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View Poll Results: A known expense is due in 55 days, when would you sell equities to raise the cash?
Immediately 36 39.56%
At the last minute 17 18.68%
I'd watch the markets and wait for the right time 38 41.76%
Voters: 91. You may not vote on this poll

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Old 07-11-2015, 08:10 PM   #21
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Originally Posted by ERD50 View Post
Oh, I understand the inconvenience/logistics of it. Hey, ya gotta do it sometime, Jan sounds as good a time as any. You've got your year-end statements, you probably can't do much on taxes yet, so why not?

I just didn't see how that fit in with the OP question, like if he didn't do it in Jan he shouldn't now, or what?

My thought process is, on average I expect the markets to go up, so I might as well wait until my cash buffer is low before refilling. But lots of other ways work as well.

-ERD50
No, I was just saying I make portfolio withdrawals once a year and then rebalance. I don't try to sell anything for the purposes of withdrawing cash at any other time (during my fiscal year). Which month doesn't really matter, I could have picked April or something. Some people do this monthly or quarterly.
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Old 07-12-2015, 11:19 AM   #22
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Thanks for the replies, everyone. A few responses to some questions/comments.

1) Yeah, selling equities is really the only choice right now. That's the only thing in the taxable account and I don't want to start to dip into the deferred accounts yet.
2) No tax losses to harvest, everything is up.
3) No serious tax consequences. One nice thing is that our marginal tax rate will be 15% this year, that means no Fed capital gains tax. State will take a little, but not a big deal.
4) This will allow me to dump a "legacy" MF that I invested in a few years ago before I converted everything to index funds. The expenses weren't high enough to suffer the tax consequences in previous years, but that's not an issue this year.
5) I think that I mentioned that I am just thinking of this as filling up my cash bucket a few months early. As many of you do, I was planning on doing this in January as part of the annual rebalance.

All in all, it's really nothing major, it's hardly even minor. I just thought it was a chance to see what others might do/ have done in similar situations.
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Old 07-12-2015, 11:47 AM   #23
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I'm more interested in where people find AC, etc. contractors who will take CC's for stuff that costs over $2-$3K. Every one I've dealt with has been like, pay by check, or we add 3% to the bill.

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Old 07-12-2015, 12:06 PM   #24
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We recently spent $14K on a home improvement project. I could easily pay for it, but the contractor arranged for a deferred-interest loan.

The loan's 14% interest will be deferred for 10 months, and nulled if we pay in full before the 10th month. So, I will pay it in full on the 9th month (want 1 extra month in case they claim they do not get the money). Between now and then, I am looking for selling opportunity. I might just get the money out of my cash AA, which is at 27% right now.
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Old 07-12-2015, 01:57 PM   #25
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I voted last minute but have never (will never) find myself in such a pickle as to have to sell equities to generate cash. My cash reserves are big enough to cover just about any situation. But, to play along, if necessary I would hang on to stocks as long as I could.
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Old 07-13-2015, 04:28 PM   #26
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All in all, it's really nothing major, it's hardly even minor. I just thought it was a chance to see what others might do/ have done in similar situations.
I would have a lots of second thoughts about paying DD's wedding since she and her potential husband have been making big bucks as software developers for Amazon and Google for a few years.
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Old 07-14-2015, 07:25 AM   #27
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Since stocks go up on average, the percentage play is to sell "at the last minute". Personally, I would sell earlier if I felt that the market was "high". Yes, I am aware that this is not a very logical position, and my market timing record is very poor. I still voted option 3.
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Old 07-14-2015, 09:15 AM   #28
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I would put a stop loss order in for enough shares to cover the bills. I would also put in an order to sell at some value above the current price. Or, if there was enough time, I might do a covered call for the shares that was currently out of the money.

That should hem it all in with some chance of selling for less than todays price but a good chance for upside gain. Timing really doesn't have much to do with it.
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Old 07-14-2015, 11:25 AM   #29
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I would put a stop loss order in for enough shares to cover the bills. ...
I try to avoid categorically saying "do this" or "don't do that" (though I do think people should understand why they are doing something).

But in the case of stop loss orders, I say "don't do that". Period.

It's been discussed here before, but a minor dip and return has you locking in that dip. We could get another 'flash crash'. And the more conspiracy theory leaning types (and I am not saying they are wrong!) fear that the market makers will target you and take you out.

Just don't do it. Really. And here I go, ready for this... "Never use stop orders". There, I said it.

That's my story and I'm sticking to it.

-ERD50
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Old 07-14-2015, 11:46 AM   #30
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None of the above.
We keep a large cash cushion so we don't have to sell equities, except for rebalancing.
That would be my choice as well... and I would replenish that large cushion in big blocks if needed.
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Old 07-14-2015, 11:49 AM   #31
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I put "watch and wait". By that I mean I'd set a limit order or two to raise the cash. Put it a percent or two above today's spot prices and see what happens. Just did this a couple months back. It took a few months to execute but eventually it did and I got the cash I needed at a decent premium to what prices were when I first thought about raising cash.

That reminds me, I need to set some more limit orders and see what happens.
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Old 07-14-2015, 12:05 PM   #32
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Yep, I would sell. The way I see it, I'm happy that I have the where withall to do do so. there was a time in my life where I would have had to grab the credit cards in order to do so.

this actually happened to me once.

We had a huge tax bill (10K) that wiped out our emergency fund, then of course the a/c broke along with the washer, dryer and refrigerator. lol talk about murphy's law.

the reality is that how often does this happen? once in 10 years maybe. so if I take a small hit on selling, it's not the end of the world.
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Old 07-14-2015, 12:11 PM   #33
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I'm more interested in where people find AC, etc. contractors who will take CC's for stuff that costs over $2-$3K. Every one I've dealt with has been like, pay by check, or we add 3% to the bill.

Amethyst

Really? I just had my a/c heater replaced last year. to the tune of 9K. lol, not only did my contractor take cc's, they gave me 6 months interest free, no payment due.

truthfully I try hard not to deal with contractors that only take cash. I had my basement finished (18K), the only check I gave him was the remaining 1/3 at the completion of the job.
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Old 07-14-2015, 12:31 PM   #34
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...

We had a huge tax bill (10K) that wiped out our emergency fund, then of course the a/c broke along with the washer, dryer and refrigerator. lol talk about murphy's law.

the reality is that how often does this happen? once in 10 years maybe. so if I take a small hit on selling, it's not the end of the world.
Agreed. Some people here really feel they need to keep a cash cushion for these once-in-a-blue-moon occurrences. I honestly don't think I've ever had one (knock on wood). And that cash is just a drag, rather than making money for you.

I have no idea what my CC interest rate is, but use 12% for example - so 2% for a couple months to figure out what to sell (maybe evaluating tax consequences)? Not a heavy cost.

-ERD50
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Old 07-14-2015, 01:05 PM   #35
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I agree on using stop loss orders. So glad I have never used them, as I have seen quite a few folks really burned by sudden drops which recovered quickly.
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Old 07-14-2015, 01:57 PM   #36
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"I'm not a market timer, but could someone please help me time the market?"
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Old 07-14-2015, 03:48 PM   #37
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I try to avoid categorically saying "do this" or "don't do that" (though I do think people should understand why they are doing something).

But in the case of stop loss orders, I say "don't do that". Period.

It's been discussed here before, but a minor dip and return has you locking in that dip. We could get another 'flash crash'. And the more conspiracy theory leaning types (and I am not saying they are wrong!) fear that the market makers will target you and take you out.

Just don't do it. Really. And here I go, ready for this... "Never use stop orders". There, I said it.

That's my story and I'm sticking to it.

-ERD50
So back to the OPs case, you would have them lock in by selling at today's price or would you have them take the risk that a 2008 type event might happen before they sell?

I agree with those that talked about having sufficient cash for most emergencies but I think this was a case about a large unexpected need. For me, my plan is to balance, transfer and cash in stocks in December/January. The reason is our income will be variable due to consulting/other investments/rental income and in December we should know what we can do to minimize taxes for the year and what we need to push into January.
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Old 07-14-2015, 05:12 PM   #38
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So back to the OPs case, you would have them lock in by selling at today's price or would you have them take the risk that a 2008 type event might happen before they sell?

I agree with those that talked about having sufficient cash for most emergencies but I think this was a case about a large unexpected need. For me, my plan is to balance, transfer and cash in stocks in December/January. The reason is our income will be variable due to consulting/other investments/rental income and in December we should know what we can do to minimize taxes for the year and what we need to push into January.
Well, I would first try to avoid the situation, but sometimes plans do fail.

But I would not use a stop-loss order, for the reasons I mentioned. That would be the last thing I would do (hmmm... no, not even then, I did say "never", and I meant it!). Set them too close, and you really risk normal variation taking you out at a low. Set them too deep, and you don't have that much protection and you still run the risk of selling low on a dip.

This is a kind of forced market timing question, so I might just take a 'gut feel' of how I felt. I don't think OP mentioned a $ figure, but it sounds like a few tens of thousands, it's not like their entire portfolio is at short term risk, just this amount. So it's not life/death. If the market tanked, you'd have to sell a few more shares, maybe more than a few. If I was worried about the market being peaky, I'd either sell now and keep it in cash, or buy puts if they were cheap enough.

You know what, since this type of 'forced sale' is expected to be a very rare occurrence in this scenario (unplanned and all), I think that there would be too few 'spins of the wheel' to consider what a market does on average. So I probably would sell now, or buy puts, just to avoid whatever emotional stress might occur if the market went against me. The difference when you do this each year for normal withdraws, you have many 'spins', so it should average out.

But, just in case I wasn't clear.... .... I would not place a stop-loss order.


-ERD50

PS: no stop-loss orders
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Old 07-14-2015, 07:52 PM   #39
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With the past weeks' choppy seas, and the market slightly up or back to where it was, I voted for sell now.

I feel the long term trend is down. But, it's just a gut feeling. One I've had for over a year, and have been basically wrong about, apparently.

-CC
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Old 07-14-2015, 09:22 PM   #40
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"I'm not a market timer, but could someone please help me time the market?"
I'm a market timer, but could someone please help me time the market, a lot better?
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