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Old 01-16-2008, 08:00 PM   #21
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Maybe I overstated the case with "thrown away" but it looks like indiscriminate selling. There is very little hard data to indicate recession I think. Even so, should there be this much fright over an event that they say you don't even know you been through it till after its over??
consumer spending growth is very weak and the christmas season was very weak as well. bad housing market means no demand for all kinds of stuff people would buy when they buy a house
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Old 01-17-2008, 09:04 AM   #22
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Listen to Beranke today and I can see how somebody would jettison stocks
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Old 01-17-2008, 02:06 PM   #23
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Last year we had two 10%+ declines and my portfolio ended up over 13%. The rallies were fast and furious with no logical warning.
Just to be correct... there were not two declines of 10%+... this current decline (which is over 10%) broke the second longest time period without a 10% decline... so it could not be two of them... close.. but not quite there...
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Old 01-17-2008, 02:25 PM   #24
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One of the really good things about not having much money in the stock market is that it has allowed me to make several purchases this month to keep our total amount invested greater than it was last year. Getting a bit better diversification too. Not that it's smart, but we've always tended to see which way the crowd is surging , then wander off in a different direction. Never was much for crowds.
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Old 01-17-2008, 02:30 PM   #25
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You're right about crowds. In fact, the equity put / call ratio currently implies that investors are very bearish, which is usually very bullish for stocks. At least in the short term.
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Old 01-17-2008, 08:23 PM   #26
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Some of the posters of this thread crack me up

If you had a proper asset allocation for your willingness, need, and ability to take risk you wouldn't engage in pointless and damaging market timing strategies.

To those who sell and move to cash based on what you're reading in the paper: You missed the top, and you'll surely miss the bottom. Historical evidence for this is stacked incredibly against you. Might want to spend a little more time at Guide to the Vanguard Diehards Forums and get the religion.

If you're not comfortable with your plan, you need a better plan.

I'm looking forward to my 10% off coupon turning into a 20% off coupon. Bring on the bears! I'm stocking up the pantry!!!
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Old 01-18-2008, 06:48 AM   #27
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Some of the posters of this thread crack me up

If you had a proper asset allocation for your willingness, need, and ability to take risk you wouldn't engage in pointless and damaging market timing strategies.

To those who sell and move to cash based on what you're reading in the paper: You missed the top, and you'll surely miss the bottom. Historical evidence for this is stacked incredibly against you. Might want to spend a little more time at Guide to the Vanguard Diehards Forums and get the religion.

If you're not comfortable with your plan, you need a better plan.

I'm looking forward to my 10% off coupon turning into a 20% off coupon. Bring on the bears! I'm stocking up the pantry!!!
LOL innova, you better get your flamesuit on.
... 1/2 the people are going to try and convince you their antics are NOT Market Timing. The others who under normal (upward sloping market advance lines) conditions profess to NOT be market timers are now talking about how to protect their portfolios.
This has turned into another retirement hobby of mine (watching the ship empty when we start going into a trough).
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Old 01-18-2008, 08:25 AM   #28
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Suited up

Its my opinion that most people that respond to market declines do not really have a plan. Its much easier to work your plan when your signed IPS (investment policy statement) is staring you in the face.

Proper protection comes from a proper asset allocation, including an appropriate allocation to fixed income investments - not market timing.

In times like these, works by Bogle, Bernstein, Swedroe and others may give comfort.
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Old 01-18-2008, 09:26 AM   #29
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For the time being, I will leave my stock/bond allocation the way it is. We're already in a bear market in small stocks. I expect midcaps and large-caps to follow in the near future. When I hear friends and relatives complaining about all the money they've lost in the stock market and some even promising they'll never invest in equities again, I'll know it's time to increase my stock allocation by 5-10%. Until that time, I will Stay the course.
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Old 01-18-2008, 09:39 AM   #30
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I'm leaving my allocation alone, but I am buying right now.
I certainly am not selling that would be a loosing proposition.
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Old 01-18-2008, 09:41 AM   #31
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Just to be correct... there were not two declines of 10%+... this current decline (which is over 10%) broke the second longest time period without a 10% decline... so it could not be two of them... close.. but not quite there...
Just to be correct, depends on how you count and the index:

S&P 500

July 17th High 1555
Aug 16th Low 1371

Decline of 11.8%

Oct 11th High 1576
Nov 27th Low 1407

Decline of 10.7%

YMMV if you prefer closing numbers
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Old 01-18-2008, 10:57 AM   #32
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These last 3 months have been an excellent tutorial for me about realistically assessing my risk tolerance.

It appears that many have far less risk tolerance than they thought.
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Old 01-18-2008, 09:21 PM   #33
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These last 3 months have been an excellent tutorial for me about realistically assessing my risk tolerance.

It appears that many have far less risk tolerance than they thought.
Isn't that the truth!

I have found that I am fine. But then I came from a position of 100% equities (being a degenerate gambler by nature) and after having taken the proverbial bath in 2000, this is nothing (now 60/40 equities/income producing).
However the biggest difference is that I am now retired. I find that times like this are the real test of whether or not you have the right AA for your risk tolerence. Everyone is ok in a rising market. It's when we get to points like this that you really learn if your AA is outta whack.

I agree with you ... if you find you are toying with 'market timing', it may be because your AA is incorrectly set for your risk tolerence level.

A lesson to be learned ?
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Old 01-18-2008, 09:32 PM   #34
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This sell off is happening so fast that I am almost out of balance again even though I brought my portfolio close to balance on Jan 3.

If so, this is going to be the fastest I have ever rebalanced.

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Old 01-18-2008, 09:47 PM   #35
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This sell off is happening so fast that I am almost out of balance again even though I brought my portfolio close to balance on Jan 3.

If so, this is going to be the fastest I have ever rebalanced.

Audrey
Are you in volitile stocks? It seems that the market should not have moved you out of balance that much (yet).
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Old 01-19-2008, 03:21 PM   #36
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Are you in volitile stocks? It seems that the market should not have moved you out of balance that much (yet).
I have a goodly percentage in equities (58%). My bond funds have appreciated as well, so that exacerbates the out-of-balance situation.

Maybe my out-of-balance tolerance window is tight (5%), but that works for me. A drop of 8.5% in equities means my equities are down 5% with respect to the rest of the portfolio. Most of my equity funds are already down that much YTD.

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Old 01-19-2008, 03:41 PM   #37
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2/3 Superbowl, 2/5 Mardis Gras, after that - may be too early for Spring or Kayaks - sooo maybe take some mad money and demonstrate the effect of hormones by trying to catch some falling knives - er ah while calling it betting on RTM:

BAC, USB, Walmart, psssst Budweiser, a little of this a tad of that - hope springs eternal - greed is good.

Of course if Dick's in Kansas City has an early bird sale on kayaks - all bets are off.

But NO plans to relearn how to hit a stupid little white ball around a manicured ex cow pasture into a little hole - stocks are more fun, fearful, hopeful and I don't throw anything when things don't work out.

Balanced index - auto rebalnce, auto asset selection, auto deduct to checking for real money(aka retirement).

Then a little mad money for those male hormones - incurable but with management - the disease can be controled - er most of the time, sort of - plus after forty years the brain pharts/legend in my own mind attacks aren't as intense.

heh heh heh - 85% Target Retirement, 15% individual stocks, .
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Old 01-19-2008, 03:58 PM   #38
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None of my stocks have had a dividend cut. So my income next year is unaffected, other than a modest drop in interest rates on my money market funds. In fact, I've take advantage of the sales on stocks to increase my future income streams by selling a TIPs and purchasing high yielding stocks.

So far this year KMP has raised dividend from .88/qtr to .92/qtr with plans for $1/qtr.
Even a bank like BB&T has said they plan to raise dividends later this year for the 37th consecutive year.
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Old 01-19-2008, 06:30 PM   #39
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There are studies which show that sitting out bear markets puts you way ahead of a buy and hold - no surprise.
I used to engage in a mechanical market timing strategy that consistently beat buy and hold by a small margin on historical data. I stopped when I realized that there was one problem: there were a few failure modes like extended sideways markets where it would trail buy and hold by a huge margin. Those failure modes hadn't happenned yet, but that was just a historical accident.

I see this over and over when I evaluate trading strategies. Lots of strategies will beat buy and hold most years, but have flaming failures every once in a while when they lose big time. Or they will have frictional costs that quietly add up to big losses over time.

I've done enough trading to learn that staying put is the way to go.
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Old 01-19-2008, 10:13 PM   #40
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I'm 100% equities, with about 30% of that international. I'm pretty relaxed because I'm 46 and working. My parents are probably experiencing a bit more angst in 2008. I do wish I had some cash to throw at equities (if it slips below 12 next week, I would jump in with everything I had). I hope this lasts a while because that improves my DCA over the long haul.

My fallback position is that if the whole thing goes up in flames, the only thing worth owning will be food, water, and ammo, anyhow.
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