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Re: Is it time to revert to cash?
Old 06-13-2006, 09:01 AM   #21
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Re: Is it time to revert to cash?

Well, I started with 40/60 equities to bonds. Now I know why! I'm just bending in the breeze.
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Re: Is it time to revert to cash?
Old 06-13-2006, 09:04 AM   #22
 
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Re: Is it time to revert to cash?

Quote:
Originally Posted by d
this is true. if one rebalances continuously (daily) the $ benefit approaches zero. but if one rebalances too infrequently, the opportunities may well be missed. any thoughts on what is optimal?
There were some studies on this. Cases were made for 1-2 year period. I do it yearly in January. Begining of the year.
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Re: Is it time to revert to cash?
Old 06-13-2006, 09:07 AM   #23
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Re: Is it time to revert to cash?

I've stopped watching. I invest consistently over time, so now I get to buy on the dips!

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Re: Is it time to revert to cash?
Old 06-13-2006, 09:52 AM   #24
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Re: Is it time to revert to cash?

Quote:
Originally Posted by Rich_in_Tampa
Bernstein would agree with you, Audrey. Apparently, all the basics being comparable, this year's winners are generally next year's losers overall, but not right away. Winners have some momentum and will keep winning for a year or two more or less. Similar observations re: this year's losers.
Oh - I didn't mean to imply that was my original idea! The MPT experts lay this out quite clearly. As do studies that show things like 18 month time frames are optimal for taxable accounts. Maybe it was 12 months for non-taxable (don't quite remember).

I use the "deviation from plan" method - evaluate the situation quarterly, and only rebalance if I am a certain percent out of whack. This last time it took 15 months to get into that state. Since I rebalanced in April, I'm going to wait at least two quarters before rebalancing again, even though my portfolio is already close to out of balance again. That is just an indication of how sharp and fast this recent correction has been!

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Re: Is it time to revert to cash?
Old 06-13-2006, 09:56 AM   #25
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Re: Is it time to revert to cash?

Quote:
Originally Posted by d
this is true. if one rebalances continuously (daily) the $ benefit approaches zero.* but if one rebalances too infrequently, the opportunities may well be missed. any thoughts on what is optimal?
I believe it's 18 months for taxable accounts (there is some tax penalty for rebalancing).
And 12 months for non-taxable accounts.

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Re: Is it time to revert to cash?
Old 06-13-2006, 11:46 AM   #26
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Re: Is it time to revert to cash?

Quote:
Originally Posted by audreyh1
I happened to rebalance my portfolio in April - added to bonds mid April and trimmed equities at end of April.
My portfolio has already swung around to where I need to rebalance the other way even with my 5% "hysteresis" - sell bonds, buy stocks!
I have never had it change so fast!
Geez, and I thought our retirement portfolio embraced volatility yet we're only 5% off our peak. I don't think our allocations have changed enough to notice. Are you in a lot of different sectors or niches? If you're bouncing off both ends of the bell curve this fast, is it time for a look at volatility?

Quote:
Originally Posted by d
this is true. if one rebalances continuously (daily) the $ benefit approaches zero.* but if one rebalances too infrequently, the opportunities may well be missed. any thoughts on what is optimal?
At some point "frequent rebalancing" becomes "dirty market timing"...
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Re: Is it time to revert to cash?
Old 06-13-2006, 12:04 PM   #27
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Re: Is it time to revert to cash?

Well lets see..we're officially more than 5 trading days with the s&p500 below its 200 day moving average.

By that metric, which would have helped one avoid almost all of the downside of the 2000 market dump, now is the time to sell.

I aint doing a thing.
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Re: Is it time to revert to cash?
Old 06-13-2006, 03:30 PM   #28
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Re: Is it time to revert to cash?

Quote:
Originally Posted by Diaper Bunny
Well lets see..we're officially more than 5 trading days with the s&p500 below its 200 day moving average.

By that metric, which would have helped one avoid almost all of the downside of the 2000 market dump, now is the time to sell.

I aint doing a thing.
It all depends on where you are at.* Large abrupt moves in the market are governed by either fear or greed.* If the whole world is selling and its going down down down, this means everyone is jumping on the bandwagon of fear, thus it is time to sell, since eventually fear turns back to greed.

The opposite is true, if there is a massive buy and feeding frenzy, and you are holding positions, get ready to sell.

Im in mostly cash right now, due to personal issues, but Im watching for some massive action, and all I see is a bit of profit taking.* However, when the freaking thing turns to all out fear, I'll be ready with rubles in hand to buy in, the fear will eventually turn back to greed.

Its all sentiment, nothing else.
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Re: Is it time to revert to cash?
Old 06-13-2006, 03:44 PM   #29
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Re: Is it time to revert to cash?

Quote:
Originally Posted by jug
Im in mostly cash right now, due to personal issues, but Im watching for some massive action, and all I see is a bit of profit taking.* However, when the freaking thing turns to all out fear, I'll be ready with rubles in hand to buy in, the fear will eventually turn back to greed.

Its all sentiment, nothing else.
jug
A bit of profit taking? Over the last month, just about every market sector has taken it on the chin. Gold was down $40 today and international markets tanked......again. The US market attempted to rally and failed. Ben opens his mouth and the market tanks. Ben doesn't say anything and the market tanks. Inflation numbers higher than expected and gold tanks. The market fears the worst......stagflation.....where everything will head south in a hurry.
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Re: Is it time to revert to cash?
Old 06-13-2006, 03:46 PM   #30
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Re: Is it time to revert to cash?

Exciting, isn't it? So, where would you invest if you knew the markets were going to continue doing this for the next 15 years?
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Re: Is it time to revert to cash?
Old 06-13-2006, 03:57 PM   #31
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Re: Is it time to revert to cash?

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......stagflation.....

what's the inflation rate? ... the unemployment rate? ... GDP growth rate?
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Re: Is it time to revert to cash?
Old 06-13-2006, 04:00 PM   #32
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Re: Is it time to revert to cash?

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Originally Posted by d

what's the inflation rate? ... the unemployment rate? ... GDP growth rate?
rising, rising, and falling.
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Re: Is it time to revert to cash?
Old 06-13-2006, 04:03 PM   #33
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Re: Is it time to revert to cash?

Quote:
Originally Posted by MileKing
A bit of profit taking?* Over the last month, just about every market sector has taken it on the chin.* Gold was down $40 today and international markets tanked......again.* The US market attempted to rally and failed.* Ben opens his mouth and the market tanks.* Ben doesn't say anything and the market tanks.* Inflation numbers higher than expected and gold tanks.* The market fears the worst......stagflation.....where everything will head south in a hurry.
Yeah, but remember that markets almost always overreact, both up and down. Stagflation came from a sustained spike in commodities last time. Go take a look at the commodities market today.
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Re: Is it time to revert to cash?
Old 06-13-2006, 04:36 PM   #34
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Re: Is it time to revert to cash?

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Originally Posted by MileKing
A bit of profit taking?
Heck yeah. Remember a couple months ago when the market was going up forever, and this time it's really different? Even so we're only about 4.5% off our all-time high.

We sold Tweedy, Browne last month and we're buying into an international index ETF (PID) while sidestepping a $2/share loss on what used to be a $29/share fund.

A few of us (thanks, Brewer!) have been patiently shorting Firstfed Financial (FED) when everybody & their brother was extolling the virtues of interest-only mortgages.

We stopped out of Las Vegas Sands in March at a huge profit and it's still going up. (Well, until this month anyway.) I stopped out of Evergreen Solar with a couple longboards' profit. I stopped out of Intel and a couple other stocks with small losses but I'll be back. I stopped out of Sun Microsystems with an annoying 15% loss and I burned my file on that company.

This has been a good shakeout to focus on low-priced stocks with cash flow & dividends. There's plenty of time between now & October to identify the good ones. Maybe they'll even be large caps.
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Re: Is it time to revert to cash?
Old 06-13-2006, 05:01 PM   #35
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Re: Is it time to revert to cash?

Global bankers all have their sights dead set on the speculative excesses in the following markets: 1) Base metals...2) Oil/Oilservices...3) Housing/related construction. Hedge funds margined to those sectors are getting their collective heads handed to them uncerimoniously. Probably some more violent volatility through the end of the week (options expirations/triple). Lots of collateral damage. Interesting to see if the fear begins to spread...as selling often begets other selling, human psychology being what it is.

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Re: Is it time to revert to cash?
Old 06-13-2006, 06:13 PM   #36
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Re: Is it time to revert to cash?

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Originally Posted by wab
Exciting, isn't it? So, where would you invest if you knew the markets were going to continue doing this for the next 15 years?
I'd buy more cars.
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Re: Is it time to revert to cash?
Old 06-13-2006, 06:33 PM   #37
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Re: Is it time to revert to cash?

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The PPI report just came out. Prices went up, except for cars and alcohol. Rejoice!
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Re: Is it time to revert to cash?
Old 06-13-2006, 09:00 PM   #38
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Re: Is it time to revert to cash?

So we're supposed to drink and drive?
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Re: Is it time to revert to cash?
Old 06-14-2006, 08:04 AM   #39
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Re: Is it time to revert to cash?

Mr. Market knows best... 8)
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Re: Is it time to revert to cash?
Old 06-14-2006, 06:22 PM   #40
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Re: Is it time to revert to cash?

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So we're supposed to drink and drive?
* actually i read 40% of all accidents involved drunk driving.......that means the other 60% were straight......
* *there ya go ,,,yes its safer to drink and drive!
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