When to fire your dry powder

[FIREd]

I bought some international equities last week, but the market will have to get much cheaper before I start parting with big wads of cash. I hope Penfed has a CD special this year, but they would have to pay around 4% for 5-7 years to get my money (my CD ladder currently pays 4% and I'd like to keep the yield up around that level).

 

[Lakewood90712]

I reserved some "dry powder", about 10%, a month ago and my rough target to plug it back in was a 10% reduction in the S&P which was right around 2000. I really don't think this one will get there.

Does anybody have a trigger point for this "correction" where they would spend their dry powder?

I would not call this a correction yet. I'm thinking something more like 20% from the top.

Getting my equity shopping list ready like every " Dirty Bottom Fisher" should.
The usual suspects, Big Oil, Big Pharmaceuticals, maybe some basic materials , and maybe some big tech.

 

[Animorph]

10% in cash. Started buying yesterday and will DCA over the next 3 months. I am either buying on the way down or buying on the way up!!
DCA over the next three months, will invest half of my cash on the side.

A 10% investment at 7% (S&P 500) down gives you a 0.7% gain for this transaction whenever the market hits the old peak. Assuming the 10% cash was withdrawn at the peak. If it's cash that's been sitting around since an April or May stock sale however you're not gaining anything, just getting a second chance. A bit of work for a small gain and with the risk of a rising market opportunity loss as the cash sits. Your 10% may be from somewhere else, of course, so this may not apply to you.

 

[almost there]

Picked up VGENX at the same price it was 5 yrs ago. Has a decent div. with solid Co.'s / Time will tell..........

 

[Gazingus]

I reserved some "dry powder", about 10%, a month ago and my rough target to plug it back in was a 10% reduction in the S&P which was right around 2000. I really don't think this one will get there.

Does anybody have a trigger point for this "correction" where they would spend their dry powder?

Actually, my original plan for this dry powder was to wait for a full-blown panic. I think I'll stick to that. I have always been 100% equities, now I'm 90% equities and 10% cash to take advantage of the next bubble-burst or ebola scare or whatever. Instead of having a percentage trigger, I'll just "know it when I see it".

 

[almost there]

I plan to start a position in VWINX, but that thing is a rock. LOL LOL

 

[BBQ-Nut]

So with all the posts about shifting assets and 'bargain buying'...what happened to the FIRE mantra of stay the course

 

[RunningBum]

So with all the posts about shifting assets and 'bargain buying'...what happened to the FIRE mantra of stay the course

People have different strategies. It's not yours or my business to tell others how to invest. This is a thread to discuss one strategy, no reason for people not using that strategy to piss in the thread. My only contribution was to correct a glaring math error. If you're going to base a decision on numbers, the numbers ought to be right. I read the thread because I'm interested in what factors people use to determine how to get in and out, in case I reconsider my own strategy.

 

[almost there]

Everyone is in a different spot. I was offered a package and took it a little over a year ago. Took a break, figured out a plan. And am now in a position to get going on it.
Its going to be a slow process, but its time I get started.

I think this has more to do with QE and interest rates than anything. But the media can spin it however they choose.

 

[ERD50]

So with all the posts about shifting assets and 'bargain buying'...what happened to the FIRE mantra of stay the course

The FIRECalc reports include rebalancing. Different people may choose different approaches to rebalancing - a strict annual update, or maybe bands around their target AA, and some may be looking at reducing their AA over time, or at specific milestones (collecting SS, pension, etc).

I don't think those variations mean they are not 'staying the course'. Maybe this is just a good time to rebalance for some?

FWIW, some studies have indicated rebalancing doesn't really do much over the long haul. Selling off some equities during a long bull (lowering returns) tends to offset the buying back during dips.

Plus - " all the posts about shifting assets and 'bargain buying' " are a relatively small number, aren't they?

-ERD50

 

[Chuckanut]

So with all the posts about shifting assets and 'bargain buying'...what happened to the FIRE mantra of stay the course

Like my old grand pappy used to say, " I reserve the right to be smarter today than I was yesterday."

My AA stays the same and I re-balance to keep it that way. However, I reserve the right to try and protect my assets and increase my earnings by fine tuning things a bit. For example, I may choose to lower my costs by moving money into index ETF's with very low annual fees. In reality, I believe that is very consistent with what many people practice here.

I think there are some people here who do have some 'play money' that they use for market timing, stock selection, etc. Some of them may actually have the knack to do it right. Congratulations to them!

 

[audreyh1]

Actually, my original plan for this dry powder was to wait for a full-blown panic. I think I'll stick to that. I have always been 100% equities, now I'm 90% equities and 10% cash to take advantage of the next bubble-burst or ebola scare or whatever. Instead of having a percentage trigger, I'll just "know it when I see it".

Pretty good panicking going on right now!

 

[NW-Bound]

When to fire? Blood flowing in the streets? Is it ankle deep yet?

 

[Gazingus]

When to fire? Blood flowing in the streets? Is it ankle deep yet?

Hold! There could be some serious jing to be made off ebola. I'd say three more people in Dallas would be enough to cause an evacuation.

 

[haha]

So with all the posts about shifting assets and 'bargain buying'...what happened to the FIRE mantra of stay the course

Same thing that always happens. Se fue.

 

[eta2020]

Same thing that always happens. Se fue.

I am still 100% equities. I added some SCHD

Maybe it will drop another 20%-30%....It would not change my allocation in any way.

 

[papadad111]

I fired my musket yesterday. The 10% cash position is now more like 5% and I decided to purchase some 3x leveraged long ENERGY ETF. ERX

Risky, perhaps, but i felt the energy pullback is bordering on overdone. Shale gas is great, but I still need West Texas Intermediate or Brent North Sea crude, then refined to fill the car every time I go to the gas station...

I also added to SPY, VTI, and VXUS core holding (VXUS being on most on-sale)...

The remaining 5% will go in IF we see a further 5% drop.

 

[papadad111]

Going on / For the record -- I Ialso think this is not "abnormal" market but rather a very very predictable and classic 10%-15% October induced market "correction" that has been long LONG overdue. I would be surprised to see 20% down and a bear market emerge at this point in our economic cycle. The US economy is growing. If it stops, the fed will do QE4.... Ebola is scary but more people die in USA of the flu every day than Ebola and it will remain that way through this crisis too. Crisis = panic + opportunity. Turn off CNBC .... talking heads are just that...

 

[Totoro]

So with all the posts about shifting assets and 'bargain buying'...what happened to the FIRE mantra of stay the course

In my case, I am about 50/50 allocation and want to move to 85/15. But I'll only do that when there are bargains to be had.

If none arrive, I am happy with that.

So I am staying the course (not selling, buying on crash). I just have a different course than you maybe

 

[GregfromTexas]

I made a strategic decision recently to increase my equities. I'm going from a super conservative less than 50% equities (I'm in my late forties) to a model where I keep 6 years of living expenses in cash and bonds and the balance in equities, replenishing the cash reserve whenever I don't have to take a loss to do so and using it to ride out downturns.

So I'm looking to buy. For 6 yeas to be the right cash reserve I need to dollar cost average my way in over 3-5 years (to avoid accidentally buying at a 10 year peak). That's plan A, but I'm being a little more aggressive by looking for buying opportunities.

All that said, this sort of looks like one. I put 1/3 of what I ultimately plan to shift to equities in as of yesterday to start the process. Might have been a little too much, but there really doesn't seem to be a dotcom bust or mortgage crisis looming and I do clearly recall concerns about those things being on the radar for a year+ before either of the last two crashes.

I think it would take something more like a 20% additional drop to get me to go all the way in one lump...

 

[redduck]

Going on / For the record -- I Ialso think this is not "abnormal" market but rather a very very predictable and classic 10%-15% October induced market "correction" that has been long LONG overdue. I would be surprised to see 20% down and a bear market emerge at this point in our economic cycle. The US economy is growing. If it stops, the fed will do QE4.... Ebola is scary but more people die in USA of the flu every day than Ebola and it will remain that way through this crisis too. Crisis = panic + opportunity. Turn off CNBC .... talking heads are just that...

Yeah, those talking heads...

 

[RAE]

I think today is a key day for the US market. If it ends down today, even with the semi-positive data that came in, I think we are in for a bigger drop tomorrow, especially near the close (emotion-based selling, mainly). Lots of folks are going to want to get out of this market before the weekend, if we don't get at least a small gain today. Just my opinion, I may be all wrong....

 

[Gazingus]

Going on / For the record -- I Ialso think this is not "abnormal" market but rather a very very predictable and classic 10%-15% October induced market "correction" that has been long LONG overdue. I would be surprised to see 20% down and a bear market emerge at this point in our economic cycle. The US economy is growing. If it stops, the fed will do QE4.... Ebola is scary but more people die in USA of the flu every day than Ebola and it will remain that way through this crisis too. Crisis = panic + opportunity. Turn off CNBC .... talking heads are just that...

I agree this is just the October willies. Will it be 10 or 15? That is the question. My trigger finger is gettin' itchy.

 

[NW-Bound]

I just check with Quicken, and it says that my non-equity allocation is good enough for 8 years of living expenses. So, I should survive a famine period of biblical length (7 years).

But if the market crashes hard, will see if I have the strength to buy "cheap" stocks with that cash that is meant to live on. No pain, no gain. But this is not a crash, just a run-of-the-mill correction so far.

PS. And I will be eligible for SS before my cash AA runs out. So, would draw SS early and use it to buy stocks too. Heh heh heh... Me, worry?

 

[panhead]

I have a chunk that I've been waiting to do something with. I told myself that I would wait till the end of the year and see if penfed had a 3+% CD deal, if so, I would go for that. If the market has a REAL pullback (ie, 20% or more) I will buy some equities. If neither of these events occur, I will either pay off my house (3%) or buy a muni bond fund. I was considering long term tax free muni, but depending on where interest rates are, I might stick with the intermediate fund.
Come on PenFed!