Djia -800

[copyright1997reloaded]

Quoting my own post here. Unfortunately, we did not get the big down on the open. Instead we have some buying on the open. I think this will fail and we head further down.

And down we go....

ETA: It will be interesting to see where we end up at the end of the day. Right now, there seems to be a lot of sell on market close with an hour to go but it remains to be seen if there are buyers to offset it. I am thinking about doing some nibbling in my 401k, especially on foreign funds but haven't really decided if and if so how much.

For those looking for individual securities, look for things that are holding up well today, have strong fundamentals and which have been hit earlier in the week. For those, perhaps the brunt of the downdraft is over. For example, Edwards Life sciences (EW) which was as high as 175 a couple/few weeks ago, 140 and change now. Good growth in this one, excellent history, and demographics which provide a long term tailwind. I hesitate to buy more only because it is already my second largest non mutual fund holding (after Apple). Apple is also interesting here as it is holding up better than some/most of its peers in term of well known techs. No question it will go down if the market tanks given its weight in ETF's, but if the world isn't coming to the end it is showing relative strength and is a good risk/reward on a rebound.

 

[easysurfer]

I'd welcome to Dow to go down much more. IMO, this is a good time for a huge market correction to give some direction certainty. Just my two cents .

 

[HI Bill]

I'd welcome to Dow to go down much more. IMO, this is a good time for a huge market correction to give some direction certainty. Just my two cents .

I'd welcome a market valuation based on something.....concrete like earnings reports and P/E ratios! Of course, that's never going to happen!

 

[NW-Bound]

I'd welcome a market valuation based on something.....concrete like earnings reports and P/E ratios! Of course, that's never going to happen!

Shiller has been telling us for years that the P/E is high. But we laugh him off.

 

[HFWR]

Shiller has been telling us for years that the P/E is high. But we laugh him off.

[emoji23][emoji23][emoji23][emoji848][emoji15]

 

[Dtail]

I'd welcome to Dow to go down much more. IMO, this is a good time for a huge market correction to give some direction certainty. Just my two cents .

For us recent retirees, not so great due to SORR.

 

[NW-Bound]

Shiller has been telling us for years that the P/E is high. But we laugh him off.

[emoji23][emoji23][emoji23][emoji848][emoji15]

Even Bogle himself has been saying for years that the P/E was high and would revert. Bogle allowed 2%/year deduction off the total return for the P/E to renormalize over the number of years. But the temperamental market may just want to take it off all at once.

For us recent retirees, not so great due to SORR.

To combat SORR: early SS.


PS. When I shared Bogle's projected market return which included that 2% penalty for P/E reversion, I recalled posters saying Bogle did not know what he was talking about. And by the way, I am not a Boglehead, and do not frequent that forum.

 

[griffithee]

While I no longer have cable, I watched CNBC every morning for fifteens years or so, thus I’m familiar with the hosts, pundits, and assorted “experts...

Btw, Kudlow has only been part of the administration since March, so hardly always...

I used to just like to watch everyday to see whatever new hairdo Maria Bartiromo was wearing. She was always my favorite female anchor!!! Still is real purdy!!!

 

[Dtail]

Even Bogle himself has been saying for years that the P/E was high and would revert. Bogle allowed 2%/year deduction off the total return for the P/E to renormalize over the number of years. But the temperamental market may just want to take it off all at once.



To combat SORR: early SS.


PS. When I shared Bogle's projected market return which included that 2% penalty for P/E reversion, I recalled posters saying Bogle did not know what he was talking about. And by the way, I am not a Boglehead, and do not frequent that forum.

Bolded - ah not so easy. Most of our investments are in Tax Deferred, so come 62 yo, the decision to pay down some of the portfolio to reduce the tax torpedo at 70 yo comes into play too.

 

[BigMoneyJim]

I took about 2 years' worth of expenses out of the markets and into cash a month or two ago in anticipation of retiring/ESRing in the near future. Sooo...

WOOOOOOOOOOOO! Fall, market, fall!

My SORR would be greatly reduced if a big downturn happened while I'm still working full-time, and if it does happen I'll probably be bold enough to stuff some of my now-dry powder back in afterwards.

 

[REWahoo]

I took about 2 years' worth of expenses out of the markets and into cash a month or two ago...

Dirty Market Timer.

 

[jollystomper]

For us recent retirees, not so great due to SORR.

A reason why I maintain enough cash so that I can maintain my retirement standard of living without being forced to cash in equities for 5-7 years from now. Definitely lowers my market gains but also lowers the market loss. The "sleep well at night regardless" factor.

 

[street]

I also have enough liquid funds that I won't ever have to sell an equity/bond fund if I don't want too.

I always hate to see the down time in the markets but on the other hand I know I will never have to sell one share to survive.

I will watch carefully and do nothing like every other down turn.

 

[ShokWaveRider]

I also have enough liquid funds that I won't ever have to sell an equity/bond fund if I don't want too.

Most folk who plan ahead do. Especially those in close Pre-ER and ER and conventional retirement too. Or at least they should.

 

[ERD50]

A reason why I maintain enough cash so that I can maintain my retirement standard of living without being forced to cash in equities for 5-7 years from now. Definitely lowers my market gains but also lowers the market loss. The o "sleep well at night regardless" factor.

Do as you please of course, but I've pointed out before that this fear of selling equities in a down market is unfounded. And be aware, that cash could be working for you instead. Simple illustration:

A conservative investor who would hold cash would also likely have a conservative WR and a conservative AA. Say an ~ 3.5% WR and an ~ 50/50 AA portfolio likely to be kicking off ~ 2.5% in divs. So if the market tanks, the investor only needs to draw ~ 1% from the portfolio. That 1% would be from fixed income in order to maintain their AA. This could obviously go on for many, many years before you would touch equities. By that time, they've probably recovered.

Nope, history says that cash doesn't provide a safety net, it is a drag and reduces your long term safety. I sleep better knowing I have my money working for me.

edit/add from cross-post:

Quote:
Originally Posted by street
I also have enough liquid funds that I won't ever have to sell an equity/bond fund if I don't want too.

Most folk who plan ahead do. Especially those in close Pre-ER and ER and conventional retirement too. Or at least they should.

What is your basis for saying "most do", and "should"? I plan ahead, and I don't, and I don't see why I should.

-ERD50

 

[street]

^ I beleive all plans aren't created equal. We all reached our goals one way or another and different ways of thinking and managing our financial future strategy.

I say what ever your plan is go for it, there really isn't a right way or wrong way. I believe my plan is best for me and I know it works from some very bad times in the 40 years in the market. I have not had to sell and always had cash to pay my way. I buy and hold and never have sold.

 

[jollystomper]

^ I beleive all plans aren't created equal. We all reached our goals one way or another and different ways of thinking and managing our financial future strategy.

+1

I have no problems with folks who choose to stay much more invested in the market and can live with that. Just puzzled why some cannot understand that I choose to stay less invested in the market and can live with that, as well.

 

[ERD50]

+1

I have no problems with folks who choose to stay much more invested in the market and can live with that. Just puzzled why some cannot understand that I choose to stay less invested in the market and can live with that, as well.

As I said, do as you wish.

I was just pointing out that your comments really fly in the face of facts/analysis. If a statement is not challenged, others might assume it is factually correct.

If after reviewing the facts, people choose to do something else anyway, that's their choice. But it doesn't change the facts. That's all.

-ERD50

 

[Huston55]

As I said, do as you wish.

I was just pointing out that your comments really fly in the face of facts/analysis. If a statement is not challenged, others might assume it is factually correct.

If after reviewing the facts, people choose to do something else anyway, that's their choice. But it doesn't change the facts. That's all.

-ERD50

This has been debated in multiple threads and is akin to the ‘when to take SS’ threads; with the answer being “it depends on you and your circumstances.”

We would all do well to remember that ‘the facts’ include more than just straight AA/Dividends/Expenses math; they also include how we behave (see link). And...that is a fact.

http://www.early-retirement.org/forums/f28/cash-buffer-vs-rebalancing-93902-5.html#post2119240

 

[Fedup]

Know thyself is the key.

 

[ERD50]

This has been debated in multiple threads and is akin to the ‘when to take SS’ threads; with the answer being “it depends on you and your circumstances.”

We would all do well to remember that ‘the facts’ include more than just straight AA/Dividends/Expenses math; they also include how we behave (see link). And...that is a fact.

http://www.early-retirement.org/forums/f28/cash-buffer-vs-rebalancing-93902-5.html#post2119240

No, rather than disagreeing, I think we are just talking two different things.

One is the facts - that's what I'm talking about.

The other is what someone 'feels good' about', regardless of the facts.
What you feel doesn't change the facts, but it might change what is "right" for you.


An analogy, to illustrate:

DW is afraid of flying. I tell her that the fact is, flying cross country is far safer than driving cross country. That is a fact.

But she is so terrified of flying, she would not enjoy a vacation if she had to fly. So for her, the "right" choice may be to drive rather than fly.

But that does not change the fact that flying is safer than driving.

​

I just think it is helpful to understand the facts. If you want to do something different from that, you should understand what you might be giving up. I don;t know why that should be viewed as controversial, or upsetting to anyone.

I don't think I told anyone they were 'wrong' for holding cash, or inferred they were stupid or anything, or that they shouldn't do it. I just tried to show them what the facts are regarding the fear of selling equities in a down market. Re-balancing takes care of that. There is nothing to fear.

-ERD50

 

[Bir48die]

I took about 2 years' worth of expenses out of the markets and into cash a month or two ago in anticipation of retiring/ESRing in the near future. Sooo...

WOOOOOOOOOOOO! Fall, market, fall!

My SORR would be greatly reduced if a big downturn happened while I'm still working full-time, and if it does happen I'll probably be bold enough to stuff some of my now-dry powder back in afterwards.

First of all, I too looked at taking two years cash out a month ago. I did a significant amount of reading and found 90% advised against this so what did I do? Reallocated. Simple.

Secondly people who think they're geniuses and then wish a downfall for the rest of the investors baffles me.

 

[Dtail]

First of all, I too looked at taking two years cash out a month ago. I did a significant amount of reading and found 90% advised against this so what did I do? Reallocated. Simple.

Secondly people who think they're geniuses and then wish a downfall for the rest of the investors baffles me.

Plus we usually don't hear the comments like " I took my monies out in March 2009 and lost out on 300% returns".

 

[NW-Bound]

I keep more cash than most, because I have very little bonds, and also because I want some money to buy stocks when they crash.

Do I buy when they crash? I do, but not to the level I said I would. It's very difficult to fight greed and fear.

 

[Qs Laptop]

I keep more cash than most, because I have very little bonds, and also because I want some money to buy stocks when they crash.

Do I buy when they crash? I do, but not to the level I said I would. It's very difficult to fight greed and fear.

^^ This ^^

I've got about 5.5% in cash just waiting to buy in on a crash. I also use it to buy on the dips. So on Wednesday I figured I'd increase my position in some equity mutual funds, maybe buy $5,000 worth. I chickened out and only put $1,200 in one fund.