what will happen Monday?

[73ss454]

Well, I'm going to hold and if that doesn't work I'll just JUMP.

 

[Midpack]

My main goal is not to get filthy rich but to preserve what I already have. Buy, hold AND SELL helps me in that goal.

And I see many buy and hold types around here and they don't seem to be filthy rich either.

I'm amazed how people defend this approach to the bitter end. There ARE alternatives.

So BHR is about equal to your BHS (the good sells are offset by the bad sells), just less effort? Alternatives indeed, you're welcome to your approach, even defending it 'to the bitter end.'

BHR can definitely provide great results. But more people have lost money thinking they had the ability to BHS successfully than have lost money adhering to BHR. And your approach is the one recommended by all retail brokers on Wall St, who are we to disagree?

 

[TromboneAl]

Just curious or perhaps for another thread, but what "rules" do people use for rebalancing? are they written?

I took at look at what I'd written down, and here it is, in a document called "Rebalancing Info" (Amounts replaced with "x"). My rule is that I rebalance annually on the first business day of January, but I see that I hadn't actually written that down. I don't have any provision for rebalancing if things get out of whack during year.

Rebalancing Plan and Record
2008

Rebalancing Plan (2008/01/07):

Last year I rebalanced to 58%.
Today I rebalanced to an asset allocation of 57% stock.
My plan is to stay at 57% for at least several years.

2009

[Chart omitted]

2010

2010/01/04: I am decreasing the stock allocation to 54% stock.
We are currently at 60.3% with $x in total investments, thus I need to transfer $x out of stocks.

We have $x in the normal money market fund, so I'll move $x to that, giving us a year's expenses plus $x. I will also move $x from Lena's 500 index ira to her GNMA ira.

2011

2011/01/01: This year, I will be setting the stock allocation to 53% stock. We are currently at 57.9% stock and have $x. That means that we have $x in stock, and I need to change that to $x, meaning that I need to move $x from stocks to bonds and MM.

We have about $x in the money market, so I will move $x to the money market from the S&P 500 Normal (giving us $x in the MM), and $x from the Total Stock Market to the Total Bond Market. I did this on (1/2/2011).​

 

[donheff]

if everything in the economy is tanking, I seriously doubt the market is heading for new highs.

Except that every time everything tanked in the past, the market did eventually head back up, thus buy, hold, rebalance. It could be different this time but as ERD asks, what option are you proposing that will serve a 30 - 40 year ER?

Edit: I got my quotes wrong somehow - the quote above actually originated with DallasGuy not 73ss454. So what kind of user name is 77ss454 anyway?

 

[ERD50]

I'm amazed how people defend this approach to the bitter end. There ARE alternatives.

You have our 'system', now show us yours. I can't 'defend' it against a vague 'sell at the right time and buy back at the right time and you will do better' 'system'.

The Dow closed lower yesterday than it was back in 1999. How is buy, hold and rebalancing working for you?

Several flaws in your statement:

1) You are cherry-picking a time frame. I could do that too, but I won't because it's meaningless and dilutes the discussion.

2) Nobody who does B&H&RB suddenly dumped all their money into the market in 1999. They DCA in during the accumulation phase.

3) It assumes that you could have correctly got in/out of the market and done better. It's very possible that a market timer would have got in/out at the wrong times, got whipsawed and done WORSE than B&H&RB.

If you are going to speak so boldly on this issue, put your cards on the table - where is the proof that you can market time better than a B&H&RB approach?

-ERD50

 

[GregLee]

My main goal is not to get filthy rich but to preserve what I already have while trying to participate in SOME of the market gains.

That's generally what BH types want, too. However, the reason to be afraid of not gaining enough when the market rises, because you don't have enough invested, is this: if the market gets wild, you'll need to make large amounts sometimes in order to balance out large losses at other times.

 

[TromboneAl]

We've got a nice wall of worry to climb.

 

[harley]

The Dow closed lower yesterday than it was back in 1999. How is buy, hold and rebalancing working for you?

Quite well, actually. It doesn't matter whether teh Dow is back to 1999 values or not. If you've been rebalancing all along (either yearly or at points where your AA gets a certain level out of whack) you've sold a number of times when stocks have been high, and bought a number of times when stocks have been low. I'm sure someone somewhere has done better doing intuitive market timing, but I doubt any particular scheme has done much better over the long run. But I'm with ERD, show me a better proven method and I'll jump right on it. I can be convinced, but it would take some effort.

 

[eytonxav]

I consider myself as a buy and hold type, but I will rebalance tactically on occassion based on how I see the tea leaves blowing. I see nothing wrong with traditional buy/hold/rebalance, but I suspect a fair number of folks deviate from the rebalance algorithm vs following an unwaivering discipline.

I just hope that what ever any of us are doing that our ports and economy turnaround for the better, but after seeing all the finger pointing after this downdraft, I am not confident that DC will be helpful towards that end.

 

[ERD50]

I just hope that what ever any of us are doing that our ports and economy turnaround for the better, but after seeing all the finger pointing after this downdraft, ...

Has there ever been a downturn that wasn't accompanied by finger-pointing? Is it 'different this time'?

I am not confident that DC will be helpful towards that end.

I am confident that your lack of confidence will be shown to be well placed.

-ERD50

 

[easysurfer]

The Dow closed lower yesterday than it was back in 1999. How is buy, hold and rebalancing working for you?

My explanation of the Buy/Hold and rebalance strategy. Can't explain it a better way (plus it's a pretty good fight scene):

‪Star Trek - Shootout at the OK Corral‬‏ - YouTube

Unlike the clip, a down market is very real, not an illusion, but to sit pat and ride it out for me is the way to go.

 

[easysurfer]

My main goal is not to get filthy rich but to preserve what I already have while trying to participate in SOME of the market gains. Buy, hold AND SELL helps me in that goal.

And I see many buy and hold types around here and they don't seem to be filthy rich either.

I'm amazed how people defend this approach to the bitter end. There ARE alternatives.

Seems to me by SELL you are either really meaning REBALANCE like what many of us over here do. Or unless you mean SELL when the market is going down, that is selling at a loss.

 

[haha]

So what kind of user name is 77ss454 anyway?

Reference to '77 Chevelle SS with the 454 big block motor is my guess. A high point of US car culture.


Ha

 

[73ss454]

Close, it's a 1973 SS 454 Chevelle that I reference. The 454 is the size of the motor as HaHa mentioned. SS stands for Super Sport and 73 is the year.

1973 was the last year for the SS Chevelle, the end of an era.

 

[eytonxav]

Has there ever been a downturn that wasn't accompanied by finger-pointing? Is it 'different this time'?





I am confident that your lack of confidence will be shown to be well placed.

-ERD50

Isn't this time different Actually my lack of confidence has turned to total disgust.

 

[donheff]

Close, it's a 1973 SS 454 Chevelle that I reference. The 454 is the size of the motor as HaHa mentioned. SS stands for Super Sport and 73 is the year.

1973 was the last year for the SS Chevelle, the end of an era.

Ah, yes. They still had those little flags with the CCs underneath that impressed us so much in the 60s: 327s, 409s. I never could afford any of them. 454 was unimaginable. My 15 years older brother had an Impala SS convertible circa 64 or so.

 

[eytonxav]

Close, it's a 1973 SS 454 Chevelle that I reference. The 454 is the size of the motor as HaHa mentioned. SS stands for Super Sport and 73 is the year.

1973 was the last year for the SS Chevelle, the end of an era.

It is also his inflation/deflation hedge; wish I still had my 67'

 

[HFWR]

Ah, yes. They still had those little flags with the CCs underneath that impressed us so much in the 60s: 327s, 409s. I never could afford any of them. 454 was unimaginable. My 15 years older brother had an Impala SS convertible circa 64 or so.

Yeah, was lucky to have a car that ran, though my dad had a 1970 Le Sabre with a 455CI. Talk about a land barge!

 

[Hobo]

Isn't this time different Actually my lack of confidence has turned to total disgust.

I am arch fiscal conservative and stand 100% behind free enterprise. It just seem the Great Depression, the Asian Monetary Crisis, and this Great Recession had the banks right in the middle of things. The ability to accept deposits (or investments) and lend it out at very high leverage puts any country's economy on perpetual thin ice. Furthermore, our government gives so much free help to these profitable institutions (from deposit insurance to first in line bail-outs).

Not to say their weren't a bunch of accessories to the crime...government spending, housing speculation, Wall Street's mystery products like derivatives and credit default swaps. You will need many fingers to point to guilty parties.

At the beginning of the 1900's, Teddy Roosevelt say the danger of "too big to fail" industries - like oil, steel, and railroads - and wisely broke them into pieces. I look at the break up of huge private utilities, like electric generation companies, AT&T, and the mini break-up of Microsoft. Cutting huge companies into pieces encourages competition from small companies. It keeps a few companies from getting so large that the failure of any one of them could bring down the country's economy.

Let's not get so obsessed with blaming Washington politics that we forget that the companies headquartered in New York City alone are way more powerful than the government will ever be.

 

[Nords]

I guess that some websites actually published minute by minute events from the trading floor using services such as Twitter. What is the point of that? To alarm us even more? To further get people worked up?

To attract website traffic/hits and sell more advertising?

Is it time to buy yet?

You're supposed to wait until they roll the little cart with the flashing blue light out onto the trading floor...

Well, I can tell that the "buy and hold no matter what" sentiment dominates this forum. Interesting.

Let me pile on with a couple more comments:
1. This market volatility is no reason to sell a dividend-paying stock, unless the company decides to [-]commit investor-relations suicide[/-] cut their dividend. There may be plenty of reasons today to buy more dividend-paying stocks.

2. Many posters on this board did a lot of tax-loss swap selling & buying during 2008-2009 while remaining "fully invested". Some of us are still carrying forward cap losses from those days...

 

[donheff]

WTF? DOW up 140 on no news, then down 30 and up 300 on the same Fed announcement? I guess this just tells us we can expect a wild ride for the foreseeable future.

 

[REWahoo]

I said 200 down today but now I change that to 600. Td

DOW futures are +140. Still sticking with -600?

yep

The Dow closed up 400, so you only missed it by 1,000 points. But hey, tomorrow is another day - want to give it another shot?

 

[clifp]

Down 630, up 430. What an exciting ride.

I really like rollercoasters at night or in dark passages. So will tomorrow bring another exciting day (my prediction) or will we take a breather?

 

[bbbamI]

WTF? DOW up 140 on no news, then down 30 and up 300 on the same Fed announcement? I guess this just tells us we can expect a wild ride for the foreseeable future.

Yee flippin' haw! Ride 'em cowboy!

 

[REWahoo]

Down 630, up 430. What an exciting ride.

I really like rollercoasters at night or in dark passages. So will tomorrow bring another exciting day (my prediction) or will we take a breather?

I may put a paper bag over my head tomorrow. I figure that should both hide events from view and reduce the possibility of hyperventilation....