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Where would you go if you left stocks?
Old 09-14-2012, 02:25 PM   #1
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Where would you go if you left stocks?

I'm not planning any moves right now, but the thought of "where would you go?" if you left the stock market is on my mind. So....where would you invest if you left the market due the recent run up and were anticipating a pull back?

Or maybe a better way to ask this is: What do you think would do well if the economy slipped into a recession and things turn ugly? Historically the advice seems to be to bounce between bonds and stocks depending on which way things were turning. But the thought of investing in bonds (with rates already being so low) just doesn't sound like a profitable venture to me.

Thanks.
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Old 09-14-2012, 02:32 PM   #2
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Yesterday and today I pulled a small <2% out of domestic equities and moved to a cash postion. - Note this was done because my stock allocation was above my target - not enough to hit rebalance bands but I'm not feeling greedy.
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Old 09-14-2012, 02:39 PM   #3
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You can't leave stocks. There is just nowhere else to run that has the potential for decent returns at not a super high risk.

Where are you going to run? Spanish bonds? Greek bonds?

The only reason I have any bonds right now is so I can sort of limp alongside inflation and have rebalancing opportunities in the stock market if it drops.
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Old 09-14-2012, 02:52 PM   #4
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Rental properties.
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Old 09-14-2012, 02:56 PM   #5
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Venezuelan Beaver Cheese.
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Old 09-14-2012, 02:59 PM   #6
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Venezuelan Beaver Cheese.
Preferably leveraged futures thereon.
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Old 09-14-2012, 03:03 PM   #7
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real estate and commodities
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Old 09-14-2012, 05:31 PM   #8
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There are a few funds that are bond funds but they act like stocks but wth less volatility.

Fidelity capital and income buys high yield bonds and small amounts of stock of distressed companies.

Fidelity new market income and fidelity high yield floating rate are two more that come to mind.
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Old 09-14-2012, 05:38 PM   #9
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If you throw out all alternatives that will fail to beat inflation in the near future, you are only with stocks and rental properties, as far as I can see. Not a fun time to be seeking safety.
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Old 09-14-2012, 05:44 PM   #10
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Rental properties.
+1
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Old 09-14-2012, 05:59 PM   #11
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real estate and commodities
My thoughts also. I have 4.5% in REIT, and 1.5% in commodities basket fund.
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Old 09-14-2012, 06:13 PM   #12
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After 25 years as a landlord in nyc i will say this.

Buying stocks is passive,dealing wiith tenants is not.

The last thing i want to do through retirement is deal with tenants.

We have been liquidating our holdings the last decade in preperation for retirement.

We had 9 co-op apartments overlooking central park in nyc and are finally down to just 2 as we bought out our rent stabilized tenants leases at 50-100k each.

No matter how carefully you screen tenants eventually divorce,illness,or job loss gets them.

One thing about rentals is they are nice until they are not.

Couple leverage with rental income loss and the preassure can be horrible..
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Old 09-14-2012, 06:19 PM   #13
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Buying stocks is passive,dealing wiith tenants is not.

The last thing i want to do through retirement is deal with tenants.
+1

I bought a rental about a year ago and am renting it to my daughter and her family. I realize the problems that might arise but I feel this would fit me and my situation.
The best part about this rental is that I am able to grow a 75'x75' garden in the back yard.
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Old 09-14-2012, 06:20 PM   #14
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Venezuelan Beaver Cheese.
I lived for quite a few years in Venezuela and it never occurred to me that Venezuelan Beaver Cheese was the answer. Talk about not seeing whats right in front of your nose! Jeez!
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Old 09-14-2012, 06:45 PM   #15
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Hi Jarts98, and welcome to the Early Retirement Forum. Please introduce yourself in the "Hi, I am..." section when you have time to do so, so that we can get to know you. Thanks.

In 2008-2009, I'm told we experienced the greatest market crash since the Great Depression. Most of us who had a diversified* portfolio based on a written financial plan, who did not sell low, and who simply rebalanced according to established criteria, in order to retain our planned asset allocation, came out of it beautifully.

Some excellent books on investing, some of which cover what to do in a plummeting market, can be found here:
Investment Books

* (this is where real estate, commodities, Venezuelan beaver cheese and their leveraged futures, and so on, come into the picture.)
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Old 09-14-2012, 06:51 PM   #16
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Some of us were even up those years.

The long term treasuries and gold i had overcame the drop in equities and i ended the year up 4%
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Old 09-14-2012, 09:34 PM   #17
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I wouldn't go to REITs. VNQ was one of the most volatile funds I held through 2007-2010. Nice to trade though. Maybe a different style of REIT?

I am selling some of my higher priced shares that are now finally above water. I'm expecting to buy them back cheaper in the future. If not, I'll just spend it in a few years anyway since I'm retired and DW is within a year of retiring. I have a lot in cash, ready to reinvest. I have some in TLT, long-term treasuries, which look much better now than they have for a while. They move nicely opposite equities, so far. And I have some in FGMNX, GNMA bonds, which have been nicely stable and have a decent yield compared to cash. With the Fed ready to buy mortage bonds, FGMNX hasn't gone down as much as I would have expected, so not quite at my buy price yet. Of course I'm a 100% equities guy, so my bond recomendations are highly suspect!
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Old 09-15-2012, 02:10 AM   #18
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I would have to see a massive over valuation before I would consider exiting stocks completely (as opposed to simply taking a bit of money off the table).

In terms of alternatives, it depend on what I expected to occur. If I was expecting inflation, I would want to hold real assets - real estate, timber, farm land, bullion, commodities and possibly some collectables ( if my knowledge was good enough). If I expected deflation, I'd want to go the other way and weight towards cash, fixed interest securities etc. I'd also pay off my mortgages as quickly as possible.

I am firmly in the inflation camp, so I am sticking with real estate as my main alternative to stocks (which I am also keeping) with a modest investment in commodities. I largely view cash and fixed income as places to park the (about) 2-3 years in expenses that I want to keep on hand to make sure I do not have to sell other assets at depressed prices.
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Old 09-15-2012, 02:55 AM   #19
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the problem is we never know what to expect..

folks are talking inflation ,inflation ,inflation.

that may happen but its so far down the road if i had to pick the one investment i thought in the near term would be a winner i would say zero coupon 30 year treasuries or the 30 year long bond.

deflation and slowing down is happening world wide very quietly behind the scenes.
if leveraging is inflationary then deleveraging is deflationary and the world and consumers are deleveraging.

the way i see it your floor is 2-1/2% and if we fall 1% on the long end you can see a 30-40% capital gain.

sounds like great odds to me.
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Old 09-15-2012, 07:40 AM   #20
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I'm about. 2/3 real estate (12 rentals) 1/3 stocks. Negligible amounts in bonds and cash. Real estate has appreciated so much in Dallas that I don't see much opportunity there. Been piling into stocks since 2008 and the new highs make me a little nervous. Not retired yet (target 18 months - just shy of 56) so I guess I will cross my fingers and keep maxing 401K and Roth, putting the rest in cash.
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