How About Just Sitting Tight (and Having a Cocktail)?

[foxfirev5]

With 6 months to ER I'm definitely sitting tight. SV and Bonds to get through the first decade at least. The 40/60 equity/fixed AA is within my comfort zone. Heck, even 35/65 would work.

[Fermion]

Quote:

Originally Posted by petershk Maybe if rates actually got above inflation . Sent from my HTC One_M8 using Early Retirement Forum mobile app

TIPS...but I guess with taxes you wouldn't be above inflation. I could probably figure out some way to make $4 million last 40 years without even touching the market, but our spending is only $40k a year.

[NW-Bound]

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Originally Posted by Mulligan I know it will eventually climb again...

People say that they do not sell because they are sure that market will climb again, yet do not want to buy. Or worse, they think badly of people who buy. Does that make sense?

And they believe in Efficient Market Theory, where investors are all rational actors.

[harley]

I've been DCAing into VTI quarterly for the past couple of years. My next chunk is supposed to go in at the end of Sept. But I think I'll move forward with it this week (assuming no massive bounce back). It would be nice to DCA at a lower price than the previous one, just for once.

[Mulligan]

Quote:

Originally Posted by NW-Bound People say that they do not sell because they are sure that market will climb again, yet do not want to buy. Or worse, they think badly of people who buy. Does that make sense? And they believe in Efficient Market Theory, where investors are all rational actors.

I buy $500 a month even in retirement automatically out of my bank account, even while I am still complaining I wish I wasn't doing it. And I hope no one wants me to hold hands and chant the "dollar cost average " mantra. It works AGAINST you when the averages go in an upside down U shape.
I am going back to the tried and true successful traditional retiree portfolio. 1/3- in 8% CDs, 1/3 in my local electrical utility, and 1/3 Ma Bell..... Next thing you know someone is going to try and tell me there aren't any 8% CDs, and then tell me something crazier that Ma Bell isn't a monopoly anymore.....
Ok, off the useless rant, NW. I don't think in the manner you propose concerning other people. I am personally just a sore loser "lose aversion" type. I do like my preferreds though and actually bought a couple hundred shares of a beaten down new issue today. I wont complain on it as much though because I know I am still getting my 8.2% on it, even if it drops. Crazy, maybe but I can sleep that way better!


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[Bestwifeever]

Quote:

Originally Posted by NW-Bound If someone thinks badly of people who buy into a falling market, what does he think about people who buy when the market is going up and up? How does one make money then? Buy high, sell higher? Buy high, never sell? Never buy, never sell?

Not sure if by quoting me you are addressing these questions to me? I think it's great that people have dry powder $$ and use it to buy into whatever market they want to, up, down. Or sideways. Same for when they sell. Far be it from me to think bad of someone else's strategy.

[NW-Bound]

Quote:

Originally Posted by Mulligan I buy $500 a month even in retirement automatically out of my bank account, even while I am still complaining I wish I wasn't doing it... I do like my preferreds though and actually bought a couple hundred shares of a beaten down new issue today. I wont complain on it as much though because I know I am still getting my 8.2% on it, even if it drops. Crazy, maybe but I can sleep that way better!

When the market is down, one can buy a little, or one can buy a lot, but as long as he buys, that makes a lot more sense than if he only buys when the market keeps setting new high and never sells.

[nun]

Quote:

Originally Posted by NW-Bound People say that they do not sell because they are sure that market will climb again, yet do not want to buy. Or worse, they think badly of people who buy. Does that make sense? And they believe in Efficient Market Theory, where investors are all rational actors.

I'm doing what I always do, rebalance to my AA so today I sold some bond index funds and bought some US equity index.

[NW-Bound]

Quote:

Originally Posted by Bestwifeever Not sure if by quoting me you are addressing these questions to me? I think it's great that people have dry powder $$ and use it to buy into whatever market they want to, up, down. Or sideways. Same for when they sell. Far be it from me to think bad of someone else's strategy.

I just wanted to add to your post observing that posters were buying, not selling.

I do not see how buying would be bad (as long as one does not go on margin or uses up his cash reserve) if people also believe that in the long run the market always comes back up. Does one walk the talk, or doesn't he?

And if one does not think the market will recover, why should he not sell everything?

[splitwdw]

I'm still working and accumulating so did the usual when there's a dip, bought stock today.

[NW-Bound]

I read back my earlier posts, and realized that I did not make myself clear.

I was thinking about several times in the past when a poster had a lump sum of cash, and asked if he should plow it all into the market at once, or if he should average it in. It being a period of market rising, so many replying posts said that he should go all in, citing "time in the market" vs. "market timing". Put it all in, the sooner you do the more money you are going to have.

Now that the market had just two days of big drop, what would people advise? No do not buy, it's too risky as the market may drop more.

So, what are we? Efficient market believers or a bunch of momentum traders? I stop believing in Efficient Market long ago, so I do not have a conflict between what I believe and how I act.

[tulak]

Quote:

Originally Posted by NW-Bound I read back my earlier posts, and realized that I did not make myself clear. I was thinking about several times in the past when a poster had a lump sum of cash, and asked if he should plow it all into the market at once, or if he should average it in. It being a period of market rising, so many replying posts said that he should go all in, citing "time in the market" vs. "market timing". Put it all in, the sooner you do the more money you are going to have. Now that the market had just two days of big drop, what would people advise? No do not buy, it's too risky as the market may drop more. So, what are we? Efficient market believers or a bunch of momentum traders? I stop believing in Efficient Market long ago, so I do not have a conflict between what I believe and how I act.

Usually it's better to lump sum. It's all about probabilities. Odds are more likely that markets go up than they do down. The last two days are the flip-side. I hit the flip-side in 2008. That's why I prefer to value average over time.

As for when to buy, look at your AA. If it tells you to buy, then go for it.

[Looking4Ward]

Quote:

Originally Posted by NW-Bound I just wanted to add to your post observing that posters were buying, not selling. I do not see how buying would be bad (as long as one does not go on margin or uses up his cash reserve) if people also believe that in the long run the market always comes back up. Does one walk the talk, or doesn't he? And if one does not think the market will recover, why should he not sell everything?

All valid questions I would ask myself but don't feel qualified to answer, which is why I'm hoping those who manage my VG funds are scooping up the equities they feel have the most potential at bargain prices today and I'll see significant gains, maybe even by the end of this year as they try to eek out every bit of performance possible. That's why I pay a whopping .16 ER to let them make those decisions, right?

[NW-Bound]

A MF manager may know that there's bargain to be had, but where does he get the money to buy?

Most MFs keep only a few % of portfolio in cash to meet redemption, and in volatile down markets like this, they have to sell stocks against their will in order to fulfill orders to cash out from MF holders.

The above is a big reason many MFs underperform the market; they are simply executing the wish of their MF account holders to buy high/sell low.

I have told a story of how some MF managers were leery of the bubble market in late 1990s-2000. They started to sell high-flying stocks to raise cash, and that made account holders furious. They called and said that the reason they invested money in the MF was for it to be 100% invested, and that if they wanted cash, they would have kept it home. Indeed, keeping some cash on hand meant you would be underperforming the bubbly market, and that's a big no-no. So, what can a MF manager do to please?

[hnzw_rui]

Quote:

Originally Posted by NW-Bound I was thinking about several times in the past when a poster had a lump sum of cash, and asked if he should plow it all into the market at once, or if he should average it in. It being a period of market rising, so many replying posts said that he should go all in, citing "time in the market" vs. "market timing". Put it all in, the sooner you do the more money you are going to have. Now that the market had just two days of big drop, what would people advise? No do not buy, it's too risky as the market may drop more. So, what are we? Efficient market believers or a bunch of momentum traders? I stop believing in Efficient Market long ago, so I do not have a conflict between what I believe and how I act.

Lol, true.

I'm first to admit that I've got a monkey brain when it comes to money and tend to suffer from loss aversion so for me a hands off approach works best. That's why I just have DCA/auto-invest as much as I can spare from the paycheck into a balanced fund (Vanguard Target Retirement 2040 VFORX) and try my best to ignore the market. I was doing so well during the weekend what with running errands, reading books and catching up on much needed sleep. Alas, browsing E-R forums shattered that idyll.

Still, I'm not doing anything since there's not much I can do aside from wait for the next paycheck and let autoinvest do its thing.

I realize value averaging is better than DCA, alas, I just don't have the patience to do it on a regular basis.

[RunningBum]

Quote:

Originally Posted by NW-Bound I read back my earlier posts, and realized that I did not make myself clear. I was thinking about several times in the past when a poster had a lump sum of cash, and asked if he should plow it all into the market at once, or if he should average it in. It being a period of market rising, so many replying posts said that he should go all in, citing "time in the market" vs. "market timing". Put it all in, the sooner you do the more money you are going to have. Now that the market had just two days of big drop, what would people advise? No do not buy, it's too risky as the market may drop more. So, what are we? Efficient market believers or a bunch of momentum traders? I stop believing in Efficient Market long ago, so I do not have a conflict between what I believe and how I act.

I'm not seeing this either, at least not in the majority. Maybe a couple posters have, but "people" in general? I don't think so. Like I said before, I haven't been reading every post, but I think these "people are being inconsistent" posts are misrepresenting a few outlier posts as general sentiment.

[Big_Hitter]

futures way up this morning - let's see what happens


how about a shout out to annuities!

[Rosie]

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Originally Posted by W2R I can't imagine the stress you must be under! My sympathies. Real estate is stressful enough on its own, without having to worry about a highly volatile market too.

Aw, you're so sweet! But really, I'm not all that stressed. Which is highly unusual for me, I guess our recent move burned out all my stress receptors.

I'm grateful that the correction occurred before we closed. I suppose by the time the sale proceeds are available to invest, the correction may have run it's course, oh well. {shrug}

[W2R]

Quote:

Originally Posted by Rosie Aw, you're so sweet! But really, I'm not all that stressed. Which is highly unusual for me, I guess our recent move burned out all my stress receptors. I'm grateful that the correction occurred before we closed. I suppose by the time the sale proceeds are available to invest, the correction may have run it's course, oh well. {shrug}

I'm so glad you are not feeling overly stressed! For me, buying/moving/selling were all immensely stressful. I am so glad to be done with real estate, and settling back into my normal routines and serene lifestyle. Real estate drives me crazy. Still, it was worth all the stress and expense to be able to live here in my "dream house". It is everything I hoped it would be.

As for the correction, if this turns into another 2008-2009 style crash, your wait to invest the proceeds might turn out to be to your benefit.

[Totoro]

Quote:

Originally Posted by NW-Bound They called and said that the reason they invested money in the MF was for it to be 100% invested, and that if they wanted cash, they would have kept it home. Indeed, keeping some cash on hand meant you would be underperforming the bubbly market, and that's a big no-no. So, what can a MF manager do to please?

Buffet's way: stay invested but in non-bubbly stocks, and put in your owner's manual that 1) you expect to underperform in rising markets with 2) that your performance should be measured over several years.