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Going to 100% cash
Old 08-23-2010, 04:44 PM   #1
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Going to 100% cash

I started selling my remaining mutual funds and will probably be in 100% cash by Thurs. or Fri.

Bottom line - the downside risk out weights the upside potential.

I'll post more after I'm finished selling.
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Old 08-23-2010, 04:59 PM   #2
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Quote:
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I started selling my remaining mutual funds and will probably be in 100% cash by Thurs. or Fri.

Bottom line - the downside risk out weights the upside potential.

I'll post more after I'm finished selling.
So by going all cash I assume (correct me if I'm wrong) you expect something bad to happen, just not sure what?
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Old 08-23-2010, 05:03 PM   #3
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Dex, be sure to let us know when the coast is clear and we can get back in...
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Old 08-23-2010, 05:20 PM   #4
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I await your more detailed explanation with interest. Specifically, how did you make this determination?
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Old 08-23-2010, 05:33 PM   #5
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So by going all cash I assume (correct me if I'm wrong) you expect something bad to happen, just not sure what?
I did a post awhile ago with some reasons. I do not have a specific political or other event in mind - I don't really watch that.

Capital preservation is key for me. At this point in time I see the upside potential limited and not worth the risk. That is the hart of investing the risk/reward analysis people do. I'm guessing people staying in the market see it the other way. The reward for staying in is greater than the risk (loss of $).

Some on this board posted that they got out in April (I think) that was a good time - I wish I did. I'm guessing they are happy they got out at that time.
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Old 08-23-2010, 05:34 PM   #6
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Too bad you didn't sell all on 8/09. The DOW was pushing 10,700 then.
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Old 08-23-2010, 05:36 PM   #7
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I went 80% cash 20% bonds last September when the DOW was at 9750. I'm still waiting for the other shoe to drop. What do you see that is making you want to do this? and why not put some in bonds?
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Old 08-23-2010, 05:41 PM   #8
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Hmmm, everything I've bought since May is up ... as much as 18+%. I've got no more money to buy, so I can't move the market upwards just by myself.

But I do like these kinds of declarations. It's the ol' Wall of Worry which I think is necessary. Thanks for the thread!
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Old 08-23-2010, 05:46 PM   #9
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Frankly I am a lot more dubious about the bond market these days than anything else. Tight spreads and low govt rates are not recipes for good returns in all but a few environments.
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Old 08-23-2010, 05:46 PM   #10
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Hmmm, everything I've bought since May is up ... as much as 18+%. I've got no more money to buy, so I can't move the market upwards just by myself.
Take out a margin loan and do what you can.

Ha
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Old 08-23-2010, 05:56 PM   #11
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I went 80% cash 20% bonds last September when the DOW was at 9750. I'm still waiting for the other shoe to drop. What do you see that is making you want to do this? and why not put some in bonds?
I posted some reasons before. There are others - if you want.
Look back to the beginning of July for the S&P. The 50 day moving average crossed below the 200 day moving average. Then go back on the chart to see what happened in the past when that happened.

I was in about 40% cash prior to today.

If you want to see what other individual investors are doing - it looks as if they are getting out.
http://www.nytimes.com/2010/08/22/bu.../22invest.html
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Old 08-23-2010, 05:56 PM   #12
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Took out a $50K 401(k) loan. Is that good enough?
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Old 08-23-2010, 06:07 PM   #13
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If you want to see what other individual investors are doing - it looks as if they are getting out.
http://www.nytimes.com/2010/08/22/bu.../22invest.html
That's one interpretation, but another is that they (individual investors) just looked at the performance numbers of the funds in their 401(k)s and switched to the top performers over the last 1- or 3-years. They probably don't even know the difference between a stock fund and a bond fund.

For a different take on the same report, there is this: Tom Petruno: Many investors still buying stocks - latimes.com

I'm not saying you are not doing the right thing, since I cannot predict the future.
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Old 08-23-2010, 06:11 PM   #14
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Hang on let me get my chronograph out.

I've been selling stocks for the past couple of years to make extra mortgage payments and buy bonds and keep me at 50/50. If the stock market takes a crash I'll use a mix of cash and bonds to buy equities......to keep me at 50/50
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Old 08-23-2010, 06:11 PM   #15
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Took out a $50K 401(k) loan. Is that good enough?

This thread kind of has me wondering and caught me by surprise.
But do tell, what's with the loan and what do you plan to do with it?
If it has anything to do with investing?
Don't mean to over step with the questions.
Steve
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Old 08-23-2010, 06:13 PM   #16
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I started selling my remaining mutual funds and will probably be in 100% cash by Thurs. or Fri.

Bottom line - the downside risk out weights the upside potential.

I'll post more after I'm finished selling.
Are you willing to pay taxes on capital gains with this move?
Tax bracket info would probably play into decisions here also.
Just questions that come to my mind on a sell or no sell.
Steve
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Old 08-23-2010, 06:25 PM   #17
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For a different take on the same report, there is this: Tom Petruno: Many investors still buying stocks - latimes.com

That's not a different take - it is a different analysis - stocks Vs bonds.

The focus of the NTY article was about taking $ out of stock mutual funds.

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I'm not saying you are not doing the right thing, since I cannot predict the future.
The right thing is determined by the investors assessment of the market - it can be different.

What am I risking if I am wrong - the opportunity cost if the market goes up?

People question why get out of the market. My guess is they want to know what that person sees that they may not.

Why are there no questions on why people are staying in the market? What do the people staying in the market see that those getting out do not?
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Old 08-23-2010, 06:39 PM   #18
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This thread kind of has me wondering and caught me by surprise.
But do tell, what's with the loan and what do you plan to do with it?
If it has anything to do with investing?
Don't mean to over step with the questions.
Steve
Essentially, yes it has to do with investing which is expensive in the 401(k) and cheaper outside the 401(k). I sent you a pm with more details.
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Old 08-23-2010, 06:43 PM   #19
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Are you willing to pay taxes on capital gains with this move?
Tax bracket info would probably play into decisions here also.
Just questions that come to my mind on a sell or no sell.
Steve
I don't think taxes should play into the decision. Maybe if you are trying to decide between 12/31 and 1/2.
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Old 08-23-2010, 06:44 PM   #20
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What am I risking if I am wrong - the opportunity cost if the market goes up?
You know your position, and selling may be best for you. But what I would would be losing-not risking, but losing- is CG tax on $175,000 net gain, plus higher ordinary tax from having my ordinary income bumped into a higher bracket, plus paying a lot more for my Medicare premium next year, and likely some other socialist bullsh*t that I have forgotten to mention.

Ha
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