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Re: Do you have a Stock Market Exit Strategy?
Old 05-21-2007, 01:37 PM   #21
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Re: Do you have a Stock Market Exit Strategy?

No plans to be out of the market since I have a DB pension that currently provides for basic (not luxury) living needs (but it won't cover basics in 10 years since it is not indexed).

I do take profits when valuations appear too high on select stocks and thus cut back on equity allocation by as much as 10 percentage points. Likewise, I would probably add substantially to equities (likely ETFs) with P/E<10.

I will likely simplify the portfolio as health deteriorates (e.g. ETFs only at some point) and likely reduce equity to ~40% range by the time I become 80 yrs of age and leave that way to death.
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Re: Do you have a Stock Market Exit Strategy?
Old 05-21-2007, 01:50 PM   #22
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Re: Do you have a Stock Market Exit Strategy?

No, I do not have a stock market exit strategy. I do not believe that such a strategy is effective, and that you are more likely to fall behind by getting out (too early) and getting back in (too late) than you are just riding it out.

I limit my portfolio to 60% equities, so that if equities exceed that I trim my equity exposure. That's the only way I know how to consistently sell high and buy low.

To "ride out" bad times, I have 1) a multi-year cash cushion and 2) 40% of my portfolio in cash and bonds which significantly reduces portfolio volatility.

Audrey
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Re: Do you have a Stock Market Exit Strategy?
Old 05-21-2007, 02:10 PM   #23
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Re: Do you have a Stock Market Exit Strategy?

I can't wait until I can understand all of this
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Re: Do you have a Stock Market Exit Strategy?
Old 05-21-2007, 02:14 PM   #24
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Re: Do you have a Stock Market Exit Strategy?

Quote:
Originally Posted by HaHa
How is this different from timing the market?

Ha
Well . . . when you are engage in market timing you are trying to move money in or out of the market at the right time in order to improve your risk-reward situation.

In this case, you are trying to move money in or out of the market at the right time in order to improve your risk-reward situation.
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Re: Do you have a Stock Market Exit Strategy?
Old 05-21-2007, 02:19 PM   #25
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Re: Do you have a Stock Market Exit Strategy?

Glad we cleared that up...

And, yes, I ended that sentence with a preposition!!
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Re: Do you have a Stock Market Exit Strategy?
Old 05-21-2007, 02:26 PM   #26
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Re: Do you have a Stock Market Exit Strategy?

Usually one should exit when gripped with fear - and after you have stained your clean white shorts.

I believe the academics who study this sort of thing - say the loss side of the equation sticks in memory more.

risk reward are assymetric or some b.s. like that.

Hence I like the part where I don't look too close and the computers just rebalance away.

Norwegian widow wise - try and consol myself with the higher yield. I always buy high, sell low - that's the only way I can make money. Exception being the automatic rebalance to a prefixed asset allocation.

: 8)

P.S.: Behavioral finance is hot stuff/in vogue right now. Sort of like Psst - dividends!. Things go in cycles/suffer from recency etc., etc. The Wall Street term is: feeding the ducks or something like that.
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