What would you buy if market went down 20%?

[tmm99]

I picked up a couple of things yesterday, but not much. I have some reserves and if (when?) the market goes down a lot, I'm thinking of buying more..

What would *you* buy if the market went down by, say 20%?

 

[Midpack]

Since this isn't the stock picking subforum, I'd sell over represented asset classes and/or use cash to buy more of the various equity funds I already own to restore my AA.

I am guessing you want individual stock tips...

 

[gauss]

Balanced and/or target retirement fund.

-gauss

 

[pb4uski]

Since this isn't the stock picking subforum, I'd sell over represented asset classes and/or use cash to buy more of the various equity funds I already own to restore my AA.

+1 I would view the downturn as an opportunistic time to rebalance - at best.

I can recall at least 2 times over the past 20 year that I should have rebalanced but did not due to fear/greed and am poorer as a result.

 

[veremchuka]

Shift from 40/60 to 60/40 equity/fixed income. My problem is one is too high and the other is about to crater. I am watching for a good buy point, I think it is too early. I really don't tinker with the market or market time but I like to buy when things are on sale and I don't see that yet. A 20% drop would be painful but a great purchase point.

 

[tmm99]

I have tons of cash doing nothing really (I am still w*rking) so I could buy a lot if I wanted to. I imagine situations would be different if you were already retired? I made a bundle in the last downturn by adding more cash into the market...

 

[W2R]

I'd sell over represented asset classes and/or use cash to buy more of the various equity funds I already own to restore my AA.

+2 Absolutely! If my rebalancing criteria/triggers came into play, I'd be happily rebalancing. I wouldn't buy or sell anything I don't already own, though.

Then I'd come back to the forum to engage in some mutual hand-holding, and try to keep myself from dealing with the situation through massive over-consumption of fine chocolate.

 

[RunningBum]

I have tons of cash doing nothing really (I am still w*rking) so I could buy a lot if I wanted to. I imagine situations would be different if you were already retired? I made a bundle in the last downturn by adding more cash into the market...

I'm not sure why it's different. You're either a market timer, or not, and I don't know that being retired changes that. Maybe age changes it, I don't know. Nothing wrong with either.

But I have to ask, you made a bundle in the last downturn, but did you get out before the top, and how much have you missed out on by not having it in the market through the full run-up? It's easy to remember and/or track gains where you bought and sold, but not as easy to track the gains you missed out on while out of the market (or losses you avoided if you did get out on top). Basically, did you beat the market by getting in and out?

 

[tmm99]

I'm not sure why it's different. You're either a market timer, or not, and I don't know that being retired changes that. Maybe age changes it, I don't know. Nothing wrong with either.

But I have to ask, you made a bundle in the last downturn, but did you get out before the top, and how much have you missed out on by not having it in the market through the full run-up? It's easy to remember and/or track gains where you bought and sold, but not as easy to track the gains you missed out on while out of the market (or losses you avoided if you did get out on top). Basically, did you beat the market by getting in and out?

I time the market going in, but I don't time the market getting out. Ever. I try to buy on bargain prices and once I buy, I keep them. I "stay the course." I will eventually have to start selling when I retire, but, no I haven't sold anything at all since the beginning of time (except for about 5K that I call "Casino money" but even that has been staying in since I bought AMZN and WFMI with it back in 2007)). I guess I am a lopsided market timer?? I am not saying it's a wise way to go. It's just the way things have worked out for me. I bought a lot during the 2009 downturn, and bought some more during the second downturn in 2010 (There was a huge thread at the time in which everyone was posting what they were buying.) I am still dollar cost averaging in each pay period, but I am keeping some reserves where I can go in bigger when the prices look better. I would be surprised if I was the only one who does this. (I guess I could buy funds according to my preferred asset allocation if I wanted to, but I am kind of leaning on high dividended funds/stocks, so that's why I started this thread curious as to what others would do.)

You are right. I don't know if I made a bundle with the sotcks/funds I bought back in 2009 and some more in 2010. I will know when I cash the money out when I retire (maybe in 6 years) and who knows when I end up selling these funds/stocks after that...

 

[keegs]

Pimco

 

[David1961]

I might buy sleeping pills!

OK. seriously, as others have said, I would try to restore my AA. Would probably do so with an index fund instead of a specific stock.

 

[Chuckanut]

I would probably add to my stock index fund holdings. Either the total market index or, perhaps, the small cap index, depending which was farthest below its allocation.

 

[RunningBum]

tmm, OK, that makes sense, and I agree it's different for retirees who are no longer accumulating. Not sure whether it's the best strategy as I think you may get some small victories but miss long run-ups with the money that's not invested. You've still had some of your money out during this year's advances. There may or may not be a 20% correction coming, and even that probably wouldn't get you back to where you started socking cash away again in 2010.

I can't actually remembered how I managed the excess when I was working. I know when I got bonuses I would immediately invest regardless of the price. Between maxing out my 401K and ESPP plus some additional regular investments, I don't think I left too much more to pile up out of my paycheck.

Trying to get your thread back on the tracks, sorry, I don't have any specific recommendations but maybe others who like to buy on the dips do.

 

[keegs]

I switched new money to cash a few months ago. Iused it to by the S&P this morning. I like the idea of rebalance.

 

[foxfirev5]

Stay the course. Actually I'm pretty excited about the future of interest rates. Although I hold a big chunk of total bond funds and Pimco Total return PTTRX I look to get some dividend return in the future. Therefore I'll add to these as/if rates rise. As well I'll maintain my AA with 45-50% equities. Pretty boring approach but that's what got me here.

 

[Lsbcal]

I switched new money to cash a few months ago. Iused it to by the S&P this morning. I like the idea of rebalance.

The SP500 (SPY is the etf) is back to roughly its April 23rd value. So if one held it they lost about 2 months of run up ... so far.

My guess is next week will be a net winner, but I'm fully invested and don't bet on that guess.

Another guess, this will not be a full blown 20% decline because we are unlikely to have a business slowdown. The fed is signaling just the opposite and as I understand it they might be able to see (with real data, not just guesses) about 1 month into the future which is better then the market participants.

 

[audreyh1]

Since I rebalanced on 5/20, it's been a race to see which, stocks or bonds, would sell off the most. Stocks have been "winning" (i.e. dropping the most), but this week, with three days of bond funds selling off about 0.5% a DAY, bonds are catching up. Still,my stock funds have dropped 1.8x more than my bond funds.

Anyway - whichever drops far enough with respect to the other will determine what gets bought.

These were some HUGE moves this week. Massive unwinding somewhere - today's triple witching probably didn't help. Maybe things will calm down a bit next week.

 

[gcgang]

What would *you* buy if the market went down by, say 20%?[/QUOTE]

A lot less than I could if the market went up 20%.

But seriously, I got lucky with my 401k. I retired end of March. Rolled my 401k to a self directed IRA in early May. I couldn't roll the funds, had to liquidate, so have a bunch of cash, still.

While I've used bond funds for this sleeve in the past, and stability is more important to me now, I'd rather pick up high quality dividend paying equities than still historically low yielding fixed income. I think we are going back to bonds being certificates of wealth confiscation like they were in the 1970s.

Nothing too original with the stocks. Probably spread it around 10-20 of the big names that balance with my current holdings.

 

[clifp]

I wrote puts on Tesla at 80 so if the market pulls back 20% I'll probably own that stock.
I'd also like an opportunity to pick up more emerging market ETF like VWO, or SCHE at cheap prices. I have been trying to buy both Chevron CVX and Southern Company So for months so that would 20% would make them good deals.

The more interesting question is what I would buy, when the bond market pulls back 20%. BND is off 5.8% from its peak if it drops another 15% I'll increase my AA by about 10% to a 75/20/5 .

 

[Badger]

Since I am no longer working, like my investments for the long haul, and have enough cash on hand to take me through about 5 years I wouldn't buy anything and just ride it out. Although I do like W2Rs chocolate idea so that might be an option.

Cheers!

 

[1st Tee]

I wrote puts on Tesla at 80 so if the market pulls back 20% I'll probably own that stock.

There's a mall up in Denver that has a Tesla store with a Red Model S in it.
Great car.

I do like the company long term but if the stock climbs another 5%, I will most
likely short it. I do think you will be able to buy it at much lower prices.

 

[1st Tee]

I picked up a couple of things yesterday, but not much. I have some reserves and if (when?) the market goes down a lot, I'm thinking of buying more..

What would *you* buy if the market went down by, say 20%?

Sold all my AT&T above 37 and want it to drop a little more before I get back in.
Picked it up below 26 a few years back.

 

[Lakedog]

Would add to some dividend holdings (SO, COP, BP) if they get cheap enough. I did buy a bit more SO this week.

 

[LitGal]

More Wellington and Wellesley (VWELX and VWINX).

 

[pb4uski]

While this week has been painful, my investments have generated annual returns of 12.85% for the last 12 months and 9.09% for the YTD, both of which far exceed the 5.5% nominal return that I use for my retirement plan, so in the whole scheme of things I'm quite happy. The glass is half FULL.