Forget Balancing - sold all my 401k equities funds and put it in the safe short term

[rayinpenn]

I don’t believe in trying to time the Market and I’ll probably miss gains but the unfounded ‘Market Exuberance’ got hold of me; Yesterday I sold all my 401k equity funds (S&P, Large Cap, International). I’ve been investing so long it is more money then this guy from very humble beginnings could have every imagined. It makes me nervous just transferring it.

I have a spreadsheet that used yahoos free stock quotes to get updated prices. Click a button and bam I know where I stand. Yahoo decided to no longer offer the service. Two days ago I manually imputed prices and took a look where the Mrs and I stand. Crazy number and with all the crazy ness in the world ..well fear set in.

Hope I’m wrong...

 

[Tetto]

This is something i've been strongly considering, but i'm still 10 years away from retiring....I will keep a ear and eye on things. I'm very suspicious though of this market; how long can it keep going? Scary

 

[gayl]

Sorry to hear that you're nervous. The way I see it is I lose only when timing, which is what you did. The market will be higher in 5 years even though we're overdue for a dip. Remember the only ones who lost in 2008 were those who sold in the panic and then either did not get back in or got in after it recovered

 

[target2019]

Over a short term it does not matter. It may be a superb move, or you'll lose some unrealized gains.

My 401k has rules that would prevent going back into a fund for a while (I think). But I have been doing similar, by steadily moving small/mid and int'l into stable value throughout this year. But we are just maintaining what I call a moderate Asset Allocation (AA).

It sounds like your AA moved from aggressive to moderately conservative or more so. Sounds right to me.

 

[dixonge]

Ray - other than a general sense of a market correction being 'overdue' - what economic markers cause you to see an imminent pullback?

 

[John Galt III]

I've really gone wild and am participating in the 'irrational exuberance' by riding the updraft by not harvesting profits when my stock index funds keep going higher and higher. But I'm still about 75/25, which is what I'm comfortable with.

 

[marko]

"Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves." Peter Lynch.

 

[Dawg52]

Forget Balancing - sold all my 401k equities funds and put it in the safe short term

Ohhhh you will get a lot of backlash here for doing that. Market timing, not keeping up with inflation and all the rest.

 

[Montecfo]

I've really gone wild and am participating in the 'irrational exuberance' by riding the updraft by not harvesting profits when my stock index funds keep going higher and higher. But I'm still about 75/25, which is what I'm comfortable with.

Same.

But I am getting close to personal wealth levels which might cause me to reduce my allocation to equities, maybe to 60/40 or even 50/50.

I do not expect to begin making those adjustments until around tax day at earliest.

 

[easysurfer]

You don't believe trying to time the market, but just sold all your 401k, so essentially, you market timed.

That's kind of like saying you aren't superstitious at all but keep a special penny in your pocket for good luck.

I think there's gonna be a nice, big, beautiful market crash in 2018. But don't trust my subjective gut feeling, so rebalancing according to my pre-determined target allocations. If there is such a big, beautiful crash I'll just have to ride out the storm and repeat to myself (like in the meltdown of 2008-2009) that it's only a paper loss unless I sell.

 

[Ready-4-ER-at-14]

Everyone has jitters when something seems too good to be true. I too was considering moving some money off the table. Truth be I consider it every day.
I want to replace some stock positions with some option long positions should this top and then rebound.

Even when you believe all will be well eventually watching net worth drop every day for months is disheartening. I need something to focus on if that happens. Its like an annoying drip, drip of a leaky faucet, even if loss is not much.

What I did was to buy some longer term (think 6 months) puts on things I have too much of and bought a few "double back if the market drops" things. Several out there but I used dog. Generally this loses money, just buying peace of mind.
I spent maybe 800-$1000 and that kept me in for the latest moves up. Amazingly I am seeing a lot of sector roll over right now, meaning some stocks declining as others in other sectors gain.

This was the amount of control I needed to have to be able to sleep. However stocks provide maybe 40% of our income, so not as if we would be destitute if all went down a lot.

My fearful mind says turn the ship around into the waves, and my inner trader says let all the sails out and run with the wind. Regardless of investing or trading philosophy, the trend is our friend till the end.

 

[Quantum Sufficit]

Just a feeling but as the market continues upward on strong economic outlook, you will begin to doubt your move and the urge to get back in will cause you to buy high

 

[CRLLS]

We are in it for the long haul, so steady as she goes. I do have to admit that the bear run has me a bit worried about WHEN the correction occurs. I am preparing myself mentally for that time. I plan to do nothing along the way.

If I listened to the experts, I would have been out a year and a half ago, missing what? 25% gains? I rationalize it as: I can lose that money and still be even with where I could have been.

I think that if I had an inevitable upcoming expense, I would be tempted to take that money now and either put it aside or make that purchase now rather than waiting and hoping that the market will still be high or higher then. Truth be told, we did just that. We purchased a new-to-us vehicle just before New Year's Day.

 

[karen1972]

I guess I just don't understand the logic, ie if we were down 5%, maybe, but why sell when the trend is still up? Do you really think the market will drop 10-15% in a single day or week where you won't be able to get out?

Maybe you mean when you went to re-balance you decided your current allocation was not at all aligned with your risk tolerance?

If you have more money than you can ever spend, I guess thats fine, but I would hate for you to be like my friend who thought when Trump was elected the sky was falling and got out...and is still out "waiting" for that market correction so he can get back in after losing out on this 20% run up.

 

[Bigdawg]

I am 7.5 years from 59.5 so I am staying put at overall allocation of 60/30/10 Equities/RE/cash. That may change this year if I sell my CA rental. I will take proceeds and become aprox 85/15 with the only RE being my primary residence. Full disclosure, DW and I are riding 2 Military COLA pensions. I am actually hoping for another 2008 so I can ride the wave back up. The sooner the better for a significant dip. If I was closer to needing that 59.5 cash I may change AA to more like 50/50.

 

[REWahoo]

Forget Balancing - sold all my 401k equities funds and put it in the safe short term

Ohhhh you will get a lot of backlash here for doing that. Market timing, not keeping up with inflation and all the rest.

Mods, can you please change the title of this thread to "Confessions of a DMT"?

 

[steveark]

Consequences

Take it from someone who has learned from experience. You might be right this time or you might be wrong but what is certain is that your plan, going forward will sentence you to a life of anxiety. You will be in constant turmoil in every down market as to when you should get back in and in every up market whether you should sell. It is no way to live. Pick a strategy based on some percentages or just buy and hold but don't rely on your emotions or you will be wrecked emotionally in the long run.

 

[aggie76]

Over a short term it does not matter. It may be a superb move, or you'll lose some unrealized gains.

My 401k has rules that would prevent going back into a fund for a while (I think). But I have been doing similar, by steadily moving small/mid and int'l into stable value throughout this year. But we are just maintaining what I call a moderate Asset Allocation (AA).

It sounds like your AA moved from aggressive to moderately conservative or more so. Sounds right to me.

Not to derail BUT...I have a question about your " My 401k has rules " line. If you are retired or over 59.5 why is you money still in a 401k account with limited investments and RULES ? You can move 100% of your money ( if you are 59.5) to a self directed IRA free from rules and with damn near unlimited investment options. I have talked to virtually everybody at my old company who are over 59.5 and chaffing under the " rules" to move their money OUT of the 401k account into self directed. Even got a nasty gram from the HR drone asking me to stop telling the serfs to excursive their legal rights. Told him to pound sand.
Again ..why are you still in a 401k if you are retired or over 59.5 ?

 

[CaliKid]

I see no problem with your plan. If you sleep better then it's the right thing for you. At the end of the day that matters a lot! If it were me I might consider just a less aggressive portfolio. Maybe 25% equities for example!? It doesn't have to be all or nothing.

 

[RetireAge50]

One time I thought about that but then realized I still might live another 50 years. Market will probably double 5 more times in my life.

 

[Big_Hitter]

Forget Balancing - sold all my 401k equities funds and put it in the safe short term

Ohhhh you will get a lot of backlash here for doing that. Market timing, not keeping up with inflation and all the rest.

short term fund will keep up with inflation

i don't see anything wrong with this move - I did the same thing in early 2000

personally, i'm going to hold off a bit then make a similar move in my 401k - taxable accounts are a different story

 

[Texas Proud]

I think taking everything out is the wrong move.... if you think there is a correction coming soon (and why take out now if you do not think it is soon) but you are wrong, you pay dearly... but if you left 30% or so in the market then you would have hedged your guess...


I have heard a few talking heads think that the market will have a correction in 2018 but will be up by the end of the year by upwards of 10%.... they only predict a correction because it has been so long since we have had one...


My big question would be... when do you plan on putting it back? As some have said before, market timing takes two correct decisions to work... get one or both wrong and it can be a disaster....

 

[Moemg]

In 2008 there were a few members who did sell all and just waited out the crash .They seemed brilliant at the time .Having been through a few crashes the signs are obvious before the tech crash everyone thought they were brilliant investors and even sports bars had ticker tapes running and before the housing bust everyone thought they could flip houses and make a huge profit .The only market timing I do is every time W2R says the Whee word I skim profit off the top .

 

[Big_Hitter]

My big question would be... when do you plan on putting it back? As some have said before, market timing takes two correct decisions to work... get one or both wrong and it can be a disaster....

i started reinvesting in the market around 2007, i miss timed the exit a bit but things have worked out

not sure who or what is saying there is a 10% ror expectation - CMAs are way down this year due to the big uptick last year

 

[LRDave]

I think 2018 will see a big drop. I thought that about 2017 too, so......


This is a case where my incredible powers of procrastination really help me out!