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Stay on the Sidelines?
Old 05-18-2018, 01:13 PM   #1
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Stay on the Sidelines?

Question for those wiser. I've been sitting in cash for 6 weeks since my rollover. It's like watching the market in a long pit stop. I can afford to do this for a few more months. My instincts say why not wait for the race to start or a correction then jump in. Then I think of other options like buying some of bond allocation and maybe overseas equities and waiting on U.S. for now.
or... Should I just get in and stop trying to time?
Any thoughts?

P.S. thanks to all. It's been an educational two months.
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Old 05-18-2018, 01:20 PM   #2
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Since you are asking about how to time the market, whatever advice you are given is likely to be wrong - including this post.
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Old 05-18-2018, 02:02 PM   #3
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There will be a better time to get in, don't worry about it. There's "market timing" a la Day-trading et al then there's prudent picking-your-spots. They are not the same.
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Old 05-18-2018, 02:05 PM   #4
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Most here do not think it is possible to consistently correctly time the market. Accordingly, "we settle" for average market returns by staying fully invested all the time. By the way, with a reasonable savings rate, settling for market returns over 20 or 30 years will likely make you wealthy. Find an AA you are comfortable with and stick with it. International can be part of that allocation.
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Old 05-18-2018, 02:50 PM   #5
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Most "wiser" folks will tell you trying to time the market is for the birds, and that the biggest risk you run is when you aren't in the market. Could go up, could go down, anyone that says they know is full of it.

There are 100's of reasons to expect down blips and up blips - correction... eh if it didn't happen in february I wouldn't expect that to come up for debate again anytime soon. But I could be completely wrong, and I'd be just as smart in that assessment as people who do it for a living.

Or split the difference and set yourself up to buy back in say 25% a week for the next four weeks or something like that. Doesn't have to be all or nothing, but I wouldn't want what I think is your 401k, sitting on the sidelines for one minute.
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Old 05-18-2018, 03:16 PM   #6
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Quote:
Originally Posted by ToneGod View Post
Question for those wiser. I've been sitting in cash for 6 weeks since my rollover. It's like watching the market in a long pit stop. I can afford to do this for a few more months. My instincts say why not wait for the race to start or a correction then jump in. Then I think of other options like buying some of bond allocation and maybe overseas equities and waiting on U.S. for now.
or... Should I just get in and stop trying to time?
Any thoughts?

P.S. thanks to all. It's been an educational two months.
When I am in a situation like yours, I generally DCA into the market. That way, I may not be buying at the best possible price, but I won't be buying at the worst price either. Some people prefer to DVA. Here's an article that is pretty easy to understand, explaining about both these methods.

https://www.investopedia.com/article...07/dcavsva.asp
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Old 05-18-2018, 03:26 PM   #7
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http://https://www.marketwatch.com/story/how-missing-out-on-25-days-in-the-stock-market-over-45-years-costs-you-dearly-2016-01-25

Market timing - not for the faint of heart.
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Old 05-18-2018, 03:31 PM   #8
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You have the money sitting in a nice savings account earning 1.75-2%, right? I'd suggest waiting, though I really understand the desire to have the cash doing SOMETHING RIGHT NOW!
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Old 05-18-2018, 04:43 PM   #9
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The U.S. leading index is fairly high now so I would buy in now.

See my thread in this forum for reasoning.
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Old 05-18-2018, 05:02 PM   #10
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Originally Posted by W2R View Post
When I am in a situation like yours, I generally DCA into the market. That way, I may not be buying at the best possible price, but I won't be buying at the worst price either. Some people prefer to DVA. Here's an article that is pretty easy to understand, explaining about both these methods.

https://www.investopedia.com/article...07/dcavsva.asp
+1

You can wait years for a meltdown, then when it finally happens you have to guess well about when the real bottom has been found otherwise you can get in too early or be too late.
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Old 05-18-2018, 05:06 PM   #11
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Myself and others held a lot of cash for a long time, thinking the market couldn't go higher, and waiting for a correction. I waited too long, and it went up more. Of course, it could go down more. You could put a percentage of your cash back into the market on a schedule (say, 20% every time the market tanks 2% or more), or you could just invest lump sum, or you could wait until the next recession, likely losing out on some gains. I would personally go with dollar-cost-averaging (depositing 10 or 20% each time the market drops a bit). I'd go with ETFs, rather than mutual funds, as you can enter those virtually instantly, rather than waiting for days for a mutual fund transaction to clear. But it also depends on how far out you are from when you'll need the money. If it's 10+ years, I'd just invest the lump sum, as it's a gamble either way!
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Old 05-18-2018, 05:17 PM   #12
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The financial markets generally are unpredictable... The idea that you can actually predict what's going to happen contradicts my way of looking at the market. George Soros
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Old 05-18-2018, 05:25 PM   #13
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My thought is to derisk your portfolio once you reach critical mass and then keep only 20% equities
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Old 05-18-2018, 05:28 PM   #14
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Quote:
Originally Posted by ToneGod View Post
I've been sitting in cash for 6 weeks since my rollover. It's like watching the market in a long pit stop. I can afford to do this for a few more months. My instincts say why not wait for the race to start or a correction then jump in.
Go with your instincts. I'm guessing you have concluded that these instincts have already served you well the past 6 weeks and are looking for more of the same kind of instinct-based investing.

Maybe you can time the market successfully and jump in whenever you conclude that "the race has started" or "a correction has occurred and won't become any worse". Maybe that will happen in the next few more months.

Try to have clear in your mind now what "starting the race" actually means and what an isolated correction will look like. That way you will have confidence using your cash and jumping in. And try to figure out what you will do if none of those things happen within a few more months.

Good luck.

(None of this is what I would do. But I've never believed in market timing. And I would never sit on any investment cash for 6 weeks.)
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Old 05-18-2018, 05:44 PM   #15
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I was able to perfectly time the bottom of the RE market in 2009 without a crystal ball, my money was 100% on the sideline drawing 5% in cd’s, the yield went away in 2008 and I knew I needed to get it making money. I started looking for an undervalued asset, Real estate had been beaten down 60% and I saw my relatives becoming wealthy through it so I jumped in, yielding a healthy 15% ROI now just through the rents.
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Old 05-18-2018, 10:35 PM   #16
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Old 05-19-2018, 03:45 AM   #17
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Most "wiser" folks will tell you trying to time the market is for the birds, and that the biggest risk you run is when you aren't in the market. Could go up, could go down, anyone that says they know is full of it.

Or split the difference and set yourself up to buy back in say 25% a week for the next four weeks or something like that. Doesn't have to be all or nothing, but I wouldn't want what I think is your 401k, sitting on the sidelines for one minute.
What if the correction is passing and the low is in? You just do not know. Buy in over time starting now. If 25%/week is too fast then 25%/month.
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Old 05-19-2018, 04:40 AM   #18
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DO you have an Investment Policy Statement (IPS)? If not, write one and then follow it. When I am tempted to do something silly with my bonus each year, I go back and read my IPS and it says invest it all according to my Asset Allocation (AA) in my taxable account. Also tells me to sell my RSU's as soon as they vest and do the same as the bonus. Otherwise I might buy orange juice futures.
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Old 05-19-2018, 06:17 AM   #19
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.... Should I just get in and stop trying to time?
Any thoughts? ....
You should just get in and stop trying to time. Follow your AA.

If you can't find the courage to jump in with both feet at once, then value average in over 6 months.
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Sitting on the sidelines
Old 05-19-2018, 08:37 AM   #20
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Sitting on the sidelines

Thank you all so much for your encouragement and opinions. The DCA method makes sense to me. BTW where would you find 1.75-2% in a savings acct ? Best I've found is VMMXX. Happy Saturday!
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