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I'm so ticked at myself....
Old 11-21-2007, 02:33 PM   #1
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I'm so ticked at myself....

First of all, I am not a market timer. I've been a strict asset allocator since the beginning of 2001 and it has worked very well for me.

The fact that I'm not a market timer (and am comfortable with market gyrations) is why it was so unusual when I recently had a very strong intuition that I should sell everything and stay in all cash for a while. That just about never happens to me -- it didn't even happen in the tech wreck of 2000 to 2002 (but I wasn't tech-heavy which might explain that).

Anyway, this "hunch" was on October 30 and 31. Check the charts.

I stayed true to my buy-and-hold principles...told my "Spidey sense" that envisioned blood on the walls to take a hike because I don't time the market and I don't invest emotionally. Well, minus 9% later (and counting), looks like my Spidey sense was right. At least on paper, I've lost a full year of projected retirement income in the last three weeks. This market is simply horrible. Every single rally is nothing but an excuse to sell even more.

I hate it when I'm right and don't listen. Someone talk me off the ledge, please?
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Old 11-21-2007, 02:38 PM   #2
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Jump!

Seriously, as long as you understand what you own, you should be fine. When you buy stocks or bonds, you're buying a claim on future income or earnings. Unless those income streams or earnings falter, you have nothing to worry about.

People love to track the value of their assets on a daily basis. And they compare capital gains as if it's something they get to keep. That seems crazy to me.
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Old 11-21-2007, 02:46 PM   #3
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Logically I know that; 10 years from now all that will matter is what earnings are in 2017, not what happened in one bad month in November 2007. It's just that I rarely feel such a strong urge to sell everything, and when I have in the past, the timing of it was never so near-perfect. I'm sure in the long run I'll be better off by not listening; heck, even if I listened this time I'd probably fall into the trap of believing I could time the market and lose that 10% (and then some) either by selling too soon or buying back in at the wrong time.

I know all these things. Yet right now I look at what I've lost since that "call" and it represents a whole year's expected retirement income. So while I know it will come back eventually, right now it just "feels" like I'll have to w*rk an extra year...

As for tracking the value of assets, I have to do that periodically to check if any of my allocations need rebalancing. I don't usually check daily, though. Sure, when I'm using financial software I update the security values each time I'm in there, but I don't analyze it much unless some asset class is getting close to the point of needing a rebalance.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 11-21-2007, 02:48 PM   #4
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You have too much stock if a 4% drop bugs you. You are virtually guaranteed to experience 30% drops or worse.

Now, the good news is that a lot of people have a bearish sentiment like you do right now. And that's usually a contrarian indicator, so we may see a killer rally by the end of the year.
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Old 11-21-2007, 02:58 PM   #5
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Originally Posted by ziggy29 View Post
I stayed true to my buy-and-hold principles...

Someone talk me off the ledge, please?
Stay the course!

Remember that for jump-out/jump-in investing to work BOTH your jump-out, and your jump-in hunches must be correct. For buy-and-hold to work, you just have to ignore the markets.

All the research says those who trade least do best!

I'll bet if you had kept a careful log of all your hunches since you started investing, you would now find that your hunches had predicted at least 100 of the last 2 bear markets! I would also guess you only predicted around 2 of the last 100 buying bargains!

Personally, I have found that I can hold the course and not sell when stocks go down, I just can not bring myself to buy near the bottom. I always think it is going just a little bit lower, and then I'll jump in.

However, I certainly feel your pain. My portfolio came within a single digit percentage of my pull-the-plug target, then declined. Sigh. Now of course higher prices are raising my pull-the-plug target, and my treadmill ride continues.
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Old 11-21-2007, 03:01 PM   #6
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You have too much stock if a 4% drop bugs you. You are virtually guaranteed to experience 30% drops or worse.

Now, the good news is that a lot of people have a bearish sentiment like you do right now. And that's usually a contrarian indicator, so we may see a killer rally by the end of the year.
Oil price has been setting new highs one after the other too. Sooner or later, oil supply/demand equation is suddenly going to shift for the better, that is, the price spikes will become price dips.

Also, if you get sick of thinking about losing a whole year's earnings, then quit looking at the market every day. Quit thinking about it.
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Old 11-21-2007, 03:25 PM   #7
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Originally Posted by ziggy29 View Post
First of all, I am not a market timer. I've been a strict asset allocator since the beginning of 2001 and it has worked very well for me.

The fact that I'm not a market timer (and am comfortable with market gyrations) is why it was so unusual when I recently had a very strong intuition that I should sell everything and stay in all cash for a while. That just about never happens to me -- it didn't even happen in the tech wreck of 2000 to 2002 (but I wasn't tech-heavy which might explain that).

Anyway, this "hunch" was on October 30 and 31. Check the charts.

I stayed true to my buy-and-hold principles...told my "Spidey sense" that envisioned blood on the walls to take a hike because I don't time the market and I don't invest emotionally. Well, minus 9% later (and counting), looks like my Spidey sense was right. At least on paper, I've lost a full year of projected retirement income in the last three weeks. This market is simply horrible. Every single rally is nothing but an excuse to sell even more.

I hate it when I'm right and don't listen. Someone talk me off the ledge, please?

I feel your pain. The only way I can deal with the down markets is to pick an equity percentage that I can sleep with even if the market tanks like it is doing now. For me, that is about 30% of my total investments in equities...way lower than most people my age (I'm 51). But I know myself and I don't want to get depressed every time the market has a prolonged down period. I actually pulled about 3% of my total investments out of equities about 2 weeks ago thinking that the market was due for a pullback due to all of the bad news. Unfortunately I didn't pull out more but hindsight is 20-20.

Have you ever noticed that markets go through periods where all news, whether good or bad, causes the market to go up. Right now it seems just the opposite...that all news, whether good or bad, is making the market go down.
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Old 11-21-2007, 03:28 PM   #8
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Like in real estate when it's always a good time to buy, it's now a stock picker's market.

Mike D.
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Old 11-21-2007, 03:43 PM   #9
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Like in real estate when it's always a good time to buy, it's now a stock picker's market.
For sure, in situations like these when nervous nellies sell the good with the bad, there's some good stuff going on sale. The good stock pickers can find the good. That's how Buffett became so successful -- buying great companies when the market took them down with everything else.

Actually this post was half done tongue-in-cheek. I'm not a market timer and never will be, but still, I did have as much of a hunch as I've ever had. That's what makes it weird.

As for "watching the stocks every day," I know where I am because I enter financial transactions into Moneydance (my recent Quicken replacement) every couple days or so, and I go ahead and refresh the quotes to see if any of my asset classes are out of whack. I define "out of whack" as more than 10% off of its target allocation. So if my allocation says I should have 8% in Asset Class X, I buy it when it falls below 7.2% of my portfolio and sell if it becomes more than 8.8%. I have a couple of assets that are close to being out of whack so I was paying more attention than usual.
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Old 11-21-2007, 03:45 PM   #10
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Now, the good news is that a lot of people have a bearish sentiment like you do right now. And that's usually a contrarian indicator, so we may see a killer rally by the end of the year.
Yeah, it pretty mercenary but I hope lots of people are bailing out of equities right now.
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Old 11-21-2007, 04:23 PM   #11
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You have too much stock if a 4% drop bugs you. You are virtually guaranteed to experience 30% drops or worse.

Now, the good news is that a lot of people have a bearish sentiment like you do right now. And that's usually a contrarian indicator, so we may see a killer rally by the end of the year.

I have my doubts that very many people actually are selling even if they may speak of bearish inclinations. I don't know personally of a single person besides myself who has lessened their stock market allocation this year. The people I know have increased their allocation on every dip. I have talked to about 40-50 regular people here at work and none NONE have sold any of their positions. There are more people like NORDS than any other type - 100% invested and wishing they had more to invest.

I myself had the same feeling as Ziggy in February, my allocation strategy is to stay between 25-50% invested in stocks, but I just couldn't see the bull arguement at all for stocks and determined I would just wait for a the market to fall from the top and add 1 percent to my allocation every month for 25 months (bear markets frequently run 2-3 years so this will keep me looking at quality stocks to buy throughout the bear market), so I sold my 25 percent stock allocation and went to zero.

Analyze your reasoning for the decision you have made and if you feel it is still valid stick with it, if you feel it needs revising revise it but look at it on a prospective not retrospective basis. Retrospective looks at what you might have done will drive you crazy and you are impotent to change that outcome.
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Old 11-21-2007, 04:29 PM   #12
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While I've always intended to rebalance when my holdings get outside the percentage windows, as a practical matter I just don't check them very often. In fact, I only check them when I do my taxes every year. Your post makes me think that's probably a better approach for me, as it avoids the potential that I'll get anxious about the need to sell at the right moment. Also, there's some evidence that "momentum" in asset class prices does exist to a limited extent, and that rebalancing too frequently can reduce overall portfolio return. So, being lazy pays off again! Woo-hoo!
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Old 11-21-2007, 04:32 PM   #13
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Also, there's some evidence that "momentum" in asset class prices does exist to a limited extent, and that rebalancing too frequently can reduce overall portfolio return. So, being lazy pays off again! Woo-hoo!
Yeah, that's one wrinkle I didn't mention for simplicity. I don't rebalance the same "hot" asset class more than once every 6 months. When I sell a hot asset class I flag it as to the day I sold it. I won't sell more of it unless it's been 6 months since my last sale.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
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Old 11-21-2007, 04:45 PM   #14
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I sold my 25 percent stock allocation and went to zero.
Decisions.....decisions.....

Your February decision to sell is still there for the rest of us since the market is approximately at the same level now as it was in mid-February. Down maybe 2% or so I guess, based on Feb 15 VTI close of 144.89.

I didn't know what to do then, and I don't know what to do now.

If one of you guys knows what VTI will be at in 3, 6, 9 and 12 months, please post the information!!
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Old 11-21-2007, 04:45 PM   #15
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I have my doubts that very many people actually are selling even if they may speak of bearish inclinations.
I just go by the equity put / call ratio. It's becoming as bearish as August, but it hasn't reached the same bearish peak yet. Which is somewhat surprising to me, since the news is much worse now. Europe and Asia are now starting the same flight to safety.

And obviously the treasury yield getting pushed down as far as it has indicates a pretty serious flight to safety here as well.

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I sold my 25 percent stock allocation and went to zero.
That may have been a smart move. Who knows. So far, we're still above the Feb levels.
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Old 11-21-2007, 04:56 PM   #16
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I understand how you feel. I thought about lighten up myself but the 'experts' were forecasting a year end rally. I guess I didn't hear the part about the dip before the rally. Never planned to sell my basic long term stock funds but did plan to scale back on my individual stocks.

Oh well, plan to ride it out and actually added a little to my dividend stocks.
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Old 11-21-2007, 05:05 PM   #17
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Wellll - I made a bad decision on stocks once - dollar cost averaging from 1966 to 1982 when the DOW started and finished around 1000 with a few interesting moves in between.

The really nice thing about the market is that it goes all year - compared to say football season.



heh heh heh - have patience - if your short term stocks with play money don't work out in 7 to 10 yrs. - dump em and dollar cost average into your serious retirement investments.
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Old 11-21-2007, 05:22 PM   #18
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The s&p was lower in Aug.
MarketGauge by DataView, LLC

This might be the time to begin buying.
.... well maybe in a few more weeks.
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Old 11-21-2007, 10:20 PM   #19
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I've lost a full year of projected retirement income in the last three weeks...
Don't feel too bad. We have lost two years of estimated living expenses (in paper) since 10/31.
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Old 11-22-2007, 09:20 AM   #20
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Don't feel too bad. We have lost two years of estimated living expenses (in paper) since 10/31.
Ouch.

My portfolio isn't doing that well, either. A December rally would be nice, wouldn't it?
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