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Good move or Bad move??
Old 06-30-2005, 03:00 PM   #1
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Good move or Bad move??

In a few minutes I will have liquidated about 50% of my IRA.* Selling a variety of mutual funds with the biggest chunk from an S&P 500 index fund.* Most of this to sit in a MM account for the time being, while some goes into oil and oil service.
My thought process- - I think the next few weeks o even until after Labor Day could be tough sledding due to the Feds action, oil prices, terror/war, 2nd qtr downers and on and on.
On the other hand oil still looks good for now and seems to be about the only investment I want to hold over long weekends.
For the cash I have raised I'm looking at putting it in my high yield funds.

Good Move or Otherwise?
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Re: Good move or Bad move??
Old 06-30-2005, 03:24 PM   #2
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Re: Good move or Bad move??

I don't market time. 100% S&P and TSM at Vanguard, all the time. Who knows who the fool is?

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Re: Good move or Bad move??
Old 06-30-2005, 03:31 PM   #3
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Re: Good move or Bad move??

Yeah, I'm sort of looking for a nice small rise in the next 2 quarters, or I probably wouldnt have just converted ~35% of my portfolio from fixed income to equities...
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Re: Good move or Bad move??
Old 06-30-2005, 03:35 PM   #4
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Re: Good move or Bad move??

Quote:
Originally Posted by Notth
Yeah, I'm sort of looking for a nice small rise in the next 2 quarters, or I probably wouldnt have just converted ~35% of my portfolio from fixed income to equities...
I'm looking for a nice rise as well, but starting in the fourth quarter. What worries me is the next couple of months.
2006 seems like it should be better, but lots of water to flow under the bridge before then.
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Re: Good move or Bad move??
Old 06-30-2005, 03:40 PM   #5
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Re: Good move or Bad move??

JP, you are playing in a fool's game. What is your time horizon? three months or 30 years? Invest accordingly.
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Re: Good move or Bad move??
Old 06-30-2005, 03:57 PM   #6
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Re: Good move or Bad move??

Quote:
Originally Posted by brewer12345
JP, you are playing in a fool's game.* What is your time horizon? three months or 30 years?* Invest accordingly.
Time horizon is quite long.
Important to note that these changes cost me nadda in transaction costs or in taxes. The possible cost is in missed opportunity if the market proceeds to go up sooner than I think it will, but I've already said that I feel the real missed opportunity would be in not getting out for a while.
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Re: Good move or Bad move??
Old 06-30-2005, 04:05 PM   #7
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Re: Good move or Bad move??

JPatrick,
I read a good piece that said the market has already reacted to the expected 3 consequtive .25% Fed increases. They were predicting a good market run.

But, I did similar today. Got out of lots of individual stocks. Going to buy CDs. Not exactly sitting on the sideline but not at the 50 yard line either.

Missed opportunity want kill us but a big downturn will.
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Re: Good move or Bad move??
Old 06-30-2005, 04:44 PM   #8
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Re: Good move or Bad move??

See, i've been waiting for a downturn, but I pretty much decided that things are just going to go sideways indefinitely. Hence my homing in on dividend paying stocks. I'm gonna get something while I wait.
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Re: Good move or Bad move??
Old 06-30-2005, 04:53 PM   #9
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Re: Good move or Bad move??

Notth,
I'm in the other predicament, I don't need dividends right now but sitting on too much growth equities could squash me.
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Re: Good move or Bad move??
Old 06-30-2005, 05:03 PM   #10
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Re: Good move or Bad move??

I threw another 5% of total combined portfolio outta cash into Lifestrategy cons(yeah Wellesley did cross my mind) on the taxable side with auto sweep of divs/interest into her checking/savings account.

I want to thin the 47 folders of DRIP stocks down to 15 -20 - maybe this year.

I promise, I promise - I will spend ,I will spend money - coming up on 62 I'm not getting any younger.

No clue as to the markets - balanced index as the tall pole, just stand, watch and think.

Lighten up on putz money, taxes willing, spend some - put off any heavy putz until winter.
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Re: Good move or Bad move??
Old 06-30-2005, 05:04 PM   #11
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Re: Good move or Bad move??

Quote:
Originally Posted by Notth
See, i've been waiting for a downturn, but I pretty much decided that things are just going to go sideways indefinitely.* Hence my homing in on dividend paying stocks.* I'm gonna get something while I wait.
While your strategy may work out fine, one thing the market has never done is "pretty much go sideways indefinitely". Early 2004, and all of 2005 to date did that. But other times that the pundits describe as "sideways markets"-like 1966 to 1982- were only sideways after the fact. If one drew line througn 1966 and summer 1982, it was indeed sideways, ignoring very strong inflation.

However, it was anything but sideways along the way. At the fall 1974 bottom the S&P was almost 50% below the 1966 top, and more than 50% below the January 1973 top. That is not my idea of sideways. But of course, you may be made of sterner stuff than ol' Ha.

Ha
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Re: Good move or Bad move??
Old 06-30-2005, 05:25 PM   #12
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Re: Good move or Bad move??

Started investing 1966. And 1966-1982 - younger, working, and dollar cost averaging - the dips got my attention, went off track and did the then version(muti asset) of 4 pillars for a while.

History doesn't repeat but sometimes it rhymes(Eugene Weber?). 1987 and 2000 - now don't hardly count compared to the exciting stuff.

Heh, heh, heh, heh, - should be fun.
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Re: Good move or Bad move??
Old 06-30-2005, 07:04 PM   #13
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Re: Good move or Bad move??

Quote:
In a few minutes I will have liquidated about 50% of my IRA. Selling a variety of mutual funds with the biggest chunk from an S&P 500 index fund. Most of this to sit in a MM account for the time being, while some goes into oil and oil service.
My thought process- - I think the next few weeks o even until after Labor Day could be tough sledding due to the Feds action, oil prices, terror/war, 2nd qtr downers and on and on.
On the other hand oil still looks good for now and seems to be about the only investment I want to hold over long weekends.
For the cash I have raised I'm looking at putting it in my high yield funds.

Good Move or Otherwise?
I believe in timing the market - that said, it is very difficult. If you can liquidate with no transaction fees, I think it makes sense to ease your worries. I'm inclined to agree with you about the direction of the market, but I've been in that camp for a looong time. You'll find that the missed opportunities end up hurting just like down markets did when you were long. You also end up enjoying down days like today (had you sold out prior to today).

If we get another serious downturn, I think those who saw their 401K's get cut in half last time will bail out, creating a large momemtum to the downside, and I'm not sure the Fed will be able to do too much to prevent it.
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Re: Good move or Bad move??
Old 06-30-2005, 07:26 PM   #14
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Re: Good move or Bad move??

Until I get a crystal ball that works, I'll stick with my bastardized, valuey 4 pillars portfolio. I got decades, and down days just mean a sale for my 401k DCAing. Those of you in distribution, I definitely see how you'd want to protect from downside risk, even if it sacrifices a few points from the upside. But those of us 30 and under should just be piling in.....IMHO
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Re: Good move or Bad move??
Old 06-30-2005, 07:51 PM   #15
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Re: Good move or Bad move??

Quote:
Originally Posted by riskaverse
I believe in timing the market - that said, it is very difficult.*
I agree. I have always to some degree timed the market. Due to this timing, I was able to raise 2 children with a non-working spouse, and in fact pay much of her way through graduate school. I retired in my early 40s, 20 years or so ago.* My wealth, while not great, is stellar when ratio'd with my lifetime earnings. Value based market timing really is just exercising the same price discipline that most people exercise in every other area of life. When some young (and still working!) people on this board call market timing a fool's game I have to laugh. If this is foolishness, I love being a fool.*

If someone wants to sell me a car, he wants something -cash- from me, and I want something-a car- from him. But he needs the cash more than I need the car. I can take a bus, walk, sponge off friends, or in my case, drive my other car. But not him, he needs cash from one of a fairly small number of potential buyers.

Same with stocks. Who the hell needs stocks? You can't eat them, live in them, pick up girls with them, drive them around. They are in fact useless. Thus, I will only buy them when they are cheap. When it looks to me like they very likely will provide me with enough cash relative to the price that my utilitities as enumerated above can be satisfied.

If stocks never again get this cheap (the least likely of all possible outcomes, IMO) I will do something else to gain the cash that I need to satisfy my utilities. Buy a laundromat, start a document shredding business.

I do believe that at times pople have a flawed conception of market timing. They think it pertains to charts, stochastic analysis, moving averages and the like. I believe that certain skilled speculators do well with these things, but it is a totally different breed of cat from value based timing. And I believe it is easier to go wrong with this method. I have never done well with it, so I abandoned it many years ago. But in a strongly trending market, some have succeeded spectacularly.

Ha
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Re: Good move or Bad move??
Old 06-30-2005, 09:56 PM   #16
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Re: Good move or Bad move??

Quote:
Originally Posted by HaHa
If stocks never again get this cheap (the least likely of all possible outcomes, IMO) I will do something else to gain the cash that I need to satisfy my utilities. Buy a laundromat, start a document shredding business.
been only investing for 3 years so I don't really know how expensive stocks were during 2001 meltdown.* Looks like stocks and prices are almost that high right now I think.* Am I wrong?*

I'm DCAing into my ROTH and plan to follow suit for a 401k once I finish school this December.* But I do plan to save money and market time my taxable account which minimizes my overall level of risk and helps to maximize my exposure to equities on sale I believe.

Any thoughts on that?* TY.

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Re: Good move or Bad move??
Old 06-30-2005, 10:05 PM   #17
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Re: Good move or Bad move??

Quote:
Originally Posted by HaHa
I agree. I have always to some degree timed the market. Due to this timing, I was able to raise 2 children with a non-working spouse, and in fact pay much of her way through graduate school. I retired in my early 40s, 20 years or so ago.* My wealth, while not great, is stellar when ratio'd with my lifetime earnings. Value based market timing really is just exercising the same price discipline that most people exercise in every other area of life. When some young (and still working!) people on this board call market timing a fool's game I have to laugh. If this is foolishness, I love being a fool.*

...

Ha
"Due to" or "in spite of"? How do you know?

"fool's game" -- Since I'm young and still working and used the word fool, you might be referring to me. I didn't say that it was, although you might think I did. What I meant by my original comment is that I don't market time but the OP does (IMHO) -- only 20/20 hindsight in the future will determine which courses of action were good ideas and which weren't.

The rest of your post sounds like value investing, not market timing. What you describe and wnat the OP wrote sound like two differen things to me.

malakito.
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Re: Good move or Bad move??
Old 06-30-2005, 11:43 PM   #18
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Re: Good move or Bad move??

Quote:
Originally Posted by malakito
"Due to" or "in spite of"?* How do you know?
Malakito-A long time ago my wife was in Pisa, sitting in an outdoor cafe. Two middle-aged couples from Texas were seated at a nearby table. One lady was trying to convinnce her friend to do some more sightseeing with her, as the two husbands were definitely done for the day.

The lady who wanted to go sightseeing said "Come on, there is so much to see here." Her friend replied, "Honey, I seen the thang leanin', and that's enough for me."

Well, I seen the thang leanin' too.

ha
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Re: Good move or Bad move??
Old 06-30-2005, 11:55 PM   #19
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Re: Good move or Bad move??

Ha Ha, I'd be interested in hearing the details of your market timing method. I believe in rebalancing, so in some circles I do participate in market timing for that. Plus my portfolio is weighted slightly towards the value/dividend side. But on the whole I haven't heard of huge gains over dca buy and hold except with "bet on black" speculating. For example, a coworker of mine bought kmart the day after they declared bankruptcy for pennies per share, made 80k in months.
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Re: Good move or Bad move??
Old 07-01-2005, 12:54 AM   #20
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Re: Good move or Bad move??

Like Laurence I just love re-balancing! Maybe I am a bit of a masocist but selling (some of) the winners to fill up the losers is truely a nice experience for me.

My biggest challenge is WHEN/how often to re-balance. Leaving taxes out of the equation(as we are all different there) I am well aware that studies out there indicate one should only re-balance every 2-3 years - and that most probably do it once a year. Meanwhile if one is with a low cost online broker and the trades are big enough - it might reduce volatility to re-balance even more. In FIRE I do not mind giving up a bit of return for insurance.

I lean towards something like an asset class being 10% out of whack - e.g. a 500k total portfolio evenly in 5 different asset classes. When one asset class is at 110k, another at 90k I re-balance. It gets more complicated when returns vary more between the asset classes - so I have not yet put my re-balancing plan on paper - but I want it to be mechanical and simple for me not to linger when criterias are fullfilled.
Cheers!
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