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Selling Out
Old 02-02-2009, 08:00 PM   #1
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Selling Out

Has anyone within the past month or so sold their entire stock portfolio and just gone with fixed income (CD/MM/ Treasuries) and wait for the tide to settle. I imagine this is easier with a IRA than in a taxable account from an accounting(tax) standpoint.
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Old 02-02-2009, 08:08 PM   #2
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Have you, ferco?
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Old 02-02-2009, 08:11 PM   #3
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I've been working on the opposite, and trying not to spend all my cash doing it.
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Old 02-02-2009, 08:22 PM   #4
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I can't imagine wanting to lock in my losses like that.

I do understand wanting to DO SOMETHING. But I guess that doing nothing is the best I can come up with.

It's going to get better.
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Old 02-02-2009, 08:25 PM   #5
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No I haven't sold anything. And I don't plan to either. Right now yields on cash, CDs and treasuries are very unattractive IMO, and treasuries seem pretty risky at the moment (LT treasuries are down almost as much as stocks YTD).

But, the bigger problem is when will you know that the tide has actually settled? Will you wait for the DOW to reach 10,000, 11,000, or 12,000 again before feeling that the recovery is underway?
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Old 02-02-2009, 08:29 PM   #6
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BTW, can anyone do better than Pen Fed's 5 year CD at 4.39%?
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Old 02-02-2009, 08:32 PM   #7
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BTW, can anyone do better than Pen Fed's 5 year CD at 4.39%?
Last week, I found a USAA 7-year CD at 4.5%.

Edit: too late, it's down to 4.25% today. Their 5-year CD now pays 3.5%.
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Old 02-02-2009, 09:13 PM   #8
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I can't imagine wanting to lock in my losses like that.
I never understood this thinking - I don't mean it's not valid, but maybe I just don't get it. Hypothetically, say you sold stocks now - 'locking in losses' as you say. But then you put it in something that doubles (say) while stocks stay flat or continue to decline. Then you shift over to stocks again before they start increasing. What losses were locked in? Seems to me that the person who sits pat is the one locking in losses, day after day.

Yes yes, obviously you have to make good moves for this to work, but as an ER friend once told me, you always invest like you go shopping: buy stuff on sale.

OP: I did this two years ago, because I believed stocks were way overvalued. It's never too late to recognize the true value of an investment, I believe.
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Old 02-02-2009, 10:23 PM   #9
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REW,
No, I haven't sold the stocks , yet ! But, as one of the possible options with this mess I wanted to get some of the pros and cons from the board.
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Old 02-02-2009, 11:42 PM   #10
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I never understood this thinking - I don't mean it's not valid, but maybe I just don't get it. Hypothetically, say you sold stocks now - 'locking in losses' as you say. But then you put it in something that doubles (say) while stocks stay flat or continue to decline. Then you shift over to stocks again before they start increasing. What losses were locked in? Seems to me that the person who sits pat is the one locking in losses, day after day.

Yes yes, obviously you have to make good moves for this to work, but as an ER friend once told me, you always invest like you go shopping: buy stuff on sale.
Timing the market only requires me to get it right twice each time. Now you want me to get it right twice and pick (guess) what other asset will beat the market in the interim ? Think I'll stick with an AA appropriate for my risk tolerance and automatically acquires what is on sale (relatively).

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Old 02-02-2009, 11:58 PM   #11
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REW,
No, I haven't sold the stocks , yet ! But, as one of the possible options with this mess I wanted to get some of the pros and cons from the board.
Ever hear "buy low, sell high"? What you're suggesting is to do the opposite. Selling at a low is just about the worst possible choice. You should be holding, maybe buying, not selling IMHO.
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Old 02-03-2009, 12:06 AM   #12
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Ever hear "buy low, sell high"? What you're suggesting is to do the opposite. Selling at a low is just about the worst possible choice. You should be holding, maybe buying, not selling IMHO.
To frame the problem carefully, he would be selling at a low relative to the past 6 years or so. We really don't yet know if it is also a low relative to 6 months from now, or a year from now.

Most of us are agnostic about this. Architect thinks he knows that equities will be lower in the future than they are today. He may be right for all I know.

One rather peciliar thing is that we have not yet had a meaningfull rally. There was short covering coming off the November low, but it fizzled quickly. Not a real hopeful sign for the bulls.

Ha
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Old 02-03-2009, 01:20 AM   #13
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BTW, can anyone do better than Pen Fed's 5 year CD at 4.39%?
Bank Deals - Best Rates and Deals: Bank Deals Weekly Summary for February 1, 2009
60-Month Certificate of Deposit:
There is also a 5.00% NCUA insured 5yr CD from Community One though it requires either a trip to Vegas or a notary and a fax machine to join.
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Old 02-03-2009, 05:10 AM   #14
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BTW, can anyone do better than Pen Fed's 5 year CD at 4.39%?
Maybe Navy FCU at 5.1% 4.6%. Navy FCU had that 5.1% for about a month now but now they have dropped to 4.6% on long (7 Year) term CD's. They still have the 3.5% 6 month $10K minimum CD's there.
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Old 02-03-2009, 09:13 AM   #15
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I almost did in October 2007...
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Old 02-03-2009, 09:15 AM   #16
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Architect thinks he knows that equities will be lower in the future than they are today. He may be right for all I know.

Ha
I don't think I've said I think stocks will be lower, if I did I misspoke. What I believe rather is that stocks still aren't a good deal. They can go up this year for all I care, I don't think the risk/reward is worth it yet. But if they go down further then I'll invest again, because then I think I'll be adequately compensated for the risk I'm taking.

Off topic, it's interesting that I hear people on this board frequently make prognostications, such as 'Treasury bonds are going to get hammered' or 'yields are too low', but they don't get called out for that forecast. But if you make a judgment call on stocks people quickly remind you that you can't predict the future.
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Old 02-03-2009, 09:32 AM   #17
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Bank Deals - Best Rates and Deals: Bank Deals Weekly Summary for February 1, 2009
60-Month Certificate of Deposit:
There is also a 5.00% NCUA insured 5yr CD from Community One though it requires either a trip to Vegas or a notary and a fax machine to join.
You start out by stating these are best "bank" CD's and then you list all those "credit unions". I know credit union CD's are insured but only by themselves, not the FDIC. If a credit union fails, you may be able to recover your money but I don't know how long it takes. Does anyone out there know the difference in the insurance of the FDIC vs the credit union's insurance program? I've got a $100k CD maturing next week and need a good place to park it.
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Old 02-03-2009, 09:37 AM   #18
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I don't think I've said I think stocks will be lower, if I did I misspoke. What I believe rather is that stocks still aren't a good deal. They can go up this year for all I care, I don't think the risk/reward is worth it yet. But if they go down further then I'll invest again, because then I think I'll be adequately compensated for the risk I'm taking.

Off topic, it's interesting that I hear people on this board frequently make prognostications, such as 'Treasury bonds are going to get hammered' or 'yields are too low', but they don't get called out for that forecast. But if you make a judgment call on stocks people quickly remind you that you can't predict the future.
It's a discussion board, so people are likely to have different views about nearly any issue. The trick is to manage to discuss politely and express one's own views while staying within our Community Rules. I think that each of us has at least SOME thoughts or opinions that are not shared by the majority here. For me, it is my refusal to have a credit card, which I think is utterly brilliant and a wonderful and stupendously LBYM tactic, whereas 99.99999% of our forum members disagree.
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Old 02-03-2009, 09:48 AM   #19
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You start out by stating these are best "bank" CD's and then you list all those "credit unions". I know credit union CD's are insured but only by themselves, not the FDIC. If a credit union fails, you may be able to recover your money but I don't know how long it takes. Does anyone out there know the difference in the insurance of the FDIC vs the credit union's insurance program? I've got a $100k CD maturing next week and need a good place to park it.
Most credit unions are insured by the National Credit Union Administration (NCUA). There are about 2% privately insured, so look them up on the NCUA website to make sure they are Federally insured. Same limits as FDIC and backed by the full faith and credit of the US Government like the FDIC (for what that's worth these days). Here's a link explaining NCUA deposit insurance. BTW, credit unions refer to deposits as "shares" - it's really the same thing, just a different term:

National Credit Union Administration - Consumer information
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Old 02-03-2009, 10:00 AM   #20
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Off topic, it's interesting that I hear people on this board frequently make prognostications, such as 'Treasury bonds are going to get hammered' or 'yields are too low', but they don't get called out for that forecast. But if you make a judgment call on stocks people quickly remind you that you can't predict the future.
Since you brought the subject up, perhaps that sentiment is particularly focused on those who frequently and repeatedly remind us of their past successes and ability to time the market. A few examples (there are many more but this makes my point):

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[Anybody join the millionaire club recently?]

With the action in the Treasury market last week I did finally - yay! With all the shared pain on this board recently I thought I'd start a positive thread.
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This one was easy. The parallels with the 30's were out in plain sight for two years at least.
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Meanwhile I suspected a crash coming up and so sold and went to bonds.

If I had followed religion and stayed the course, today I would have lost money on every single purchase I made during my entire investing career...
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Well it's too late now anyhow. One of my predictions from a year ago was that the Fed would start buying up higher on the yield curve. Guess what they announced today?
You didn't register on the forum until 11/19/2008 so how are we to confirm your predictive abilities?
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... the deflating credit bubble wasn't too hard to predict two years ago.
And even the About Me section of your profile includes:
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Studied economics and investing, moved it all to long Treasuries before the crash of 2008.
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