Anyone taking money off the table?

[Totoro]

As Charlie Munger supposedly said: "Investing is where you find a few great companies and then sit on your ass."

Or various people: "Don't just do something, stand there!"

I have yet to learn both lessons completely.

 

[Lucantes]

This thread is pretty funny.
There is only one reasonable plan here: if you will need cash in 30 days to close on real estate, you need to get that money in cash asap, which is now. Markets may go up in those 30 days, they may go down, they may skyrocket or they may crash. None of your business, your business is to have the cash in hand to close your contract. Ha

+1

 

[DrRoy]

I do not subscribe to 'sell in May' either. As I have approached my RE early next year, I have been easing off my equity allocation, from 80% two years ago, to about 70% now. I have planned to go to 65% in the first half of this year, but did not do it yet because of the correction. Probably soon.

In December last year I set my market target for the AA change at 2090 on the S&P 500. We hit it today so I pulled the trigger.

 

[Gone4Good]

Sold some U.S. equities today . . . large, mid, and small caps.

Before I did I wanted to do a sanity check to see how much my previous sales had cost me in foregone gains. I've been a net seller of equities since 2013. Some of those sales have been quite good (Domestic Mid-Caps in 2015 are still down 6% as of today, International Large Caps in 2013 are still down 9%) but most sales have been losers, as you'd expect in a generally rising equity market.

So what's the opportunity cost I've paid to reduce my equity exposure over the past three years?

My IRR on all of those sales combined is (2.4%)

Considering current equity valuations and the extended age of both this bull market and the business cycle, 2.4% is a very attractive insurance premium to have paid for the downside protection it bought me.

After doing this calculation, I went ahead and sold more equities today.

 

[tmm99]

Sold some U.S. equities today . . . large, mid, and small caps.

Before I did I wanted to do a sanity check to see how much my previous sales had cost me in foregone gains. I've been a net seller of equities since 2013. Some of those sales have been quite good (Domestic Mid-Caps in 2015 are still down 6% as of today, International Large Caps in 2013 are still down 9%) but most sales have been losers, as you'd expect in a generally rising equity market.

So what's the opportunity cost I've paid to reduce my equity exposure over the past three years?

My IRR on all of those sales combined is (2.4%)

Considering current equity valuations and the extended age of both this bull market and the business cycle, 2.4% is a very attractive insurance premium to have paid for the downside protection it bought me.

After doing this calculation, I went ahead and sold more equities today.

I did the same thing yesterday and a few days ago. Total, mid and small. I had been wanting to do this for a while, but didn't want to.We are not selling at the peak, but the numbers are good enough for me, and I bought them years ago, so it's all good. I now have some more money to convert to CAD before CAD starts gaining steam...

 

[nwsteve]

I did the same thing yesterday and a few days ago. Total, mid and small. I had been wanting to do this for a while, but didn't want to.We are not selling at the peak, but the numbers are good enough for me, and I bought them years ago, so it's all good. I now have some more money to convert to CAD before CAD starts gaining steam...

I am in the same camp of reducing equity exposure, especially in my mid-cap position. The speed bump I am trying to get over is what to do with the proceeds. My default has been VCSH.
I would be interested in hearing of what options others are using.
Nwsteve

 

[Gone4Good]

I am in the same camp of reducing equity exposure, especially in my mid-cap position. The speed bump I am trying to get over is what to do with the proceeds. My default has been VCSH.
I would be interested in hearing of what options others are using.
Nwsteve

Reinvestment is a challenge.

I've mostly also been trying to avoid exchanging equity risk for duration risk and credit risk. So that further complicates things.

Mostly I've been stashing this cash in 5-yr CDs figuring I'll break them if and when I need to. Ally and Synchrony are both yielding around 2%.

 

[Totoro]

More or less my approach too.

Have been triggered by this forum to look at writing cash covered puts though. Would write them at -20% of current levels (+/- 1700).

Gives a bit of income and triggers a buy automatically when a dip occurs.

 

[Fedup]

No but I moved my husband's money from C to S and I for TSP fund. C is now at the top and S And I are still not recovered from their peaks. Hopefully it's a right move. But I think C has topped out. Grinding higher.


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[foxfirev5]

Just peeled a little bit more off of equities. Delays SS further out beyond 65 by giving a few more months of living expenses. I realize that having over 5 years in SV funds I'm giving up potential returns, but it sure feels good.

 

[Rustic23]

I cashed out May 2015. Market is still below the point I did. I expect the market to go beyond that point, but put me in the bear column. My reasoning was. I have enough to last me and DW for the rest of our life. Preservation of capital is more important than increasing it. If the market does take a significant drop in the next year or so, I might put it back.

 

[REWahoo]

I cashed out May 2015. Market is still below the point I did. I expect the market to go beyond that point, but put me in the bear column. My reasoning was. I have enough to last me and DW for the rest of our life. Preservation of capital is more important than increasing it. If the market does take a significant drop in the next year or so, I might put it back.

If you've already won, no need to keep playing the game...

 

[splitwdw]

I cashed out May 2015. Market is still below the point I did. I expect the market to go beyond that point, but put me in the bear column. My reasoning was. I have enough to last me and DW for the rest of our life. Preservation of capital is more important than increasing it. If the market does take a significant drop in the next year or so, I might put it back.

I wouldn't know where to keep my money if I cashed out all of my stock holdings. What did you put your money into?

 

[eta2020]

I wouldn't know where to keep my money if I cashed out all of my stock holdings. What did you put your money into?

I am very curious too since cash/CDs are guaranteed way to erode principal.

 

[foxfirev5]

I am very curious too since cash/CDs are guaranteed way to erode principal.

Nothing will erode principal like a major downturn followed by a couple of decades to recover. Many examples, but I don't really care. Unless you have countless millions, why bother. Manage the risk and live your life.

 

[eta2020]

Nothing will erode principal like a major downturn followed by a couple of decades to recover. Many examples, but I don't really care. Unless you have countless millions, why bother. Manage the risk and live your life.

Sure.... just historically one will will erode principal in pretty much guaranteed way by being in cash. Not so with something like S&P 500.

In fact looking at s&p 500 from high above over my entire life... charts looks mighty fine and I see no erosion of principal.

It is OK to go to CDs if you are 70. If you FIRE at 50 I do not think there any kind of safety in such allocation. In fact it is recipe for disaster.

 

[LOL!]

I cashed out May 2015. Market is still below the point I did. I expect the market to go beyond that point, but put me in the bear column. My reasoning was. I have enough to last me and DW for the rest of our life. Preservation of capital is more important than increasing it. If the market does take a significant drop in the next year or so, I might put it back.

OK, I guess that the significant drop that happened was not significant enough? Some things were down 30% from May 2015 levels.

 

[NW-Bound]

... Have been triggered by this forum to look at writing cash covered puts though. Would write them at -20% of current levels (+/- 1700).

Gives a bit of income and triggers a buy automatically when a dip occurs.

There are a few of posters at the LOL's market timing thread doing that, myself included.

The problem with writing puts on the S&P at 20% below the current price (a relatively safe bet) is that it gives you only a return of around 2% annualized, and that is with expiration 9 months out or longer. You could just buy CDs, then break them to buy stocks if and when a crash occurs.

I have been doing this, but with ETFs in more volatile sectors, particularly the ones that have been beaten down bad. The annualized returns have been at least 10x to 20x higher, and for committing the money for only 1 to 2 months. And I am doing this on ETFs that I would have bought outright, except that I already hold them and worry about having too much of them.

The risk is indeed higher than betting on the S&P, so this is no free lunch. However, because the return is higher, I only commit smaller amounts at one time, and also ladder them so as not to get all my ammo expended at the wrong market turn.

As they say, "you pays your money and you takes your chances".

 

[Mulligan]

Sure.... just historically one will will erode principal in pretty much guaranteed way by being in cash. Not so with something like S&P 500.

In fact looking at s&p 500 from high above over my entire life... charts looks mighty fine and I see no erosion of principal.

It is OK to go to CDs if you are 70. If you FIRE at 50 I do not think there any kind of safety in such allocation. In fact it is recipe for disaster.

I am no Nostradamus, but I can pretend to be.... From what I have heard, the market historically speaking is very expensive...Top 5% of all time.. 1966 to 1982 is a long time to endure losses if one does not need to risk it. I think it all boils down to how much risk one actually has to take. Personally, having a pension and at 51, having all my money in CDs would not be a recipe for disaster, it would just be an added bonus. I could just stash cash in a safe and be perfectly fine. But like I said, this is just my personal situation.

 

[NW-Bound]

I forgot to say that I have not been selling puts recently. Instead, for the last week or so, I have been selling covered calls, now that the market turns gun-ho. No, not on everything indiscriminately, but only the holdings I think may pull back. If they get exercised and someone buys my stocks, I will have sold high and raise my cash level. If they expire worthless, well I keep the premium, which is still better than doing nothing.

 

[Rustic23]

Cash is in cd's for now. As I said it will go back, maybe, some day, or maybe not. I have said before, I am/was an index investor, and there even broad indexes. None of those went down 30% or I would have gone back in, maybe, maybe not.

 

[marko]

Nothing will erode principal like a major downturn followed by a couple of decades to recover. Many examples, but I don't really care. Unless you have countless millions, why bother. Manage the risk and live your life.

You mean like in 2008? I lost 26% in 2008!

 

[Fedup]

Maybe a lot more people take money off the table then they dare to admit, judging from the stock market today.


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[eytonxav]

The market and the economy have minds of their own, which makes timing too challenging for me, but I agree, if you've won the game, stop playing.

 

[splitwdw]

Cash is in cd's for now. QUOTE]

Thanks, just wondered.