Catchin the fallin knife. I've been burned to. I think I'm going to space it out over the next year and see what happens. If the market gets started on a big rally that hurts emotionally though. Being out when things are going up can be more stressful than being in when it's going down.
Dry powder...when is the time?
- Thread starter RockOn
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Catchin the fallin knife. I've been burned to. I think I'm going to space it out over the next year and see what happens. If the market gets started on a big rally that hurts emotionally though. Being out when things are going up can be more stressful than being in when it's going down.
Dawg52
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I almost feel this way. But, I'm trying to be strong and just hold my nose from the smell of my reeking stocks.
Got some cash but a little too timid to buy anymore. Maybe that is a good buy signal for you guys. ![:-\](https://www.early-retirement.org/sk/forums/images/smilies/undecided.gif "Undecided :-\")
W2R
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I almost feel this way. But, I'm trying to be strong and just hold my nose from the smell of my reeking stocks.
Hang on. No panic allowed.
Remember, buy low, sell high. Maybe it is a good time to think about asset allocation.Surely some of your holdings are doing well. As I recall, you have approximated Wellesley with two ETF's, correct? Wellesley is up slightly today, compared with yesterday, and those ETF's probably are as well.
I'm staying on the sidelines right now and probably for the next few months at least. Wife and I find ourselves currently set up in about 55% cash / cash equivalents. We're still dollar cost averaging into the market via 401k's and IRA's, but for other cash, we're staying on the sidelines. Currently buying some I bonds and sloshing cash into money market funds. Have 2 cd's coming up in the next 6 months that were at 5.1% and 4.31% (no penalty for early withdrawl)...so will need to decide then if the time is right or if I'm going to continue to stay out with that money.
Notmuchlonger
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Are you serious? Thats hard to believe its thats much.
Dawg52
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DVY sucked today as it owns a good chunk of financials. I own a few other stocks to counter this and some have held up and some have not. Not a good day is relation to how the DOW held up.
Oh well, I think I'm gonna change my avatar to the born loser. Better fit for me.
W2R
Moderator Emeritus
Don't be silly. It's just a lousy day. Can't last forever, right? When they do go back up (and they will, at some point), it may be time to go to a more conservative asset allocation.
Ronstar
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Its been a few bad months. But 20 years from now we'll remember this as a minor correction. And dont change your avatar - I like the one you have now.
megacorp-firee
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how true.
Why agonize on the way down AND on the way up? Stick to your plan (unless you think the rules of the game have substantially changed) (he says with a grimace
).
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mathjak107
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yep its true, the average first year recovery is in the 30% range. the biggest moves are the first week and quarter. ill try to find the web site again with the back-up figures who did the study
i look at it this way, the proper thing to do is do nothing in market drops and ride it out. so that being the case if i called it lucky and got out in november any point i get in before the recovery starts is a whopping bonus of more shares. . i dont have to catch the bottom. even if i missed buying 10% lower and the market fell after i bought so what. do you think 10 years or 15 years from now the extra couple of % will amount to a hill of beans.
15 years ago i think we stood at 3300, today its near 12,000 . did catching the bottom of the last downturn at that time really matter? at 2% interest pretty soon on money markets and cd's its worth the wait, get in a little early and wait for the party to start. its worth giving up a little interest and not missing that first turn around week when it eventually happens
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BUM
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Don't do what I'm doing. I've kept my dry powder so long, that now its not as explosive as it used to be (when it was earning 5.4%)!
did buy some WB yesterday though...
did buy some WB yesterday though...
maddythebeagle
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Don't forget the taxi drivers !
haha
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Many stocks have bottomed, at least for now. Interest rates are low and getting lower. This is not the typical condition for a crash. Look at Kraft, look at GE, look at JNJ, look at any number of quality cash generating stocks and you will find that they are sitting out most of the recent 6 months volatility.
Commodity stocks including energy as well as financials are a different story. Here, one can either do analysis and pass on anything even slightly suspicious, take small bets on very beaten down stocks that you think are good, or bypass this area entirely and stick to consumer products etc.
Over any reasonable amount of time you are not going to lose money with this approach, even though according to forecasters ECRI their index of leading indicators in now in recession territory.
I always hold back some "strategic cash", but right now it is less than my usual allocation. You don't always get to buy quality companies at reasonable prices. I might feel differently if I were planning to buy a grab bag of good and bad companies, like some random index.
Ha
Commodity stocks including energy as well as financials are a different story. Here, one can either do analysis and pass on anything even slightly suspicious, take small bets on very beaten down stocks that you think are good, or bypass this area entirely and stick to consumer products etc.
Over any reasonable amount of time you are not going to lose money with this approach, even though according to forecasters ECRI their index of leading indicators in now in recession territory.
I always hold back some "strategic cash", but right now it is less than my usual allocation. You don't always get to buy quality companies at reasonable prices. I might feel differently if I were planning to buy a grab bag of good and bad companies, like some random index.
Ha
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headingout
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I agree with others who are buying now (incrementally, not burning all your powder at once). The analogy that works for me is waiting in a crowded airport on Friday night: would you rather get on a flight with 2 stops that guarantees you'll get home, or risk not catching any flight at all? In other words, I'd rather get into a down market too early, rather than too late. I am DCA'ing my dry powder, about 5%/week. Started in late January, will run out end of April. There is the risk that the market goes way down and stays down after that, but I'd rather be in than out, think current prices are low, and see some support.
clifp
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I think yesterday would have been a good time to use some powder. Hindsight is way better than 20/20
What a difference a day makes. I paid $58.75/share on the 3rd and I'm actually up on DVY.I think yesterday would have been a good time to use some powder. Hindsight is way better than 20/20
I was hoping that it'd suck for another year or two of reinvested dividends... of course the dividends that were reinvested last July at $73.26/share are still down nearly 20%. Remember how much the S&P500 dropped in 2002?
Remember how 2006-7 was the "death of volatility"? The VIX actually dipped below 10 last Dec and again in Jan. Yesterday it was a tad over 32.
Yet in July 2002 it actually broke 50, and in Oct 2002 it came pretty close to that a couple more times.
In terms of rising volatility and being off the peak, we ain't seen nuthin' yet. When the barbers and shoeshine stock-pickers go short and advise buying futures on the volatility index-- then we'll be at the bottom.
I don't think we'll see that this time. I could be wrong. A run on the banks should be enough to get a bottom.
growing_older
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Okay, I have no real interest in trying market timing, but with a small pile of mad money I tried to catch the falling knife and buy into some financial stocks. Overall I'm looking for 7-8% annual return in equities going forward, but I find that my "mad" experiment has gained about 16% in a single day. Now what do I do? Dump it and take my gain off the table? Ride it out and let this drift downward after my lucky timing? Pretend the paper gain doesn't exist? Let's see 16% daily would be what on an annual basis? Time to write and sell a newsletter.
Seriously, for those who do play with a little mad money: if you buy something just because you feel like it and happen to hit a lucky turn like this, do you take the gain or wait and see? I wouldn't have bought at this level.
Seriously, for those who do play with a little mad money: if you buy something just because you feel like it and happen to hit a lucky turn like this, do you take the gain or wait and see? I wouldn't have bought at this level.
Beginners luck. Hooked for life.
First part is when to buy, second part when to sell. Good luck
unclemick
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Beginners luck. Hooked for life.
First part is when to buy, second part when to sell. Good luck
I basically do the first part get some mad money and buy - I never bother selling, why would I? They either do good, do bad, merge, go private, go bankrupt or are otherwise generally entertaining.
That's why they call it mad money. Right?
heh heh heh -
Now if you get bored with a company - sell and buy a fun one. I did spend the dividends once in a while.
Patrick
Full time employment: Posting here.
As per the old addage: "Cut your losses and let your profits run."
Put in a trailing stop behind the current price. Set it far enough behind to give the price some room to move so you don't get stopped out right away. If your trading software doesn't automatically move the stop for you, check the price periodically and move it up when the stock price moves up; if the stock price moves down, leave the stop where it is. The market will get you out automatically.
megacorp-firee
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I hit it once ... law of averages ... you'll hit one in your lifetime too... but it'll cost ya. I've learned my lesson a while ago, ... tsk tsk DMTers
oh ... even got a few tops along the way ... also chalking it up to luck ... if you do it enough times everyone will hit it.
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growing_older
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No software involved, and I'm not sure I really understand what you are telling me. In hindsight, the too good to be true pop up in price has settled back down, so maybe if this ever happens again, I lock in that outsize unexpected one day gain, then go back and refigure the original proposition in light of the new prices. Live and learn.
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