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Old 02-23-2018, 08:43 PM   #141
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When I decide to get back in, I would aim to get 25% back in as soon as possible.
Getting back in when the market has fallen is quite easier than when the market is heading up, most people see the value when the market is significantly down, as I stated one must be willing to admit they are wrong, I expect the market to respond in short order here to the down side, a new stock market high would mean I was wrong in my assessment and I would get my 25% back in. As that is 4-5% higher than my sell point, that would lower my portfolio results by one - 1.5% percent approximately this year, than if I never would have done this.
If this is in taxable account, you'll also be lower due to the tax on your capital gains that has to be paid. And depending on health care subsidy, that gain may also push you over the cliff which would also lower your results. But hey, for every seller there's a buyer, one of them will be correct. Sometimes both end up being correct
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Old 02-23-2018, 08:48 PM   #142
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I completely understand folks deciding to get out of the market now. No reason for folks to take it personally. At times I am tempted, particularly with my 401K having a Stable Value fund that is now yielding over 3% with the principal guaranteed. I'll admit that part of me is a little greedy, which is why I'm going to keep about 40% of my AA in equities. But I have also modeled what would happen to that 40% should the market tank, and I can still live with the result.
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Old 02-23-2018, 10:35 PM   #143
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Originally Posted by Running_Man View Post
When I decide to get back in, I would aim to get 25% back in as soon as possible.
Getting back in when the market has fallen is quite easier than when the market is heading up, most people see the value when the market is significantly down, as I stated one must be willing to admit they are wrong, I expect the market to respond in short order here to the down side, a new stock market high would mean I was wrong in my assessment and I would get my 25% back in. As that is 4-5% higher than my sell point, that would lower my portfolio results by one - 1.5% percent approximately this year, than if I never would have done this.
I'm glad you have a plan for both market directions. Sounds sensible to me.
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Old 02-23-2018, 11:49 PM   #144
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Market timers indeed avoid worst days, but more importantly, they miss out on best days too where most of your returns will actually come from. Just look at what happens if you only miss 10 best days. Your overall return goes from 9.8% to 6.10% and if you miss 30 best days, it's money in the mattress.


This chart is interesting but not that relevant... those 10 days are going to be spread over a long time period... it would be impossible for someone to sell everything just before those 10 days and be in the rest of the time...

Now, this chart says that those 10 days are mostly within 2 weeks of the worst days.... so, if you want to market time keep all money in cash... when the market takes a big tumble invest everything and wait two weeks... then sell everything and wait for the next time...
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Old 02-24-2018, 12:20 AM   #145
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BUT, if you have enough for your own lifestyle, a good buffer, and still do not care, as one gets older capital preservation and sleeping well is a lot more important. at least it is to me. We could handle a 12% inflation for 15 - 20 years and still not need to worry.
We feel the same. Even keeping up with inflation, and we should do a bit better than that, our 30 year safe withdrawal rate would be 3.33% (100/30 years), which is much more than we plan to spend anyway. Every day is a vacation day in the Bay Area for us so we happy with that kind of lifestyle. We feel pretty fortunate to have the life we do and be able to live below our means in retirement so no need to take on additional risk for us.
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Old 02-24-2018, 04:15 AM   #146
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Now, this chart says that those 10 days are mostly within 2 weeks of the worst days.... so, if you want to market time keep all money in cash... when the market takes a big tumble invest everything and wait two weeks... then sell everything and wait for the next time...
That has been back-tested and it doesn't quite work out that way either.
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Old 02-24-2018, 04:33 AM   #147
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When I hear "epic proportions" relative to the stock market I assume we're not talking about a correction or 'The Great Buying Opportunity of 2008', but more of a repeat of the Great Depression of 1929.

I just don't see that. IMO the past few weeks have returned us to a more stable market with somewhat high valuations, suddenly realistic interest rates and perhaps some healthy, low inflation on the horizon. Back to normal IMO.

But what do I know. I'm staying the course but plan to revisit this thread in December!
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Old 02-24-2018, 05:00 AM   #148
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I just don't see that. IMO the past few weeks have returned us to a more stable market with somewhat high valuations, suddenly realistic interest rates and perhaps some healthy, low inflation on the horizon. Back to normal IMO.
Well, I just don't see that.

Two weeks does not cure all problems.

My crystal ball shows taper tantrums with each rate hike going forward. The only question is which one will push us over the cliff?
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Old 02-24-2018, 05:26 AM   #149
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Well, I just don't see that.

Two weeks does not cure all problems.

My crystal ball shows taper tantrums with each rate hike going forward. The only question is which one will push us over the cliff?
Yeah. I worded that poorly.
My point was that I see things becoming a bit more stable/normal with the usual ups and downs, corrections, rallies, rate hikes, inflation, taper tantrums and even a good ol' fashioned 6 hour flash crash.

The usual stuff.

I'm just struggling to see where a market event of 'epic proportions' is on the horizon.
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Old 02-24-2018, 05:45 AM   #150
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I'm just struggling to see where a market event of 'epic proportions' is on the horizon.
True, that is a bold call.
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Old 02-24-2018, 06:16 AM   #151
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True, that is a bold call.

All it takes is a trigger to bust a bubble. I think Federal, State, Local and personal debt will be the bubble. The trigger nobody can predict, but then all the pundits come out after the fact saying “ I told you so!”
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Old 02-24-2018, 06:23 AM   #152
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All it takes is a trigger to bust a bubble. I think Federal, State, Local and personal debt will be the bubble. The trigger nobody can predict, but then all the pundits come out after the fact saying “ I told you so!”
Also true. However, we also know that even if the trigger is obvious and right there out in the open for everyone to see, it may not happen for a very long time...queue up The Big Short.

Personally, I don't think it is particularly important what the trigger is, when exactly it happens, etc. If you're positioned appropriately, then you're good no matter what happens.

Sure, the pundits will emerge saying "I told you so" - even if they made their calls 6, 12, or 24 months early. How long after the call do we give kudos for having correctly called it? How far after the call are the stone-throwers justified in saying "You were wrong"?
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Old 02-24-2018, 06:49 AM   #153
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Sure, the pundits will emerge saying "I told you so" - even if they made their calls 6, 12, or 24 months early. How long after the call do we give kudos for having correctly called it? How far after the call are the stone-throwers justified in saying "You were wrong"?
Here's a well known wealthy investor who has been forecasting a bad scenario the last 5 years. Dow has moved up 10k since then but you can bet if we do have a major crash of 'epic proportions' he will be beating his chest telling us I told you so.

https://www.cnbc.com/video/2013/03/2...end-badly.html
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Old 02-24-2018, 07:07 AM   #154
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If people can't sleep at night worrying about the next correction or crash they should not be invested in equities in the first place.

That's exactly why people establish an AA based on risk tolerance. As we all know stocks go mostly up but also severely down as in 2007-2009.

We've established our AA with 50% equities 6 years ago, two years before we pulled the plug and we plan to stay the course with rebalancing as needed. Back then we've modeled the impact of a major downturn and felt comfortable with the outcome. When I back tested our holdings with portfolio visualizer it came up with a 27% maximum drawdown and we're OK with that.
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Old 02-24-2018, 07:35 AM   #155
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When I hear "epic proportions" relative to the stock market I assume we're not talking about a correction or 'The Great Buying Opportunity of 2008', but more of a repeat of the Great Depression of 1929.

I just don't see that. IMO the past few weeks have returned us to a more stable market with somewhat high valuations, suddenly realistic interest rates and perhaps some healthy, low inflation on the horizon. Back to normal IMO.

But what do I know. I'm staying the course but plan to revisit this thread in December!
On the inflation front, I can speak for the building products industry which now has record high commodity pricing and has continued to rise 2-3% per week. Competition for employees has become fierce in our markets and this is driving up wages. Our employee health care costs have doubled in the last four years. We are replacing aging specialized delivery trucks we paid $120,000 for with new ones going for $300,000. All of this must be factored into our selling prices.

I can't say I know what constitutes a healthy overall inflation level but I'm sure my industry will be well beyond it.

FWIW - Like the OP, I'm pessimistic on the market because of what I believe the FED will have to do to keep inflation at a "healthy" level.
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Old 02-24-2018, 07:38 AM   #156
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If people can't sleep at night worrying about the next correction or crash they should not be invested in equities in the first place.

Thta's exactly why people establish an AA based on risk tolerance. As we all know stocks go mostly up but also severely down as in 2007-2009.

We've established our AA with 50% equities 6 years ago, two years before we pulled the plug and we plan to stay the course with rebalancing as needed. Back then we've modeled the impact of a major downturn and felt comfortable with the outcome. When I back tested our holdings with portfolio visualizer it came up with a 27% drawdown and we're OK with that.
+1
At 50% Equities and calculated a maximum 26% max drawdown (in line with your 27%) and Firecalc still has us at 100%.
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Old 02-24-2018, 07:44 AM   #157
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Back in the 1990's we did fine with high real rates. As long as real rates go up at a moderate rate I doubt the stock market will tank due to interest rates alone. That is my guess.

But of course we don't have great economic models and we are all just guessing here. Then we have the guessers that were right the last time and the economist guessers and the academic guessers and the Goldman Sachs type guessers.
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Old 02-24-2018, 07:57 AM   #158
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Like most here I agree the market is a tad rich. I feel that S&P fair value is around 2100, although stocks never actually sit at fair value but are to be found either well above or well below it seems. If the market traded sideways for 2 years I wouldn't be surprised. 2015/16 redux.

I have two pots of money, the IRA pot and the after-tax pot.

The IRA pot AA is 85/15 or so because I'm only 47 so I don't care much about equity valuations in that pot, I just want to be mainly in the market. This thinking will slowly change as I enter my early 50's and my AA will be adjusted gradually.

The after-tax pot is of more interest, since I plan to tap it starting 2022 or so. Since I don't know squat, I put it in the Wellington fund and suchlike. AA seems reasonable and I can't think of any better, low overhead, low involvement way to deal with my money.

Best I can do. In the past I dabbled with getting in/out and had mixed results.
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Old 02-24-2018, 08:29 AM   #159
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When will you get buy back in?
right before the bull market starts. LOL.
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Old 02-24-2018, 08:45 AM   #160
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Mostly on this board people tell us what to do, not what they are doing, in advance, with a date stamp.

To me, RMs action is much more valuable. I too would sell more, but most of my equities are in a taxable account, and some are are long time holds and I do not want to face the certain hit of high taxes vs the contingent hit of market drawdowns. But I do have what is for me a low equity allocation of a bit less than 50%

Ha


+2.

Facts trump opinion.

Tax hits deter my adjustments, too, on the margin. Recently backed off equity by letting DW’s 401K roll over into cash. Now at 40-ish percent equity, depending on how one allocates preferred.

I’m 3 months to 39 months away from retirement, depending on this and that. I’m at a low equity allocation because I’m in the retirement red zone. And this is despite equity-favorable indicators, such as a yield curve that has not yet inverted. I’m not interested in juicing my returns shortly before retiring only to lose more than I had gained in a recession proximate to my retirement date.
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