Sold all my stocks

[ERD50]

Quote:

Originally Posted by REWahoo Quote: Originally Posted by REWahoo What % of your holdings did stocks represent? No need to respond, I found the answer in your Feb 7 post: 25%

But I wonder if he has exposure to stocks in some MF/ETFs? So maybe he isn't going to zero equities?

Another question that I didn't see answered:

Quote:

Originally Posted by Texas Proud Quote: Originally Posted by Running_Man As of today I am back to 0% stocks. .... Last time I sold all was 2007. .... so when did you get back into the market? ...

Heck, I saw the 2000 crash coming. But I was thinking of getting out in 1997, the market had a huge, huge run up by that point. But if I got out then, there was never a place to get back in that was lower, and I would have had to pick it really well to avoid losing a bundle.

edit: OK, there was answer to timing back in post:

http://www.early-retirement.org/foru...ml#post2017166

So that worked out well, but that doesn't mean it can be duplicated. Each time is different.

So yeah, getting back in is tricky.

-ERD50

[EvrClrx311]

More numbers...

In 2000 the DOW hit a high of 11,750 (inflation adjusted that's about 17,000 today) and in 2001 it had dropped to 7,286 (inflation adjusted that's about 10,400 today). In 2007 the DOW hit 14,164 (inflation adjusted that's about 16,750 today) and in 2009 it hit 6507 (inflation adjusted that's about 8,250 today).

The in between point of both of these corrections was 9,518 (2001) and 10,335 (2008). Obviously the second one was a larger decline, looking at the long term DOW you could even say the market was still correcting itself from the late 90's. The market grows about 10% a year... (7% minus inflation). Each of those mid way averages projects out to... 30,543 (2001) and 19,198 (2008) for today's DOW.

So in a very loose way you might say that we're nowhere near the exuberance of 2001... if the midway of the fall would put us around 30K for the DOW (however I must say... the 9,518 point that's built from by adding 7.1% growth to that 9,518 value of 2001... may be missleadingly high because that's above the long term average of the DOW. It's a peak and trough that both sat rather high compared to all in history, if that makes any sense)... however we are above the average fall back point hit in 2008 of 19K.

If we could make perfect sense of the numbers then this would be easy. So instead I try to make sense of the point we're at based on where we've been. Thought it may be helpful for others

I'd say we're about half way between the dangers of 2000 and 2008. So anyone guess when the next "fall" we'll be looking at in the future to try and project the next one. I think the gut feeling about the impending correction, drop, what have you is built into the unprecedented run of the market since 2009. It was a very low bottom, to build up from, but the run up has been looooooooong ever since.

I have no conclusions... or guesses.

[marko]

Quote:

Originally Posted by ncbill But do we have anyone else here who has such rental RE experience?

Is he 'gone travelling' for life or is this a short term errrr....vacation?

[REWahoo]

Quote:

Originally Posted by marko Is he 'gone travelling' for life or is this a short term errrr....vacation?

Some things only time will reveal.

[marko]

Quote:

Originally Posted by REWahoo Some things only time will reveal.

Early on here, I was put on a two week time-out. I thought I was being clever but I wasn't.

Never want to do that again!

Love this forum --and the folks here--way too much to jeopardize my welcome.

[volfan]

So if you have an IRA at Vanguard and want to lower your equity risk by rebalancing, do just go to more bonds (i.e. Changing the target date fund to a dated fund with more bonds)?
Or with all the thoughts about bonds being overvalued too, what type of Vanguard fund for fixed income would you use? Short-term treasury (or intermediate, or long), Inflation Protected securities fund, or what else?

[Running_Man]

With all the other threads talking about selling items named similar to stocks reminds me of Goldman Sachs laughing when Michael Burry told them he wanted to short the bonds because mortgages would fail.

Volfan: I did not change my bond allocation, although funds from my stock sales are all in short term funds at the present time.

[aja8888]

Quote:

Originally Posted by volfan So if you have an IRA at Vanguard and want to lower your equity risk by rebalancing, do just go to more bonds (i.e. Changing the target date fund to a dated fund with more bonds)? Or with all the thoughts about bonds being overvalued too, what type of Vanguard fund for fixed income would you use? Short-term treasury (or intermediate, or long), Inflation Protected securities fund, or what else?

Right now I am using one year and less duration T Bills. The last two auctions got me a 1.65% 3 month bill rate and a 2.04% 12 month rate.

[sengsational]

Do you use Treasury Direct or can you get those short T Bills right on Fidelity or something?

[aja8888]

Quote:

Originally Posted by sengsational Do you use Treasury Direct or can you get those short T Bills right on Fidelity or something?

You can us Treasury Direct, but Vanguard, and I'm sure others, have a bond desk where you can place orders. It's pretty simple. Plus, you can see the upcoming and current auctions either on TD or VG/F. Plus, there is no fee to place orders for new auctions.

I'm limiting my purchases to 3, 6, and 12 month T-Bills to build a ladder so that some bill will mature every three months. I feel it's safer than holding a bond fund in this rate rising environment.

[volfan]

So would it be acceptable to buy one of vanguard's treasury funds instead of purchasing individual ones through the auction to build a ladder? I believe there is a short term, medium term, and long term treasury fund. And what would be the advantage of treasuries over a tips fund? I know that a few of the target retirement funds have TIPS.

Thanks for any insight.

[COcheesehead]

If you want short duration government and quality. Check out EALDX. 2% yield and the liquidity ease of a fund. No load at Fido.

[aja8888]

Quote:

Originally Posted by volfan So would it be acceptable to buy one of vanguard's treasury funds instead of purchasing individual ones through the auction to build a ladder? I believe there is a short term, medium term, and long term treasury fund. And what would be the advantage of treasuries over a tips fund? I know that a few of the target retirement funds have TIPS. Thanks for any insight.

Purchasing t-bills at a discount does not subject you to changes in NAV as in a fund when interest rates change. Plus, there are no fees and you get your investment back at maturity (face value).

TIPS are a play on inflation changes.

[kevdude]

Quote:

Originally Posted by ncbill But do we have anyone else here who has such rental RE experience?

There are a number of us here who have plenty of rental real estate experience, but he was/is certainly a higher profile poster over the last few years. My wife and I are semi-retired due to our real estate investments.

[audreyh1]

Quote:

Originally Posted by aja8888 Purchasing t-bills at a discount does not subject you to changes in NAV as in a fund when interest rates change. Plus, there are no fees and you get your investment back at maturity (face value). TIPS are a play on inflation changes.

I don’t see this as an advantage. Seems like you are just ignoring the real world. Existing t-bills/bonds go up and down in value every day.

[daylatedollarshort]

Quote:

Originally Posted by audreyh1 I don’t see this as an advantage. Seems like you are just ignoring the real world. Existing t-bills/bonds go up and down in value every day.

But not if held to maturity. The par value is known in advance. With most bond funds there is no maturity date and the future NAV is not predictable.

[audreyh1]

Quote:

Originally Posted by daylatedollarshort But not if held to maturity. The par value is known in advance. With most bond funds there is no maturity date and the future NAV is not predictable.

Yes they are going up and down in value while you are holding them.

[daylatedollarshort]

Quote:

Originally Posted by audreyh1 Yes they are going up and down in value while you are holding them.

But if you only hold to maturity, then the interim values are irrelevant. The advantage is knowing you will get the par value at maturity. With most bond funds the NAV may be more or less than your purchase price when you want to sell.

[Texas Proud]

Quote:

Originally Posted by daylatedollarshort But if you only hold to maturity, then the interim values are irrelevant. The advantage is knowing you will get the par value at maturity. With most bond funds the NAV may be more or less than your purchase price when you want to sell.

It was a good many years ago, but I read an article that Vanguard had put out that showed that this was not an issue...

The gist is that you do know the principal amount you will get, but you have no idea what interest rate you will be able to invest that money when it does mature... it might be LOW... so, over time your return is similar to a bond fund... and might be lower...



IOW, a false sense of taking away interest rate risks.... now, if you are going to use that money when it matures for some reason, then that is much better than a bond fund.... you have matched your investment with your spending needs...

[HadEnuff]

Quote:

Originally Posted by daylatedollarshort But if you only hold to maturity, then the interim values are irrelevant. The advantage is knowing you will get the par value at maturity. With most bond funds the NAV may be more or less than your purchase price when you want to sell.

True, but I think that "advantage" is lost when you want to re-invest that money in a similar bond. If the NAV of the fund goes down due to interest rates rising, the fund is selling bonds as they mature, and buying new bonds at the better rate, every day (or at some interval), while you are holding your bond to maturity. Your bond is still earning whatever interest you got, but the bond fund is buying newer bonds at a higher yield than yours.
I'm assuming we are talking short-medium duration in both cases.

By the time your bond matures, it's a wash, because of the improved yield of the fund compared to individual bond, during the period of rising interest rates.