Will the Stock Market Rally Stick, or Vanish?

[DJRR]

I am waiting for the big payoff

This is how it usually works:

first 10% - suckers rally

2nd 10% - really a suckers rally, no way will they fool me again

3rd 10% - maybe it is safe to go in

4th 10% - I should get in, tired of this 2% Treasury

Average market timer will miss the first 40% of the rise. This is why they perpetually underperform the indicies. This move could easily happen in weeks when it turns, you just never know when it will turn. We could easily go back down to the lows.

I am willing to bet that the money I put in every month this year will be worth way more in 15 years. If you are trying to live off of it today than that is a different issue.

[Dawg52]

Quote:

Originally Posted by DJRR I am waiting for the big payoff This is how it usually works: first 10% - suckers rally 2nd 10% - really a suckers rally, no way will they fool me again 3rd 10% - maybe it is safe to go in 4th 10% - I should get in, tired of this 2% Treasury Average market timer will miss the first 40% of the rise. This is why they perpetually underperform the indicies. This move could easily happen in weeks when it turns, you just never know when it will turn. We could easily go back down to the lows. I am willing to bet that the money I put in every month this year will be worth way more in 15 years. If you are trying to live off of it today than that is a different issue.

That's the way it has worked for me in the past, so I have stayed in. Unfortunately I didn't miss the 50% decline this time either.

[ziggy29]

Quote:

Originally Posted by Dawg54 That's the way it has worked for me in the past, so I have stayed in. Unfortunately I didn't miss the 50% decline this time either.

For the sake of your forehead, at some point you may want to use the rally to take a little out of the market. Maybe not much yet since it's still way underwater, but at some point if it continues for a while it might not be a bad idea to take 10-20% of your stock portion and move it into something safer. Sounds like your forehead could use the TLC...

[W2R]

I wonder how many of us are going to change our asset allocations when the market recovers.

I don't think I will change my asset allocation, but I will be keeping my eyes open for something else to do with my money other than investing all of it. Well, aside from spending it (that doesn't count).

[ziggy29]

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Originally Posted by Want2retire I wonder how many of us are going to change our asset allocations when the market recovers.

I was at 70/30 when the meltdown began. If I can get back close to 70/30 I plan to go down to about 55/45. But I'm going to let my stocks ride for a while.

[Gearhead Jim]

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Originally Posted by lightwaves When everyone is this negative it almost for sure that a rally will ensue. I watched Larry Kudlow's show on CNBC I believe on last Tuesday. He said he was having trouble finding a bull to be on his show. That was the clue for me to pump in some more money into the market the next morning which I did. Market has been up from there. It was clear at that point that just about everyone who was planning to sell had already sold. I'm not predicting this rally will last but I am starting to be able to read these moves much better now based on the amount of negativity that exists.

Recently I've noticed some moderately optomistic economic news stories; not predictions of a big advance but simply "the world is not ending now" stuff.
Since there is lots of money sitting on the sidelines and the beginnings of optimism in the press (which does the public's thinking for them), I suspect that the S&P 500 will end this year above the lows we've seen. Not that we won't see further bumps during the year...

[haha]

Quote:

Originally Posted by Want2retire I wonder how many of us are going to change our asset allocations when the market recovers. I don't think I will change my asset allocation, but I will be keeping my eyes open for something else to do with my money other than investing all of it. Well, aside from spending it (that doesn't count).

If markets recover moderately, but some of my non-dividend payers go up strongly, I will probably take the gains of the non-payers if I can offset against tax losses and go for more income, stock or fixed, depending on prices.

If markets should get quite extended again, measured by P/E10, I'll look at my stocks and decide what to do.

My equity allocation floats. I try to increase it when the stocks I want are relatively cheap, decrease it when they are relatively expensive.

Ha

[W2R]

I have to admit that my dividends in 2008 were a bright star shining through the gloomy night of a cratering economy (how's that for mixed metaphors). Since I am still working, the dividends got overshadowed by the beating my portfolio took. Still, if I were retired, my dividend income would be more than enough.

I will most likely keep all of my nestegg in my usual, previously planned 45:55 (equities:fixed) asset allocation. I haven't really thought of any alternatives that seem reasonable. I would be a lousy landlord, so a rental unit for income is out. I used to think that an immediate lifetime annuity would be great, but I see no reason to trust an insurance company with my money now that I don't have to.

It is in man's nature (and woman's nature too!) to question and check over investment decisions time and again, making sure we are not making a mistake.

[Bikerdude]

Quote:

Originally Posted by Want2retire I have to admit that my dividends in 2008 were a bright star shining through the gloomy night of a cratering economy (how's that for mixed metaphors). Since I am still working, the dividends got overshadowed by the beating my portfolio took. Still, if I were retired, my dividend income would be more than enough. I will most likely keep all of my nestegg in my usual, previously planned 45:55 (equities:fixed) asset allocation. I haven't really thought of any alternatives that seem reasonable. I would be a lousy landlord, so a rental unit for income is out. I used to think that an immediate lifetime annuity would be great, but I see no reason to trust an insurance company with my money now that I don't have to. It is in man's nature (and woman's nature too!) to question and check over investment decisions time and again, making sure we are not making a mistake.

I agree. I was very pleased with my 2008 dividends. I'm now closely watching the March payout to see how it compares to last year.

[Dawg52]

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Originally Posted by ziggy29 For the sake of your forehead, at some point you may want to use the rally to take a little out of the market. Maybe not much yet since it's still way underwater, but at some point if it continues for a while it might not be a bad idea to take 10-20% of your stock portion and move it into something safer. Sounds like your forehead could use the TLC...

Don't worry, I will. But a long way to go.

[Bikerdude]

Quote:

Originally Posted by Want2retire I wonder how many of us are going to change our asset allocations when the market recovers.

Probably so many that the market will take a long time to fully recover.

[Notmuchlonger]

Quote:

Originally Posted by Want2retire I wonder how many of us are going to change our asset allocations when the market recovers. I don't think I will change my asset allocation, but I will be keeping my eyes open for something else to do with my money other than investing all of it. Well, aside from spending it (that doesn't count).

75/25 Ive been fine with whats going on. I see no reason to change it.

[ejman]

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Originally Posted by Bikerdude Probably so many that the market will take a long time to fully recover.

Maybe I'm the eternal optimist but my feeling is that most of the people that spook easily have been long gone from this market. I suspect that the few that are left in will probably ride it for a long time. For myself, I have really wide AA "bands" and I'm still away from the extremes where I would take drastic action. (Target is 50 % to 60 % equities - start looking into selling equities once it exceeds 60 %, which I did in early 2007. Currently equities at 53%)

[clifp]

I moved from 70/30 to 80/20 in Jan 2008. I guess I am close to 70/30 now. When the market recovers I am going to take $100K and stick in CDs. I think Ha Ha is joining me. LOL.

[Grep]

Quote:

Originally Posted by Want2retire I wonder how many of us are going to change our asset allocations when the market recovers.

In a time like this, everyone who hasn't sold at the bottom is saying the same thing: "When it gets back to X, I'll sell." Sounds good about now. Heck, I wish it would hurry up and get to X, and I'll sell a bunch too. I promise!

Except that, when it gets there, people start thinking "But what if it keeps going up? Then I'll feel like an idiot for having sold. And if it goes to Y, I'll really clean up! Things are looking much better now, so I'll hang on a while longer." And then by Z, everyone who sold at the bottom starts piling in.

[haha]

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Originally Posted by ejman Maybe I'm the eternal optimist but my feeling is that most of the people that spook easily have been long gone from this market. I suspect that the few that are left in will probably ride it for a long time.

How could this be true? Since someone has to own all shares of stock, and since ther have been more equity issuances than retirements by corporate action, how could there only be a few owners of stock left?

I guess it coud be that all the small fry sold, and Waren Buffett, Carl Icahn, and you and I and the other ER board members are the only stockholders left. But I doubt that is true.

ha

[W2R]

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Originally Posted by haha How could this be true? Since someone has to own all shares of stock, and since ther have been more equity issuances than retirements by corporate action, how could there only be a few owners of stock left? I guess it coud be that all the small fry sold, and Waren Buffett, Carl Icahn, and you and I and the other ER board members are the only stockholders left. But I doubt that is true. ha

Some stockholders have bought more while prices were low. Even I fit into that category due to rebalancing, and I am definitely a small fry and no Carl Icahn. Then again, maybe I don't understand your question.

[ejman]

Quote:

Originally Posted by haha How could this be true? Since someone has to own all shares of stock, and since ther have been more equity issuances than retirements by corporate action, how could there only be a few owners of stock left? I guess it coud be that all the small fry sold, and Waren Buffett, Carl Icahn, and you and I and the other ER board members are the only stockholders left. But I doubt that is true. ha

Actually, that's it, between you, Want2Retire and me, we own it all. Now we are sticking thru thick and thin right?

[Bikerdude]

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Originally Posted by haha I guess it coud be that all the small fry sold, and Waren Buffett, Carl Icahn, and you and I and the other ER board members are the only stockholders left. But I doubt that is true. ha

Isn't that the definition of a market bottom? Everyone who wants to sell has sold leaving only buyers or holders.

[TromboneAl]

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Originally Posted by Grep In a time like this, everyone who hasn't sold at the bottom is saying the same thing: "When it gets back to X, I'll sell." Sounds good about now. Heck, I wish it would hurry up and get to X, and I'll sell a bunch too. I promise! Except that, when it gets there, people start thinking "But what if it keeps going up? Then I'll feel like an idiot for having sold. And if it goes to Y, I'll really clean up! Things are looking much better now, so I'll hang on a while longer." And then by Z, everyone who sold at the bottom starts piling in.

Exactly.

Also, many investors don't realize that a 50% decline followed by a 50% increase still leaves you down 25%. So when they hear that the market is up 50%, they start singing "Happy Times are Here Again."