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Old 02-11-2014, 12:49 AM   #21
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Interesting discussion even bearing in mind this is (financially) a very unusual group. I've always had a side interest in psychology spurred by some of the foolish things that otherwise apparently normally intelligent people do. While everyone has had a "What was I thinking?" event, I'm talking about consistently foolish behavior.

Like the retired math teacher we are slightly acquainted with who is $500k+ in debt.

So I just put several books on my Amazon "wish list" that deal with finances and emotions, like Your Money and Your Brain and some others like that.

Nice. I too like the psych angle re stock market.
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Old 02-11-2014, 12:50 AM   #22
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I don't know about anybody else, but I'm following LOL!'s Market Timing Newsletter on this site.

Oh hell ya...genius stuff for sure.
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Old 02-11-2014, 08:28 AM   #23
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Data point: after staying out of the market (no 30% gain for us!) and having cash sit in a Vanguard MM account all last year we started buying back in in mid January this year. Won't say that portends well for the market.
Oh oh, time for most of us to get out now!
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Old 02-11-2014, 12:24 PM   #24
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...

Obviously I gave them the advice to stay the course, selling would lock in their losses, you can't time the market, etc.... Not sure if they agreed.

So... Is it time to throw more money into the market since there appears to be some panic in the general population?
Did you really mean to say this? This infers they jumped into the market in the past few months. How else could they have losses? IF they are jumping in at highs, and then asking what to do at the first tiny pullback, I think the need education, not advice (I realize you are trying to avoid giving them 'advice').

While I don't feel confident in my market timing abilities, it seems as likely as not that this could be a good time to lighten up (enough weasel words there? Like a 50-50 chance of rain? ). Not because of some recent down days, but because we have had a big run up the past two years.

But then again, maybe not.

-ERD50
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Old 02-11-2014, 05:10 PM   #25
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That is really interesting. I can't remember the last time someone I know in real life even mentioned the stock market.
I talk to friends and family members that invest in the stock market about stocks all the time. Guess we're odd and into pain.
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Old 02-11-2014, 07:31 PM   #26
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3 unrelated people have solicited my opinion on whether it's time to pull out of the stock market. All within the last week.

One was a brother in law.
One was a friend,
One was a coworker.

None of them know each other - they live in different cities, etc.

Obviously I gave them the advice to stay the course, selling would lock in their losses, you can't time the market, etc.... Not sure if they agreed.

So... Is it time to throw more money into the market since there appears to be some panic in the general population?
I have no idea what you might be talking about. Both the Dow and S&P are very near all time highs.

Who gets panicked over that? And who has losses to lock in$ Only [people who have been short the last few years.

Also I never recommend throwing money. Hug it, kiss it, then carefully place it knowing you may never see it again.

Ha
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Old 02-11-2014, 07:36 PM   #27
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No doubt, that's me. no vice.
Calm Man, I know someone who could help you with this. Contact me with absolute discretion. Smoke signals might be best.
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Old 02-11-2014, 08:27 PM   #28
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... So... Is it time to throw more money into the market since there appears to be some panic in the general population?
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Originally Posted by haha View Post
I have no idea what you might be talking about. Both the Dow and S&P are very near all time highs.

Who gets panicked over that? And who has losses to lock in$ Only [people who have been short the last few years.

Also I never recommend throwing money. Hug it, kiss it, then carefully place it knowing you may never see it again.

Ha
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Calm Man, I know someone who could help you with this. Contact me with absolute discretion. Smoke signals might be best.

I'm with haha on this one. I don't really do market timing myself, not that I don't believe in it, I just don't trust my abilities in it enough.

But to 'throw money in the market' near all time highs Sounds like a buy high, sell low disaster in the making.

-ERD50
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Old 02-11-2014, 08:27 PM   #29
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<snip>
. . . selling would lock in their losses, you can't time the market, etc.... Not sure if they agreed.
<snip>
I have to admit I was a little perplexed by this, also.
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Old 02-12-2014, 01:22 AM   #30
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3 unrelated people have solicited my opinion on whether it's time to pull out of the stock market. All within the last week.

One was a brother in law.
One was a friend,
One was a coworker.

None of them know each other - they live in different cities, etc.

Obviously I gave them the advice to stay the course, selling would lock in their losses, you can't time the market, etc.... Not sure if they agreed.

So... Is it time to throw more money into the market since there appears to be some panic in the general population?
The OP is talking about a contrarian strategy.

Regarding throwing more money into the market, I've never understood this idea. The same for people who talk about making a large amount of money in 2008 by buying after the decline. Aren't people already fully invested? Where is the money coming from to add additional money? If one has a long-term CD, you can't cash it out. No one should have large amounts of cash sitting around because it should have already been in the stock market. And if one doesn't use market timing then again, the money is invested. Making a change in asset allocation doesn't make sense. So are people selling real estate to put money in the stock market?
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Old 02-12-2014, 10:44 AM   #31
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The OP is talking about a contrarian strategy.

Regarding throwing more money into the market, I've never understood this idea. The same for people who talk about making a large amount of money in 2008 by buying after the decline. Aren't people already fully invested? Where is the money coming from to add additional money? If one has a long-term CD, you can't cash it out. No one should have large amounts of cash sitting around because it should have already been in the stock market. And if one doesn't use market timing then again, the money is invested. Making a change in asset allocation doesn't make sense. So are people selling real estate to put money in the stock market?
Not everyone is fully invested at all times. As a matter of fact, it makes sense to have available, uncommitted cash to take advantage of buying opportunities. And some people may actually WORK and get PAID routinely for more cash.
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Old 02-12-2014, 10:54 AM   #32
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Originally Posted by inquisitive View Post
The OP is talking about a contrarian strategy.

Regarding throwing more money into the market, I've never understood this idea. The same for people who talk about making a large amount of money in 2008 by buying after the decline. Aren't people already fully invested? Where is the money coming from to add additional money? If one has a long-term CD, you can't cash it out. No one should have large amounts of cash sitting around because it should have already been in the stock market. And if one doesn't use market timing then again, the money is invested. Making a change in asset allocation doesn't make sense. So are people selling real estate to put money in the stock market?
The market is not, contrary to what reading this board might lead you to believe, the only place to generate income. Some might be high stakes poker players. Some might buy and sell real estate. Some might make short term loans to property flippers. In those cases having a damn silly wad of cash is kind of normal.
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Old 02-12-2014, 10:56 AM   #33
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As a matter of fact, it makes sense [for those with the market timing itch] to have available, uncommitted cash to take advantage of buying opportunities.
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Old 02-12-2014, 10:57 AM   #34
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Not everyone is fully invested at all times. As a matter of fact, it makes sense to have available, uncommitted cash to take advantage of buying opportunities. And some people may actually WORK and get PAID routinely for more cash.
Exactly. Plus, even with routine rebalancing, you're going to end up with some money sitting on the sidelines in something conservative like a money market account or cash. Back in 2007 when the market was riding high, I sold off a bit. And when 2008/early 2009 hit, I started buying back in again.

I also lucked out a bit, too. In 2008, as the market was crashing, a lot of banks were freezing HELOC's, not letting their borrowers tap into any more equity even if they were below their limit. I called my bank to see if they were going to do that as well. They said no, but I ended up maxing my HELOC out, just in case. While I was in no danger of losing my job, I wanted easy access to the money in case anything came up. Plus, with the way interest rates were dropping, it wasn't costing much to pull it out.

While prices were cheap, I bought some stocks, padded some mutual fund accounts, etc. Got some pretty good bargains. For example, Nordstrom's for around $10/share. I bought it mainly because it was paying a 6% dividend at the time, something you weren't going to get from any bank. Well, now it's trading for around $58 per share. And the dividend is now $1.20 per year rather than 60 cents. That's only about a 2% yield on the current share price, but about 12% on what I initially paid!

I also bought a bunch of Cedar Fair, around $7-10 per share. And again, initially for the dividend, which was $1/share at the time. Ironically, they cut the dividend soon after I bought, but then the price went up. Currently around $49-50/share, and the dividend is now $2.80 per share.

As for this volatility we've had so far this year? Well, as of last night, my total is down about 0.033%. Pretty negligible. But even there, I've had some stocks/funds that have gained notably, some that have fallen off, so it's been enough to make me rebalance a bit.
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Old 02-12-2014, 10:58 AM   #35
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Old 02-12-2014, 11:57 AM   #36
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... As a matter of fact, it makes sense to have available, uncommitted cash to take advantage of buying opportunities. ...
I don't know that we can say that is a fact. Some studies have shown rebalancing hurts overall returns. As REWahoo points out, you are really talking market timing - maybe you can win, maybe you can't, but I don't think it rises to the level of 'fact'. But when you look backwards at a stock chart, it sure seems easy to pick the right times to get in and out!

-ERD50
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Old 02-12-2014, 11:59 AM   #37
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Old 02-12-2014, 12:35 PM   #38
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I'm with haha on this one. I don't really do market timing myself, not that I don't believe in it, I just don't trust my abilities in it enough.

But to 'throw money in the market' near all time highs Sounds like a buy high, sell low disaster in the making.

-ERD50
I beg to disagree. The markets were making "all time highs" throughout the 80's and 90's. You mean you would have stopped investing in 1985 because the markets were at "all time highs". Who knows, in 10 years folks will be wondering why people didn't "throw" money in the market in 2014 since it soared over 10,000 points by 2024. I mean who would have thought in 1987 that in 12 years the market would be up 10,000 points.

The market can always make fools out of the smartest of us.
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Old 02-12-2014, 12:48 PM   #39
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Wish I knew.
We rebalance and tend to do it more during a run up or run down, so we have
sold a lot the last few yrs.
We like to stay between 25%-35% equities and are currently at 25%
I've noticed that there is not a decent consensus on what a 'balanced portfolio' is. Probably because financial advisers often use that to differentiate themselves. For me, I've been out of balance for years, and like it like that
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Old 02-12-2014, 01:18 PM   #40
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I've noticed that there is not a decent consensus on what a 'balanced portfolio' is. Probably because financial advisers often use that to differentiate themselves. For me, I've been out of balance for years, and like it like that
I've been badly out of balance for decades. Probably for another decade or two. And I'm a pretty fair price ahead of a balanced account.
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