, only your words are better than mine, thank you for this post. I will read up on what you recommend here.

onourway
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Re: Why not stand on the sidelines for a little while?

Post by onourway » Wed Mar 25, 2020 6:05 pm

The thing is, you are acting as if your concerns are something novel, something we haven’t heard before. Every investor who decides to pull out believes with every bit of their being that “this time is different”. Eventually some of them will be right.

The thing is, buy and hold is really a really simple philosophy that is exceptionally hard to execute consistently over the long term. People who have excess money to invest tend to be pretty smart, and so they naturally can’t help but extend that intelligence to their investments, where it then tends to backfire on them when it turns out the market is dictated by so many factors that are nearly impossible to predict let alone model, and that’s a really hard pill for a smart person to swallow - that not only were they wrong - but that being wrong cost themselves a lot of money.

Some people really do have to learn for themselves - hence we are totally serious when we tell you to go ahead and do what your are convinced needs to be done. You really might be the exception.

jon eciu
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Re: Why not stand on the sidelines for a little while?

Post by jon eciu » Wed Mar 25, 2020 6:06 pm

OP, your post is challenging because (as you've reiterated in many of your replies) it was meant to be a challenge to this particular community, where "staying the course" is a tenet. The words "orthodoxy" and "dogma" keep surfacing here, and if you find yourself irritated with the suggestion that this is all about your risk tolerance, try to allow that many of us register that you are indeed a very intelligent person, and that you are discussing this in good faith, but that we nevertheless experience this discussion to be about risk tolerance rather than something more original. People challenge orthodoxy sometimes as a way to avoid the difficult requirements of a principle. I don't say that to be insulting, but to offer perspective on why this community is being strident in its response to your post. A quote I heard once, that has stood me in good stead, is "I never met anybody that was too dumb to get sober, but I have met plenty of people that were too smart."

Many of us are weathering this crisis dumbly, but that's because we adopted a "dumb" approach to investment in the first place. While stress tests are always important, to some degree you are barking up the wrong tree.

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Re: Why not stand on the sidelines for a little while?

Post by Rowan Oak » Wed Mar 25, 2020 6:14 pm

HomerJ wrote:
Wed Mar 25, 2020 4:40 pm
Something you're not getting though with the "dogma" comments.

We were just like you guys at one point. We thought we could time the market too, we thought we could tell when it was different. And we were mostly wrong. So we lost money, or made less than the market.

Then we switched over to "buy and hold" because it makes sense. Logical sense. And then we watched people come on these boards for the past 12-15 years, and continually post how "This time it's different", and how timing the market WAS possible, and how they'll just get out until things go back to normal. And then we'd watch them lose money or make less than the market.

Just like we did.

So you coming on here and posting these things isn't new to us. We've seen it before. Maybe you're right this time. Someday someone might be right. Maybe even you.

But it's not dogma. There are good reasons we believe in "buy and hold", and good reasons we don't think it's a good idea to sit out for 9 months.

It could work.. Sitting out for 9 months might be very profitable. We don't know.

We're smart enough to know that we don't know. It's hard to predict the future. And since just investing in the market over the long-term makes you wealthy even with the crashes, we choose to do that. Get wealthy without trying so hard. It's nice.

Good luck to you! :sharebeer
This pretty much sums up how I became a buy and hold investor. Great post.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Wed Mar 25, 2020 6:15 pm

fitterhappier wrote:
Wed Mar 25, 2020 6:03 pm
I think you are saying the market valuations today does not support the downside fat tail risks that people or you should be taking. Your prediction is by re-risking now for the short term (a few months) even though you are a long term investor you will be better off because the odds in your favor. I think you should ponder carefully over what Andrew Lo believes. Andrew Lo, the Adaptive Market Hypothesis theory founder, believes that people are mainly rational, but sometimes can overreact during periods of heightened market volatility. Are you overreacting? I think you are.
That is really exactly what I'm saying, only your words are better than mine, thank you for this post. I will read up on what you recommend here.
Sorry for the extra post here...

I would be remiss, and I think, unfair to my own position, to not point out that my suspicions about downside risks were triggered by hard facts about market behavior in the past three weeks. It's really not a good story, and as close to a clearly damning natural experiment as one will find about market rationality in the short term. It's not to say that in the long run - or more precisely, in more normal times - the market isn't broadly reflective of the future value of expected profits...but it is to say that something seems really wrong right now. Something was clearly, factually, wrong from early March to about right now, if one looks at the information available vs equity price movements. Which led to a string of thoughts along the lines of, maybe something is just really wrong right now, and why am I "in"? And then, thinking about a local peak where I could get out for a while...

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Wed Mar 25, 2020 6:16 pm

Rowan Oak wrote:
Wed Mar 25, 2020 6:14 pm
HomerJ wrote:
Wed Mar 25, 2020 4:40 pm
Something you're not getting though with the "dogma" comments.

We were just like you guys at one point. We thought we could time the market too, we thought we could tell when it was different. And we were mostly wrong. So we lost money, or made less than the market.

Then we switched over to "buy and hold" because it makes sense. Logical sense. And then we watched people come on these boards for the past 12-15 years, and continually post how "This time it's different", and how timing the market WAS possible, and how they'll just get out until things go back to normal. And then we'd watch them lose money or make less than the market.

Just like we did.

So you coming on here and posting these things isn't new to us. We've seen it before. Maybe you're right this time. Someday someone might be right. Maybe even you.

But it's not dogma. There are good reasons we believe in "buy and hold", and good reasons we don't think it's a good idea to sit out for 9 months.

It could work.. Sitting out for 9 months might be very profitable. We don't know.

We're smart enough to know that we don't know. It's hard to predict the future. And since just investing in the market over the long-term makes you wealthy even with the crashes, we choose to do that. Get wealthy without trying so hard. It's nice.

Good luck to you! :sharebeer
This pretty much sums up how I became a buy and hold investor. Great post.
I like this one too, thank you HomerJ.

Elysium
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Re: Why not stand on the sidelines for a little while?

Post by Elysium » Wed Mar 25, 2020 6:25 pm

fitterhappier wrote:
Wed Mar 25, 2020 5:47 pm
Elysium wrote:
Wed Mar 25, 2020 4:55 pm
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
To recap: we are facing a world-historic crisis situation, much of which depends on how the US pandemic plays out, and various economic vicious cycles play out after an unprecedented small-business wipeout and massive unemployment...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. The line "what everyone will agree.." is a giveaway into the thinking. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.
Lol you're only a few posts down from where I get outed as late-gen-x, facts guy, go play Ben Shapiro on FB threads and don't clog up my discussion please.
OP, the point is your post about standing on the sidelines is still an emotional response to something that has already happened. This is the time smart people with capital are scooping up shares that are beaten down temporarily. Obviously there is a lot of panic selling, without which you will never be able to purchase stocks at bargain prices. That's how you increase your wealth over time, not standing on the sidelines until prices have gone up. Then you get to buy at the higher prices for overall lower expected future returns. Standing on the sidelines is something you do when markets are peaking and you have made profits, not when they go on sale.

Perhaps you like the safety of lower returns, I like higher returns from purchasing at bargain prices when stocks are on sale.

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Re: Why not stand on the sidelines for a little while?

Post by BuckyBadger » Wed Mar 25, 2020 6:41 pm

Why does every market timer think that he or she somehow knows more than enough else?

And why on earth do they use SO MANY WORDS to try to convince other people of that fact??

There are so very many fancy words in this thread describing plain old market timing. It's almost poetic.

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Re: Why not stand on the sidelines for a little while?

Post by CrankAddict » Wed Mar 25, 2020 6:52 pm

fitterhappier wrote:
Wed Mar 25, 2020 5:08 pm
Regarding the you're-going-to-freak-out argument:
a) I've been though a lot of ups and downs and I seriously doubt that I'd freak. I mean, I can easily rule it out. Saying that doesn't seem to end the barrage of posts accusing me of it, even digging into my post history. It's just what a couple of posters here deeply want to be true. I seriously don't care, I just want to not do things that are dumb because of stupid dogmas. Bogleism, I've discovered, is just screaming "I'm a textbook dogma" at me after this experience. It's fortunate for most people here that it mostly works and their chosen dogma isn't gold or BTC.
b) I don't find this argument to be compelling (I'm choosing to respond to you, but it's been put forward several times here) because it can easily be turned around as an argument against buy and hold or whatever strategy you want to name. There's no such thing as not betting no matter what you do, FOMO is in effect 100% of the time, a fact of life, IMO.
"b" is provably false. FOMO is out the window with the "set it and forget" bogle recipe. Trust me, I'm a guy that spent months writing code to optimize automated bitcoin purchases due to FOMO. I've lived the 24/7 gotta-watch-it-or-else life and it blows. Now I can go a month without even logging in to Vanguard. There's very little FOMO if you aren't even watching.

As far as "a", if you were as stoic as you are describing you'd just make your move and brag (or cry) about it later. If you are on here asking "why not?" then by definition you aren't 100% confident in this. So bailing now and just sitting there while the Dow goes back to 30k isn't going to impact you at all? Really? Sure, it could go down to 10k as well (the same argument could have been made in January (of any year) btw). But if I don't plan on selling either way I don't have to factor that into my decision tree right?

And while I get that there is always going to be blind allegiance within a devoted group, from what I've seen around here people are pretty rational. If you don't want people "screaming dogma" at you about not selling then perhaps go hang out on markettimer.com instead bogleheads.org?

And for what it's worth... I really have no horse in your race. Whether you become homeless or a billionaire it quite literally won't impact me at all. I'm just trying to bounce some thoughts off you before you make a such a big decision, which in the end, I would hope, is why you posted in the first place. So please don't take offense or think I'm trying to talk down to you or anything like that.

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Re: Why not stand on the sidelines for a little while?

Post by Randolph Mortimer » Wed Mar 25, 2020 7:06 pm

BuckyBadger wrote:
Wed Mar 25, 2020 6:41 pm
Why does every market timer think that he or she somehow knows more than enough else?

And why on earth do they use SO MANY WORDS to try to convince other people of that fact??

There are so very many fancy words in this thread describing plain old market timing. It's almost poetic.
Ego.

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Re: Why not stand on the sidelines for a little while?

Post by H-Town » Wed Mar 25, 2020 7:11 pm

It appears that no one can change your mind at this point. We tried to help to no avail.

Do what you want with your money. Most of us here would end up with too much money than we need anyways. No need to get too worked up about it.

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Re: Why not stand on the sidelines for a little while?

Post by watchnerd » Wed Mar 25, 2020 7:45 pm

BuckyBadger wrote:
Wed Mar 25, 2020 6:41 pm
Why does every market timer think that he or she somehow knows more than enough else?

And why on earth do they use SO MANY WORDS to try to convince other people of that fact??

There are so very many fancy words in this thread describing plain old market timing. It's almost poetic.

It's like when a Bond villian or super villian has to tell everyone about his genius plan to rule the world.
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Re: Why not stand on the sidelines for a little while?

Post by watchnerd » Wed Mar 25, 2020 7:49 pm

H-Town wrote:
Wed Mar 25, 2020 7:11 pm


Do what you want with your money.
He can keep his money.

I just want to buy his shares.
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Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Wed Mar 25, 2020 8:56 pm

Elysium wrote:
Wed Mar 25, 2020 4:55 pm
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
To recap: we are facing a world-historic crisis situation, much of which depends on how the US pandemic plays out, and various economic vicious cycles play out after an unprecedented small-business wipeout and massive unemployment...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. The line "what everyone will agree.." is a giveaway into the thinking. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.
Seriously? He's 100% right when he says "highly unusual" and I'm no snowflake.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: Why not stand on the sidelines for a little while?

Post by geo5000 » Wed Mar 25, 2020 9:39 pm

Bingo, is the OP looking for an “atta boy, you’re right , go for it ?
Just do it, or you will be a nervous wreck every single day, 24/7 for god knows how long ! Not worth it.

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Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Wed Mar 25, 2020 10:04 pm

nanameg wrote:
Wed Mar 25, 2020 5:03 pm
Thanks but is that TRUE? Hasn’t the inverse relationship between stocks and bonds been decoupled? I see people on the forum questioning and wondering about returns on their bond funds
Here's Vanguard's Total Bond Market Index Fund Year-to-Date compared to Vanguard's Total Stock Market Index Fund Year-to-Date.

Image

Looks to me like Total Bond Index Fund is doing EXACTLY what I want it to do...

It's up 1.22% for the year, while Total Stock Market is down 25% for the year.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Wed Mar 25, 2020 10:06 pm

watchnerd wrote:
Wed Mar 25, 2020 5:24 pm
People really don't like to admit it's super hard to beat the market.

A "touch the stove" moment is sometimes required.

Or as Will Rogers said:

"There are three kinds of men.

The one that learns by reading.

The few who learn by observation.

The rest of them have to pee on the electric fence for themselves."
Heh, everyone is quoting that since I put it out there a week ago :)

I love the fact that there's only ONE guy who learns just by reading... That's about right.

I'll admit I had to pee on the fence.
Last edited by HomerJ on Wed Mar 25, 2020 10:13 pm, edited 1 time in total.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: Why not stand on the sidelines for a little while?

Post by phantom0308 » Wed Mar 25, 2020 10:09 pm

yohac wrote:
Wed Mar 25, 2020 4:54 am
Summer heat and humidity may slow down the virus. An effective vaccine and treatments may arrive sooner than expected. Or maybe not, but there are definitely risks for sitting out the next 9 months.
Summer heat like Australian and Indian summer doesn’t seem to be helping much. I guess it’s hard to know how bad it would’ve been in their winter. Australia has 2500ish case and a population of 28 million. Hard to know India since they haven’t been testing. The country is in lockdown for 3 weeks fwiw.

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Re: Why not stand on the sidelines for a little while?

Post by Elysium » Wed Mar 25, 2020 10:13 pm

HomerJ wrote:
Wed Mar 25, 2020 8:56 pm
Elysium wrote:
Wed Mar 25, 2020 4:55 pm
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
To recap: we are facing a world-historic crisis situation, much of which depends on how the US pandemic plays out, and various economic vicious cycles play out after an unprecedented small-business wipeout and massive unemployment...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. The line "what everyone will agree.." is a giveaway into the thinking. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.
Seriously? He's 100% right when he says "highly unusual" and I'm no snowflake.
I will not make portfolio decisions based on political views one way or other, and instead totally ignore most of it unless I have clear evidence that something "highly unusual" is going on that could impact the financial markets negatively. In that event that information would already become public and priced in by the market before I may even get to it. Since OP made that as one of the reasons for his decision to consider going to sidelines, then that brings into question whether he is being driven emotionally.

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Re: Why not stand on the sidelines for a little while?

Post by Clemblack » Wed Mar 25, 2020 10:42 pm

The real danger here, for OP and for others who share his sentiments, is that he implements his plan and succeeds.

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Re: Why not stand on the sidelines for a little while?

Post by LFKB » Wed Mar 25, 2020 11:05 pm

fitterhappier wrote:
Wed Mar 25, 2020 5:47 pm
Elysium wrote:
Wed Mar 25, 2020 4:55 pm
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
To recap: we are facing a world-historic crisis situation, much of which depends on how the US pandemic plays out, and various economic vicious cycles play out after an unprecedented small-business wipeout and massive unemployment...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. The line "what everyone will agree.." is a giveaway into the thinking. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.
Lol you're only a few posts down from where I get outed as late-gen-x, facts guy, go play Ben Shapiro on FB threads and don't clog up my discussion please.
Just an observation, but you seem like the type of person that thinks you’re smarter and better than other people. You were already were proven wrong once when you moved from a three fund portfolio to all equities in the late stages of the longest bull run in history. I’ll venture a guess that you’ll fail badly again with this strategy and maybe that is a good thing for you in the long run. Let us know when you sell everything.

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Re: Why not stand on the sidelines for a little while?

Post by White Coat Investor » Wed Mar 25, 2020 11:20 pm

fitterhappier wrote:
Wed Mar 25, 2020 4:16 am

I'm a buy-and-hold long-term indexing investor,
No you're not.

The reason not to stand on the sidelines is because you have no idea what the future holds. But that is no different from March 2018 or March 2019. Long term investors capture the long term return of the markets. Market timers hope they can miss the bad times and get the good times. Pulling out of the market AFTER a big drop just means it is more likely that you do just the opposite.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Re: Why not stand on the sidelines for a little while?

Post by HomerJ » Wed Mar 25, 2020 11:34 pm

White Coat Investor wrote:
Wed Mar 25, 2020 11:20 pm
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am

I'm a buy-and-hold long-term indexing investor,
No you're not.

The reason not to stand on the sidelines is because you have no idea what the future holds. But that is no different from March 2018 or March 2019. Long term investors capture the long term return of the markets. Market timers hope they can miss the bad times and get the good times. Pulling out of the market AFTER a big drop just means it is more likely that you do just the opposite.
This. Oh my goodness... This...

This should be at the top of every thread on Bogleheads.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: Why not stand on the sidelines for a little while?

Post by watchnerd » Wed Mar 25, 2020 11:59 pm

HomerJ wrote:
Wed Mar 25, 2020 10:06 pm
watchnerd wrote:
Wed Mar 25, 2020 5:24 pm
People really don't like to admit it's super hard to beat the market.

A "touch the stove" moment is sometimes required.

Or as Will Rogers said:

"There are three kinds of men.

The one that learns by reading.

The few who learn by observation.

The rest of them have to pee on the electric fence for themselves."
Heh, everyone is quoting that since I put it out there a week ago :)

I love the fact that there's only ONE guy who learns just by reading... That's about right.

I'll admit I had to pee on the fence.

I ordered it on a wooden plaque, laser engraved, to hang over my toilet.

https://www.amazon.com/There-Rogers-eng ... 35&sr=8-12
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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 1:18 am

jon eciu wrote:
Wed Mar 25, 2020 6:06 pm
...
you are discussing this in good faith, but that we nevertheless experience this discussion to be about risk tolerance rather than something more original. People challenge orthodoxy sometimes as a way to avoid the difficult requirements of a principle. I don't say that to be insulting, but to offer perspective on why this community is being strident in its response to your post. A quote I heard once, that has stood me in good stead, is "I never met anybody that was too dumb to get sober, but I have met plenty of people that were too smart."

Many of us are weathering this crisis dumbly, but that's because we adopted a "dumb" approach to investment in the first place. While stress tests are always important, to some degree you are barking up the wrong tree.
I missed this earlier and just wanted to say I really respect this post this and definitely am not insulted. There's an appealing honestly to putting it this way. makes me want to probe where you'd stop being (admirably) dumb...here's a hypothetical that's been on my mind: I shudder to consider how much terror and insanity there would be if the age effects of this virus were reversed, killing kids. I could easily imagine a panicked flight from population centers. At some level of chaos and destabilization of the world economy to function well, much less grow, you gotta get "smart" and perhaps modify strategy, right? Especially if the market (i.e. equity pricing) looks broken.

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 1:29 am

White Coat Investor wrote:
Wed Mar 25, 2020 11:20 pm
fitterhappier wrote:
Wed Mar 25, 2020 4:16 am

I'm a buy-and-hold long-term indexing investor,
No you're not.

The reason not to stand on the sidelines is because you have no idea what the future holds. But that is no different from March 2018 or March 2019. Long term investors capture the long term return of the markets. Market timers hope they can miss the bad times and get the good times. Pulling out of the market AFTER a big drop just means it is more likely that you do just the opposite.
Nor am I a true scotsman
https://en.wikipedia.org/wiki/No_true_Scotsman

I've offered to specify a date certain for re-entry into the market (at least for the purposes of discussion). This is no different in principle from one of the millions of people who are getting laid off as we speak (at an all-time record rate!), many of whom are "long-term investors", suspending 401k contributions until some future date when they are again employed.

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 1:38 am

LFKB wrote:
Wed Mar 25, 2020 11:05 pm
fitterhappier wrote:
Wed Mar 25, 2020 5:47 pm
Elysium wrote:
Wed Mar 25, 2020 4:55 pm

OP gave away clues to where he is coming from with his opening statement itself. When you are blinded by biases of some sort, it prevents you from focusing on the facts. The line "what everyone will agree.." is a giveaway into the thinking. There is a whole generation out there that are needing safe spaces to hide away until they get their perfect policies in place.
Lol you're only a few posts down from where I get outed as late-gen-x, facts guy, go play Ben Shapiro on FB threads and don't clog up my discussion please.
Just an observation, but you seem like the type of person that thinks you’re smarter and better than other people.
...
I just want to point out to the small crew that's trying to take this thread into insult territory (common problem w/ online discussions), that within 2 posts you've gone from attempting to belittle me as not ready for the big bad world by association with a generation I'm not even part of, to now playing victim. You should be on better behavior and should refrain from attacking and insulting people in online forums (about...boring financial matters no less!), but if you just can't resist, at least make the experience less whiplash-inducing.

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Re: Why not stand on the sidelines for a little while?

Post by Novine » Thu Mar 26, 2020 1:51 am

fitterhappier - I noted in another discussion that the idea that "the markets" are forward thinking is pretty hard to accept when we look at what happened during the month of February. On February 12, the Dow rang up its highest average ever. This happened in the face of all the news coming out of China, the increasing spread of the coronavirus in the US and the potential that the same economic contraction hitting China could happen here with all the resulting economic problems that would result.

Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.

In those ways, I can understand where you are coming from with your skepticism. But here's the other thing that the past 6 weeks should show you. Markets sometimes don't act logically, especially in times of great uncertainty. You think there's a lot more downside and risk in the markets and I fully agree with that view. But the markets don't always follow the most logical path. If the pain goes on long enough, eventually the markets will be forced to bend to economic reality. But they often go in directions that don't appear to make sense and that will confound your attempts to jump back in at the appropriate time. There's plenty of stories of people who got out early in 2008 but sat out for years because they couldn't find the confidence in the markets to jump back in. That's why you are getting a lot of advice from people to stay in even if it feels like this time is really different.

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 2:08 am

HomerJ wrote:
Wed Mar 25, 2020 10:04 pm
nanameg wrote:
Wed Mar 25, 2020 5:03 pm
Thanks but is that TRUE? Hasn’t the inverse relationship between stocks and bonds been decoupled? I see people on the forum questioning and wondering about returns on their bond funds
Here's Vanguard's Total Bond Market Index Fund Year-to-Date compared to Vanguard's Total Stock Market Index Fund Year-to-Date.

Image

Looks to me like Total Bond Index Fund is doing EXACTLY what I want it to do...

It's up 1.22% for the year, while Total Stock Market is down 25% for the year.
I haven't brought up relative price moves before but thank you for doing so HomerJ. Something obviously crazy is happening right now, and it's quite visible on the right side of this chart. Bonds and stocks are (supposedly, from what I read) being sold because businesses and individuals simply need to get ahold of any cash they can probably because what we're about to experience, over the next 8 quarters, is historic-level very-very-bad.

https://www.nytimes.com/2020/03/12/upsh ... virus.html

So the bond/equity relationship is at least temporarily broken (to the doxxer types who are digging up my past and posting about my switch from 3-fund to 100% equities, it's not looking super terrible at the moment right now, is it? Are you all rebalancing into down stocks with...down BND sales?)

Now think about the volatility we're seeing. All of these things are telling us that the ability of "the market" to correctly price equities is pretty messed messed up right now. "We've crashed down to 2017 levels", doesn't seem like THAT big of a deal to me. Are equity prices really reflecting the damage to world output? Are they really reflecting the downside risk that we go from, say, 2017 to 2014 levels? In 2014 the Shiller P/E had been above 20 for 4 years - point being that these lower levels aren't some terrifying place nor are they far-off historically...

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 2:25 am

Novine wrote:
Thu Mar 26, 2020 1:51 am
fitterhappier - I noted in another discussion that the idea that "the markets" are forward thinking is pretty hard to accept when we look at what happened during the month of February. On February 12, the Dow rang up its highest average ever. This happened in the face of all the news coming out of China, the increasing spread of the coronavirus in the US and the potential that the same economic contraction hitting China could happen here with all the resulting economic problems that would result.

Does anyone believe that what's followed over the past 6 weeks was "priced into the markets" on February 12? There's no evidence that it was. I think you agree. I fully expect to see the same happen tomorrow (March 26) when the unemployment numbers come out. Any evidence that the markets have priced in the impact of the reporting of huge unemployment numbers? I haven't seen it.

In those ways, I can understand where you are coming from with your skepticism. But here's the other thing that the past 6 weeks should show you. Markets sometimes don't act logically, especially in times of great uncertainty. You think there's a lot more downside and risk in the markets and I fully agree with that view. But the markets don't always follow the most logical path. If the pain goes on long enough, eventually the markets will be forced to bend to economic reality. But they often go in directions that don't appear to make sense and that will confound your attempts to jump back in at the appropriate time. There's plenty of stories of people who got out early in 2008 but sat out for years because they couldn't find the confidence in the markets to jump back in. That's why you are getting a lot of advice from people to stay in even if it feels like this time is really different.
Thank you for this post Novine, interesting thoughts and I find a lot to agree with here. My proposition is to fix the "when do you get back in" problem by stating a date, at which point I would, like a robot just following its programming, hit the buy button.

The question is when is someone not buying-and-holding anymore. Certainly, we can all agree that selling to rebalance intra-day, or selling 100% at the end of a trading day and getting into a similar set of index funds the next day, is not a meaningful change away from a buy-and-hold strategy. If you sell and wait a week to get back in, are you still buying-and-holding? I think so. Somewhere between a week and a way-outer-bound of two years, you're no longer buying and holding (because for one, you're not "holding"). 9 months is probably stretching it but it's not entirely clear to me that I would cease to be a buy-and-hold investor. (My credentials are, I believe, pretty impeccable! I probably average 1 trade a year and as previously stated am in 100% equities and have the clear intent to continue with 100% equities, or some form of equity-heavy lazy portfolio.)

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fitterhappier
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Re: Why not stand on the sidelines for a little while?

Post by fitterhappier » Thu Mar 26, 2020 2:46 am

Better reeeeally believe that Bogleism works in all circumstances, folks

Image

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Re: Why not stand on the sidelines for a little while?

Post by rossington » Thu Mar 26, 2020 3:24 am

fitterhappier wrote:
Wed Mar 25, 2020 4:16 am
...but everyone can agree that the current administration is highly unusual, and what the admin decides to do matters greatly for the outcome, and all of this playing out in the midst of a historically totally unusual election (??)
^^^This is from your post on Monday
...while at the same time we have (without getting too deep into politics) what everyone will agree is a highly unusual US administration in place, and are in an election year.
^^^This is from today's post.

It is apparent you are hoping for an election outcome that makes it worth waiting until December to get back in.

You should sit on the sidelines.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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