Puzzley
Recycles dryer sheets
- Joined
- Sep 3, 2007
- Messages
- 169
What will I do? Watch the market a little, yawn, and do nothing....
Tomorrows market?
- Thread starter bentley
- Start date
- Status
Who knows? It could be the high for the next few years. Personally I think it's still on it's way down unless some miracle happens. For example the war ends and we win, all closed areas are opened up to drilling oil, the government bails out the lenders and borrowers, the FED sets interest rates at minus 2%, Bush sends out $50,000 stimulous checks to everyone, someone invents a large SUV that gets two hundred MPG and does zero to 60 in 2.5 seconds......all I need is a miracle.
Goonie
Thinks s/he gets paid by the post
Yep, same here! Although I did just receive my annual pension 'bonus' check, and I might put some of it into the market this week to take advantage of the 'blue light specials'......or not.
Dawg52
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Tomorrow I plan to mow my grass, clean up my golf cart, and just generally stay away from financial news. The market will probably decrease some more but I think it is pretty much late in the game to be selling now. Now if we ever get back to May's high, that's another story.
CaseInPoint
Recycles dryer sheets
Existing money needs to stay where it is, even if it takes nerves of steel. New money can go into CDs, a low-cost index find, or even bonds or treasuries if your portfolio need some rebalancing.
Personally, for nearly a year, I've stopped investing in the market. I keep new money in a simple money market account while I wait for things to clarify and have been keeping an eye out for good commercial real estate. These days, though, I'm very tempted to buy some indexes.
With retirement possibly right around the corner, you should probably check in with your financial advisor and get some peace of mind. The stress of indecision can be worse than the market itself.
CaseInPoint
Recycles dryer sheets
Take a look at the "slow stochastic" on the SP 500 (one year chart) in the technical indicators section on Yahoo. It points out oversold bottoms pretty well even though once again, not the holy grail. We are definitely due for a bounce and I expect to see one soon. Even the infamous Jim Cramer talked about looking at oversold indicators as a timing indicator a week ago or so.
P.S. I added the link........ When it goes below 20 and turns up a rally is usually underway
^GSPC: Technical Analysis for S&P 500 INDEX,RTH - Yahoo! Finance=
Enjoy
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I was just looking at my Vanguard account and something did occur to me.
I have been accumulating DLS and DGS over the past year or so for international small cap exposure and I now have a paper loss. I could sell, book the tax loss and then rebuy it after the waiting period expires.
It don't know if it will go up or down during the waiting period but I know that I should be able to counter balance some capital gains and/or write off some income at the expense of a higher future cost basis.
I think that is the only thing in my portfolio with a loss at this point.
I typically don't do this sort of thing very often but I'll have to thing about it some more.
MB
I have been accumulating DLS and DGS over the past year or so for international small cap exposure and I now have a paper loss. I could sell, book the tax loss and then rebuy it after the waiting period expires.
It don't know if it will go up or down during the waiting period but I know that I should be able to counter balance some capital gains and/or write off some income at the expense of a higher future cost basis.
I think that is the only thing in my portfolio with a loss at this point.
I typically don't do this sort of thing very often but I'll have to thing about it some more.
MB
Nanita8140
Recycles dryer sheets
- Joined
- Jan 8, 2008
- Messages
- 75
Today in the Sun Sentinnel newspaper I read an article about a plant that grows in South America that may be "one" of the alternative fuels of the future...it's oil may power our cars. I don't remember the name of it...look it up in today's Sun Sentinnel(south Florida newspaper)...this plant grows for up to 40 years, needs little water, and doesn't get eaten by wild animals(sounds miraculous to me)....thing is it can take "years" to know and to grow enough of it....there will be alternatives "eventually"....until then the market may go down or sideways(who knows?...not me).
As for the posters question as to what I will be doing "tomorrow" with my portfolio....nothing...let it sit. I won't touch it no matter what...who knows, I might be one of those people that jumps off a tall building if this turns out to be the "next depression"...oh yeah but let me not omit that if I do jump, I will do so with a parachute, as I have other assets that will keep me afloat shall I loose "ALL" of my stock market holdings. Come to think of it, even if I didn't have other things I would still jump out with a parachute, for as long as I have my health, my family, and God in my life I have it "ALL". My advice is, consult your soul.
Well, there's jatropha, jojoba and castor...
Jatropha is probably the miracle one mentioned.
Bikerdude
Thinks s/he gets paid by the post
- Joined
- Jul 4, 2006
- Messages
- 1,901
Your right. However, as with most threads on this forum you have a diversified bunch. Some in retirement, some close to retirement, some with a big cola'd pension and health care, some living mostly on their assets. I guarantee a 40% market drop will get the attention of those in the latter group.
Come on...lets be honest. While I still believe that buy-and-hold is probably the best strategy to either gain wealth, or maintain buying power in retirement (mainly because it is essentially impossible to pick a top or bottom), there is something to be said for capital preservation.
How many of you **really** believed the market could streak further skyward last October? With the credit crunch that appeared in Aug, the meltdown in sub-prime mortgages, home prices plummeting and foreclosures going out the roof?
I'll bet virtually all of you - deep in the gut - knew that it couldn't continue. That a major sell-off wasn't only necessary, but inevitable. This at a time when virtually all of the world's stock markets weren't only at an all-time high, but growing exponentially. Nothing does that over time - exponential growth always ends with a collapse. Just look at China, or maybe closer to home a bacteria colony.
Now its going to take a 27% gain in the DOW to get back to the Oct high.
My only real point here is that while rebalancing, it makes sense to look at the market, try to get a feel for where it is historically valuation wise, consider the economic *knowns*, and if it is more likely than not that downside potential outweighs upside, to at least reduce exposure.
Remember the old adage - not losing money is every bit as important than making money.
How many of you **really** believed the market could streak further skyward last October? With the credit crunch that appeared in Aug, the meltdown in sub-prime mortgages, home prices plummeting and foreclosures going out the roof?
I'll bet virtually all of you - deep in the gut - knew that it couldn't continue. That a major sell-off wasn't only necessary, but inevitable. This at a time when virtually all of the world's stock markets weren't only at an all-time high, but growing exponentially. Nothing does that over time - exponential growth always ends with a collapse. Just look at China, or maybe closer to home a bacteria colony.
Now its going to take a 27% gain in the DOW to get back to the Oct high.
My only real point here is that while rebalancing, it makes sense to look at the market, try to get a feel for where it is historically valuation wise, consider the economic *knowns*, and if it is more likely than not that downside potential outweighs upside, to at least reduce exposure.
Remember the old adage - not losing money is every bit as important than making money.
I'm thinking that we'll need a lot more posts like these before the market reaches capitulation.
We did a 40% drop after 9/11... then our portfolio doubled over the next five years. Things seemed to work out OK.I'm not a "doom and gloomer" but history shows an additional 20% decline is not out of the question. What you do then is the bigger question. Once the crowd starts to dump stocks in earnest it will test your fortitude.
Oh, please, you're trying to apply rational logic to a market that has neither. Spouse's ER'd uncle started shorting the overvalued NASDAQ in late 1998, when it couldn't possibly go higher by any rational logical analysis, and he shorted himself right back into the workforce until 2006.
We rebalanced in February because our asset allocation had gotten too far out of whack. That way we didn't have to be rational or technical or [-]psychotic[/-] psychic. With the appropriate cushion of cash and a chosen asset allocation, the rebalancing should take care of the capital preservation.
Of course the ultimate in capital preservation would be an annuity.
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
I detect a hint of snarcasm...
W2R
Moderator Emeritus
A list of excellent books for those who would like to or need to learn more about investing:
Investment Books
One of the books on the list providing an interesting discussion of financial history that some here might find beneficial is A Random Walk Down Wall Street by Burton Malkiel.
Required reading would include The Four Pillars of Investing by Bernstein and The Bogleheads' Guide to Investing by Larimore et al.
Investment Books
One of the books on the list providing an interesting discussion of financial history that some here might find beneficial is A Random Walk Down Wall Street by Burton Malkiel.
Required reading would include The Four Pillars of Investing by Bernstein and The Bogleheads' Guide to Investing by Larimore et al.
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You're making my point. There are times when the market is clearly overvalued - as in dot-com, and in US equities 2007. I could not believe that the market started to climb after the turmoil of last Aug, and in fact reached a new high. With all the revelations that were slowly being revealed?
But the "irrational exuberance" never lasts. Markets eventually come back to their rightful valuations - P/Es between 10 and 15. Lower range, a reasonable expectation for a good return. Higher range, t-bill returns or worse.
We were in the 20s last year - and those were based on "forward earnings expectations". Gotta give some credit to those on Wall St. - they always find a new way to let you know that stocks are a bargain.
I agree that rebalancing in and of itself reduces risk to a degree. I'll just say it again...when the market as a whole is trading at 20+ P/Es, based on "forward earnings expectations" - with all the cracks that became obvious in the system - that reducing your equity exposure makes sense.
I hope you're not trying to tell me that investing in the stock market with a "forward" P/E of 20 is likely to produce the same returns as investing in the same market with a backward looking P/E of 10?
Or, maybe phrased a different way, when would you ever consider reducing equity exposure? P/E=30? P/E=40?
P/E-100?
No, I guess not. Maybe it'll go to 200...
W2R
Moderator Emeritus
Hey, if we all knew how to predict the market, we'd all be multi-zillionaires.
We wouldn't want to share our "knowledge" with anybody and we'd be hiding out on our private islands, surrounded by bodyguards and busily counting our money. 8)
We wouldn't want to share our "knowledge" with anybody and we'd be hiding out on our private islands, surrounded by bodyguards and busily counting our money. 8)
The question is how do you reduce the risk of losing money. The buy and hold folks say pick an AA you can live with, climb on the roller coaster and hold on to your hat. What you are proposing is in essence market timing, no? Nothing wrong with it, but basically you have to be able to recognize a top in order to make the right move. In general I keep my asset allocation pretty conservative for someone my age (I am 34 and my AA is only 65-70% stocks), so I tend to ride the ups and downs. And so far that's exactly what I have been doing. My portfolio overall is down only about 8.6% from July 2007, much less than the overall stock market and I don't feel panicked about it. Nor am I kicking myself for missing the top.
But I have to admit that in mid 2007 I started feeling like we were heading into trouble, so I put my play money to work and I bought a bear market fund (when the DOW passed 13,000 on the way up). But by October of last year, when the DOW passed 14,000 I felt like I had made a big mistake and I almost got rid of it but for once my procrastination paid off. I am glad I didn't, but I think it showed me that it is difficult to make the right decision at the right time and not second guess yourself all the way. And now I have to decide when to sell this puppy...
Thanks, Want2retire. I've done a lot of reading in the last 1.5 years, trying to figure out how to invest my very fortunate inheritance. I have finally come up with a plan - that I intend to initiate come late Oct. I've been mostly cash, market-neutral (HSGFX) and foreign bonds (BEGBX) up to this point.
I simply can't understand why most just stick their head in the sand and say valuations don't matter. Nothing matters more...especially since the first couple of years in retirement can seal your bliss or doom.
When I finally get fully invested over the next couple of years, I will continue to keep my eyes on stock market valuations, and when they get out of line, reduce my exposure accordingly.
I think it was Buffet that said not losing money is as important than making money...
You see, FIREdreamer - you actually have more guts than I do. I decided years ago never to short anything (although I posted here last year that I was considering shorting China (wish I had), and am very tempted to short USO right now!). Markets can and do move up irrationally, and if you're caught on the wrong side, can lose a fortune.
Yes, in a sense it is market timing. But when P/E ratios climb into the upper bounds of historical ranges, you'd better have a damn good reason to believe that they will be sustainable.
Typically they are not sustainable, and will eventually return to the mean.
Which means that if you bought in the 20s, you end up losing money. If you bought in the 10s, and rode it up to the 20s - and held - you give it back when it retreats.
Nothing wrong with taking some money off the table if you're lucky enough to have a gain. Theres also nothing wrong with not investing when the markets are excessively expensive.
Bestwifeever
Moderator Emeritus
- Joined
- Sep 17, 2007
- Messages
- 17,774
Sure, good advice to buy low, sell high--but does anyone here ever sell high?
OP is possibly more risk-adverse than he realized this close to his anticipated ER--should he just ride this market down (if that's where it's going) before he rebalances into a more conservative AA?
OP is possibly more risk-adverse than he realized this close to his anticipated ER--should he just ride this market down (if that's where it's going) before he rebalances into a more conservative AA?
Well I don't know how much guts I really have. I picked BEARX, probably one of the "safest" bear market fund around (in case I was wrong). I didn't feel like I was taking as much risk with it as I would have with a Rydex inverse or double inverse for example.
I read a lot of material over the weekend, much of it follows your view. I think the markets are very oversold as of last week and a rally is due. Selling into that rally and waiting it out for awhile makes some sense to me. Any rally from here might bring in investors selling out, bear markets tend to create that, the opposite of buying the dips. Of course, the real problem will be deciding when to put the chips back on the table. Waiting for the VIX to hit 35 or 40 is one idea, capitulation.
Of course, the bottom could of been Friday, such is life, and market timing. - Status
