Well-disciplined, but...

[redduck]

It appears that people who contribute to this board are well-disciplined regarding their investment strategies. But, the question is: what kind of news event might cause you to pull out 25-50% (or more) of your investment in the market? Second part: what sort of news event might cause you to add much more to the market than you had planned?

[d]

if we had a dramatic run-up, i'd rebalance. if we had a dramatic run-down, i'd rebalance. (actually, either wouldn't have to be very dramatic, as i tend to rebalance often, in small doses.)

[SecondCor521]

I put money in when I have it.

I take money out when I need it.

The news doesn't affect my investment actions at all.

2Cor521

[bssc]

If I saw that I won the lottery on the news, I would be adding to my portfolio but the only news that I make investment decisions on is individual company news such as a buyout or bankruptcy.

[wabmester]

Quote:

Originally Posted by redduck It appears that people who contribute to this board are well-disciplined regarding their investment strategies. But, the question is: what kind of news event might cause you to pull out 25-50% (or more) of your investment in the market? Second part: what sort of news event might cause you to add much more to the market than you had planned?

Good question. (There's a similar thread at the diehard's forum.) People here often talk about buying stocks when they're "on sale."

A couple examples of historical stock "sales:"

If bond yields went up to, say, 15% (a la 1979) and corporate earnings were in the toilet, what would you do?

If the gov't was making bold socialistic moves and talking about taking over public companies for the good of the people (a la 1930's), what would you do?

I'm not sure I'd have the discipline to stay in stocks or the cojones to buy on dips.

[LOL!]

Let's see, stayed invested in 1987. Stayed fully invested since, including 2000, 2001, 2002.

But, how about this news item:

"FDA approves new NIH drug that makes you instantly 20 years younger, prevents cancer and heart disease, costs $500,000"

[rockyj]

Quote:

Originally Posted by redduck But, the question is: what kind of news event might cause you to pull out 25-50% (or more) of your investment in the market? Second part: what sort of news event might cause you to add much more to the market than you had planned?

If you're suggesting that one could hear a news report of a catastrophe (or upcoming unfavorable market conditions) and then pull out in time avoid big losses from the resulting market response, or similarly to react to a news report of favorable market conditions in time to benefit from the subsequent runup, neither seems very realistic.
Both presuppose that you can act quickly enough to beneifit from a subsequent and predictable market reaction. By the time such things were reported, you'd be too late; the market would have reacted.

The questions also presuppose a rational market.

Quote:

Originally Posted by d if we had a dramatic run-up, i'd rebalance. if we had a dramatic run-down, i'd rebalance.

Exactly. It's not so much reacting to news events in anticpation of market reaction, but rather having a plan (asset allocation) and reacting to market changes that have already occured, for whatever reason. So if the market reacts dramatically to a specific event about the same time you were poised to do some rebalancing or new accumlation anyway, there may be an immediate buying opportunity. I wouldn't keep money intended for the market out while waiting for such an opportunity, however.

I'm talking here about mutual funds, long term, and the market in general. Obvoiusly individual stocks may be a different game, one that I gave up on a while ago.

[redduck]

Well, let's say it's that time of year-- actually the very day-- that you had planned to put your lump-sum amount into your retirement plan...and you hear that North Korea just nuked South Korea or that the world learns the avian flu is now rampant in some part of the world. Do you hold off or do you just put your money into the market as per always?

[rockyj]

Quote:

Originally Posted by redduck Well, let's say it's that time of year-- actually the very day-- that you had planned to put your lump-sum amount into your retirement plan...and you hear that North Korea just nuked South Korea or that the world learns the avian flu is now rampant in some part of the world. Do you hold off or do you just put your money into the market as per always?

If I had long term money waitng to go into the market, and the market tanks due to the nuke. Yes, I'd put it in as always and be thankful for the dip. The kind of news that might make me change my asset allocation would be the kind that would lead me to shift into weapons, canned goods and bottled water. But by the time I heard that news, Wal-mart would be out of all of all that stuff anyway.

[wabmester]

Quote:

Originally Posted by redduck Well, let's say it's that time of year-- actually the very day-- that you had planned to put your lump-sum amount into your retirement plan...and you hear that North Korea just nuked South Korea or that the world learns the avian flu is now rampant in some part of the world. Do you hold off or do you just put your money into the market as per always?

I live for the kind of dramatic events that have no real lasting economic impact. The market always overreacts, and I always buy on those dips.

[lowflyer]

Quote:

Originally Posted by redduck Well, let's say it's that time of year-- actually the very day-- that you had planned to put your lump-sum amount into your retirement plan...and you hear that North Korea just nuked South Korea or that the world learns the avian flu is now rampant in some part of the world. Do you hold off or do you just put your money into the market as per always?

Since 9/11, we've seen any number of these events and they will certainly take the market down. It (so far) always comes back and more. The market seems to be getting even more imune to these events, but when it goes down, if you are watching, it's a great time to jump in. Of course, this is more of a short-term trading opportunity and difficult for most "investors" to do. Look at what happened when the Cirrus aircraft rammed into the building in NY a couple months ago. The market took a quick dip and then went right back up. I'm sure traders made alot of money.

[brewer12345]

Quote:

Originally Posted by wab I live for the kind of dramatic events that have no real lasting economic impact. The market always overreacts, and I always buy on those dips.

Ditto. Plus as I get older and more experienced, I inceasingly have more confidence in my convictions.

[REWahoo]

Quote:

Originally Posted by brewer12345 Ditto. Plus as I get older and more experienced, I inceasingly have more confidence in my convictions.

Better than growing more confident you will be convicted...

[REWahoo]

Quote:

Originally Posted by brewer12345 Ditto. Plus as I get older and more experienced, I inceasingly have more confidence in my convictions.

One more point. Your above statement is the precursor to what you will become as you continue to age. Today's "courage of your convictions" is tomorrow's "obstinate old f@rt".

(Let me save you a response: Yes, I am speaking from experience. )

[unclemick]

Quote:

Originally Posted by REWahoo! Today's "courage of your convictions" is tomorrow's "obstinate old f@rt".

WITH a Curmudgeon Certificate AND you get to remember it your way.

heh heh heh heh heh heh heh heh heh heh heh heh - no coffee yet.

[Jarhead*]

Quote:

Originally Posted by wab Good question. (There's a similar thread at the diehard's forum.) People here often talk about buying stocks when they're "on sale." A couple examples of historical stock "sales:" If bond yields went up to, say, 15% (a la 1979) and corporate earnings were in the toilet, what would you do? If the gov't was making bold socialistic moves and talking about taking over public companies for the good of the people (a la 1930's), what would you do? I'm not sure I'd have the discipline to stay in stocks or the cojones to buy on dips.

Wab: I had two children and a homemaker wife in 1966.
By the time 1979 rolled around, nothing surprised me.

Stagflation produced high unemployment rates, and run-away inflation.

If you were able to hold a job and somehow keep up with inflation you were "successful". Stocks and Bonds were mostly off the radar screen
for all but the individuals that had an inheritence, or other special circumstances.

Early Retirement Boards would have been a blank page.

Hope you guys don't have to experience a period like this, because my children are about the same age bracket as most of the posters on this board (Age 40 and 37).

Meanwhile, enjoy the blessings of the the last 25 years, but be careful out there.

[WanderALot]

Quote:

Originally Posted by Jarhead* Wab: I had two children and a homemaker wife in 1966. Hope you guys don't have to experience a period like this, because my children are about the same age bracket as most of the posters on this board (Age 40 and 37).

Hmm, If you had 2 children in 1966, wouldn't they BOTH be at least 40 by now?

[Jarhead*]

Quote:

Originally Posted by WanderALot Hmm, If you had 2 children in 1966, wouldn't they BOTH be at least 40 by now?

My Wife reads this board occasionally when I post something. She already beat you to it. We were married in 1963, and our children came along a few years after 1966.

Give me a break, that was a long time ago.

[cute fuzzy bunny]

Quote:

Originally Posted by LOL! "FDA approves new NIH drug that makes you instantly 20 years younger, prevents cancer and heart disease, costs $500,000"

Wait until Costco sells it for $75,000 with a free sample on a toothpick at lunchtime.

Hey Jarhead...as the 18 year old from missoula says, you get to remember it any way you want to. As long as I get to make you feel like an old fart by pointing out that I was two when you got married and just graduating high school in '79.

And are you enjoying this minnesota-like weather we're having?

[WanderALot]

Quote:

Originally Posted by El Guapo Hey Jarhead...as the 18 year old from missoula says, you get to remember it any way you want to. As long as I get to make you feel like an old fart by pointing out that I was two when you got married and just graduating high school in '79.

Well, I think Justin, soupxcan and CoolDude weren't even born when you were graduating high school and I wasn't even 5.