Sold all my stocks

[exnavynuke]

I'm not psychic, so I'm still buying stocks. Good luck though.

 

[foxfirev5]

Me too. On both counts. Wasn't easy to stay calm but that's what we did.

Likewise. I'm finding that doing nothing is one of my greatest attributes.

 

[pb4uski]

Believe in [-]the Force[/-] your AA.

 

[Dash man]

This week I sold a little over $400k in stocks. They are for tax harvesting to offset about $50k in gains from a sale in January. I just moved the money into a 1.55% Synchrony Bank Savings account for at least 30 days to get past the wash sale period. It also gives me time to reevaluate the companies whose stock I sold and decide if I want to buy them back or to invest elsewhere, or just add to my cash for the longer term. I still have plenty in stocks, so this didn’t make a significant change to my AA.

 

[haha]

Some of you guys would likely tell Brad Pitt how to get dates.

 

[audreyh1]

Wow, fascinating. I’ll be very interested to see if you are right this year.

Personally I’ve been surprised the stock market reaction hasn’t been more strongly negative to the recent fast interest rate rises, so my instinct is that there are more shoes to drop.

But I’m sitting on my hands as usual.

Oh - I won’t sit on my hands if we have a huge drop. I’ll be busy rebalancing. And trying to do some strategic tax loss harvesting. And if it’s that bad my current AA scheme has me going more aggressive if CAPE10 craters.

But good thing I also have several years expenses plus slush fund set aside in short term funds though, huh?

 

[ExFlyBoy5]

I support your decision RM, but we both know that my opinion is nothing more than a hill of beans.

As my wife says, "If you aren't cooking for me, paying my bills, or fornicating with me, then it's none of your damn business!" Some folks on this board should remember that.

I will also admit that I had a pretty large liquidation about a week ago. I too feel something "in the air" and thought it would be wise to cash out on what has been a VERY GOOD period of return for me. Of course, I am still pretty young and have a healthy pension, so it will be many, MANY years before I consider a complete sell off of my stocks holdings and accordingly, I still hold quite a bit of money in stocks. If it does crater, then I will feel a little better since I took some "off the top". If it doesn't then that won't bother me too much either.

 

[redduck]

The OP is timing the market. He obviously knows more than all of the financial gurus and most anyone that knows anything about finances.

He should be on TV.

The nerve of RM to let us know what he is doing re: his finances. And, then he has the audacity to make it obvious that he knows more than all of the financial gurus. (In truth, I missed the obvious part).

But, I totally agree, we all need to be wary of someone who breaks ranks because it could lead to even more subversive actions, like having sex in other than the missionary position.

 

[audreyh1]

I recall an article I read which showed that, historically anyway, that there were actually only a few days where if you were out of the market, you lost out on the majority of the return. Said another way, the market tends to jump up quickly and significantly.

Personally, I wish running_man would not have posted this as I feel the same way about the market. So while I'm not getting out of the market, I guess I'd at least be singing along if he did come into Alice's restaurant with a few friends.

I believe the reverse is also true: if there were only a few days out of the market you avoided the majority of the loss.

So it’s a wash, IMO.

 

[njhowie]

+1 on selling stocks
Although I sold over the last couple years, I am 95% out of the market. I am laddering cd's and don't care about losing market returns. I have enough money to RE, and after 40 years in the market, do not want risk it anymore.
I sleep like a baby

Thank you! Agree 100%.

Same here. Laddering CDs and high quality (pre-refunded) municipal bonds for me.

Sleeping like a baby - priceless.

 

[Lsbcal]

Some of you guys would likely tell Brad Pitt how to get dates.

Well I looked it up and the divorce is still pending for Pitt. So the general advice here is you should stay married because you have to get it right twice. You get out of a marriage, but then you have to get back into something good. Timing women is hard. Don't do it.

 

[audreyh1]

Historically, equity prices have risen while low interest rates rise, up to about 5% on the 10 Year Treasury. Makes sense in that interest rates rising from very low levels reflects an improving economy, which is also good for stocks, up to a point of course.

Sure,

But I think there are some big exceptions in this case.

I believe that the market rise (aka asset inflation) since and including 2013 was due in large part to aggressive Fed quantitative easing. They were fighting deflation at the time, a lot of Central banks have been fighting it on a global scale. Now they are working hard to take away that punch bowl.

And I believe a lot of the recent partying has been due to the continuation of very low inflation, and interest rates in spite of the Fed raising short term rates and making clear their “quantitative tightening” timeline. Intermediate and long-term rates were very stubborn about going up, and the 10 yr treasury rate even dropped drastically mid year.

The picture has now changed. Interest rates aren’t nearly so friendly anymore.

And, IMO, >3% on the 10 year is going to have a material impact on the housing market. I don’t think we can say “5%” is an OK level that won’t hurt stocks anymore. Maybe it’s 3% - the “new normal”? We’ll find out over the next year or so.

 

[Nemo2]

like having sex in other than the missionary position.

Personally, I decided not to take a position on missionaries, because when I buy them they go down, and when I sell them they go up.

 

[joeea]

As of today I am back to 0% stocks. The action of the market and the confidence of the average participant leads me to fear there is shortly to be a move of epic proportions and speed to the downside.

Epic proportions and speed?
Great that you posted it here. That way we can look back in a while and [-]laugh[/-] see how you did.

Please also post when/if you decide to get back in.

I assume you guessed correctly in 2007 and got out and back in with a time period that pleased you. Otherwise you wouldn't do it again...

 

[joel2125]

sold all stocks

It has been well established that timing the market is a fools errand. You must sell at or near the top, buy again at or near the bottom and do this every time. The data clearly shows that this is simply not possible. You called in in 2007 but the chances are slim your luck will hold. If you need the money i five years I forgive you. If your time horizon is ten plus I think you are making a mistake.

 

[Free bird]

Every man is or hopes to be a market timer. Haters gonna hate.

 

[AndyS]

As of today I am back to 0% stocks. The action of the market and the confidence of the average participant leads me to fear there is shortly to be a move of epic proportions and speed to the downside. Hopefully, I turn out to be wrong but am willing to lose a few percent to the upside to avoid the downside I fear. Last time I sold all was 2007.

Well, I hope you're right ... 'cause I been waiting a while for there to be some real "blood-in-the-streets" so I can pick up some more stock oriented funds on the cheap. I really have no clue if/when that might be. Not holding my breath though.

 

[HadEnuff]

The OP is timing the market. He obviously knows more than all of the financial gurus and most anyone that knows anything about finances.

He should be on TV.

I'd be he knows at least as much.

 

[AndyS]

Interest rates aren’t nearly so friendly anymore.

.

Having come into adulthood in the late 70's ... I think interest rates right now are fantastic! ( Returns on bonds .... not so much )

It's just too bad I don't need to borrow any money right now.

 

[Scratchy]

Runningman, I appreciate your posting your unconventional play in advance. What I do tire of are posts from people who tell tales of successful market timing (usually in the form of humble-brags ) in retrospect.

There are and will be more cat-calls from those who disapprove of this move, but I think the dangers of trying to time the market, at least with short term plays, are overstated on this forum. I believe most people on this forum would agree that over the long term equities will rise but over the short term they are completely unpredictable. It seems to me then that the best predictor of long term success is total exposure to equities over time, and that short term jumps in and out (i.e. attempts to time the market) would pay off just about as often as not. So one should not be derided for deciding the market doesn't look good at any particular moment for any reason.

I have not had good experience myself trying to time the market so I am staying put with my 65-35 AA. Hope you don't take offense when I say I hope you are wrong but I tip my hat to you if you come out ahead, as you did with your prescient sell in 2007.

 

[LOL!]

It has been well established that timing the market is a fools errand. You must sell at or near the top, buy again at or near the bottom and do this every time.

This is a ridiculous oft-mentioned fallacy. One doesn't have to have perfect market timing in order to benefit from market timing.

I'll give a stupid example: Suppose I had a coin that came up heads 55% of the time and tails 45% of the time. And you knew that. You could bet with that coin and not get "heads" every time, but if you ever bet "tails", you would be crazy, wouldn't you?

 

[rodi]

I have no idea what the market will do. I used to buy individual stocks and try to time the market. I learned that my instincts/skills/ability in this area was less than optimal. (I suck at stock picking and market timing.) After some painful learning experiences I switched to the index funds and 60/40 AA approach and that works for me.

RunningBum. I wish you luck but I also, greedily, hope you're wrong. If not... I'll just keep rebalancing on the way down and on the way back up.

 

[EvrClrx311]

Some statistics to support the gut feeling...

Using Shiller's data to graph the long term line, through the peaks and troughs of the market, while calculating out inflation... you end up with a linear 7.1% growth for stocks (S&P). This line can be positioned so that the market sits half above and half below that line, and the market positions on top of it over the long haul. So if the history of this dataset is any indication of the next few decades... you can assume (for what assumptions are worth) that half of the next 30 years we'll sit above this line and half of it we'll sit below.

That line, right now... isn't really all that useful day by day, month by month, or even year by year... however regression to the mean suggests that gravity will pull us down or up depending on where we sit compared to this line.

The line... as of October 2017 (last time I computed it) had us at 18,700 for the DOW (that is assuming the DOW is correlated over the long haul to the S&P historical return).

So I don't know how we'll get back to the line... maybe it'll just be 3.5 flat years... maybe it'll be another 25% rise and a sharp correction. I can say, half of the next 20 years are likely to sit below it, and half above it. On average. I do know that, history tends to suggest that at each high, people come up with all kinds of justifications for why we belong there (indicators...economy... "it's different this time"... it always is different this time, ironically... etc...) but we somehow always manage to keep straddling this long term 7.1% (after inflation).

I assume we will continue to do so for the long haul... and on that note, I assume the market is about 33% ahead of itself right now - but that's normal, sometimes it's 33% behind itself (that would be a huge sell off from right now). I guess this is market timing... but it's unemotional analysis as well, so long as the future conspires to mimic the past...

I was 100% stocks until December... I moved to 23% bonds when it passed 24,400, and earlier this month, when the market hit 26,200 I moved another 20% to cash. I am secretly cheering that one on because it came a day or two before the 1000 point drop (it was luck, but I'd like to think my intelligence had something to do with the choice... nah). I'm now sitting with almost 40% of my 401k out of stocks for the first time ever, wondering if I'm stupid as well... I never liked to market time, myself.

It just feels like the right thing to do, right now. meh...

 

[joeea]

I believe most people on this forum would agree that over the long term equities will rise but over the short term they are completely unpredictable. It seems to me then that the best predictor of long term success is total exposure to equities over time, and that short term jumps in and out (i.e. attempts to time the market) would pay off just about as often as not.

I don't see how the second part of the second sentence follows from the first.
And I've seen no evidence that it is correct. Quite the contrary.

Perhaps you have a link to something that backs it up?

 

[exnavynuke]

This is a ridiculous oft-mentioned fallacy. One doesn't have to have perfect market timing in order to benefit from market timing.

I'll give a stupid example: Suppose I had a coin that came up heads 55% of the time and tails 45% of the time. And you knew that. You could bet with that coin and not get "heads" every time, but if you ever bet "tails", you would be crazy, wouldn't you?

It's not a fallacy to say that you have to correctly (if not perfectly) time your exit and your reentry to beat "staying in". Get out on the way up, watch it keep going up, and then get back in and you have less than if you'd stayed in. Get out on the way down, watch it keep going down, see it start going back up, watch it go up and keep going up past where you got out, get back in 5% above where you got out and you'd have been better off staying in.

Only if you get back in below where you got out and then have it go up do you profit from market timing. That requires timing the exit right (have to get out as it is going down or before it goes down) and timing the reentry correct (have to get back in before it goes back up to where you got out) in order for market timing to be beneficial. Historically, very few people get that right.

Get out of the S&P 500 in 2007? Great. Don't get back in until 2014... you would have been better off staying in the whole time. In hindsight, it's easy to time the market because we can see the charts. In practice, it's rarely done in a manner that beats staying in.