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Where to invest with the market at all time highs?
Old 01-26-2017, 10:13 AM   #1
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Where to invest with the market at all time highs?

Hi Market Gurus ! I'd love to get your advice.

I currently have about $160K sitting in "cash" in my investment portfolio. $130K of it is in a taxable account and $30K of it is in a tax-deferred account.

I don't need the money any time soon (>7 years). I've got an overall portfolio allocation of:
30% Bonds - Spartan U.S. Bond Index Fund (FSITX)
5% Real Estate - Spartan Real Estate Index Fund (FSRVX)
35% US Stocks - Spartan Total Market Index Fund (FSTVX)
30% International - Spartan International Index Fund (FSIVX)

I could just allocate the money into the funds I've got and be done with it (Bond going to tax-deferred account, rest going taxable) but I'm a bit skittish because of the recent market highs. While I try to think long term and not time the market, I'm having a hard time pulling the trigger on purchasing more given how frothy the market is.

So any ideas? I think my options are:
1) Do nothing, just let things ride as they are for a while
2) Allocate the cash into my existing portfolio allocation because not trying to time the market means not trying to time the market
3) Put the money into a "high" interest savings account at Ally or something similar making 1% (seems better than #1 option regardless, I suppose)
4) Put most if it into equities (FSTVX or FSIVX) because the market isn't done yet
5) Put most of it into bonds because they are cheap right now
6) Some other choice I haven't thought of.

Thanks - appreciate your thoughts and consideration!
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Old 01-26-2017, 10:25 AM   #2
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The stock market is close to all-time highs most of the time because it has an upward progression, so that is not a good excuse to be skittish.

I'd vote for your #2 and follow your asset allocation plan.
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Old 01-26-2017, 10:47 AM   #3
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is this a pole?
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Old 01-26-2017, 10:55 AM   #4
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You might look at sectors to find which are yet to participate in the rally.
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Old 01-26-2017, 10:56 AM   #5
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If having the funds in cash or savings helps you to sleep at night, there's nothing wrong with that. If, however, you want the funds to be put to work, I'd vote for #2.
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Old 01-26-2017, 11:05 AM   #6
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I like this one, and this is how I handle things:
Quote:
Originally Posted by JohnM View Post
2) Allocate the cash into my existing portfolio allocation because not trying to time the market means not trying to time the market
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Old 01-26-2017, 11:30 AM   #7
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+1 for #2.
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Old 01-26-2017, 11:53 AM   #8
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You might look at sectors to find which are yet to participate in the rally.
+1

This, I would do. It requires one to be a stock picker, or at least a sector picker, in addition to being called a market timer, but that never scares me.

Examples of sectors that I overweight right now include biotechs and emerging markets.
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Old 01-26-2017, 12:25 PM   #9
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Quote:
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+1

This, I would do. It requires one to be a stock picker, or at least a sector picker, in addition to being called a market timer, but that never scares me.

Examples of sectors that I overweight right now include biotechs and emerging markets.
+2

Another sector I am overweight currently is energy, mainly through VDE but also a couple of individual stocks.
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Old 01-26-2017, 12:37 PM   #10
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Not a recommendation, but I'm doing nothing and letting it ride. Of course I've been doing that for the last up 2000 points so what do I know. I am in stocks, but below my desired/target allocation.
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Old 01-26-2017, 01:49 PM   #11
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Thanks everyone for your replies. I very much liked LOL's comment that given the market's general upward trend anyway we are generally near highs anyway. I will go forth with my option #2, though I might send out another thread at some point about the right low-cost bond fund to invest it.

Amazing group, as usual!
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Old 01-26-2017, 05:31 PM   #12
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I very much liked LOL's comment that given the market's general upward trend anyway we are generally near highs anyway.
While I probably would go with #2 as well, I kinda don't think you should base it on the "general upward trend" idea.

The PE10 averages about 16, and it's at 28.46 today. For reference, before the 1929 market crash the PE10 was about 30, and in the 1970's and 1980's, it was in the 10 range. I've convinced myself that altering my asset allocation based on PE10 isn't market timing, but really, it is, hehe!
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Old 01-26-2017, 10:10 PM   #13
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I'm pretty bearish right now, and have been increasing my cash position. The combination of very high valuations, low earnings growth, and potentially catastrophic policy ideas out there (trade war anyone?) has moved me from about 95% stocks to 75% stocks.

I guess 75% stocks isn't really bearish compared to most people's allocations though. I figure it is better to get my allocation to a more comfortable risk level at a market high than to wish I had after a big drop.
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Old 01-26-2017, 11:20 PM   #14
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OP - Certainly favors Spartan stuff.

I have recently bought some BSJJ , otherwise nothing jumps out at me as a screaming buy at this time.

Not that BSJJ is a screaming buy, but it seemed like a safe buy (as you get your investment back).
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Old 01-27-2017, 12:19 AM   #15
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I will tell you what I'm doing right now. I am still investing in the market. I am not moving any money around at all. Saving a little bit in case of a decline, and sitting tight. I am not feeling overly confident in the market right now.
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Old 01-27-2017, 06:48 AM   #16
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I'd go for number #2 but with a small twist: Consider phasing it in over a year or two.

Minimizes regret in case of downswing, and gets you moving.
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Old 01-27-2017, 01:19 PM   #17
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I go with #6. Put it into high-yield savings. Then break it down into a certain number of moves, and invest a set amount regularly. Me, I'd take 5-10K each month and spread it out into current funds to maintain the AA. You could accelerate or decelerate as you wish.
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Old 01-27-2017, 01:40 PM   #18
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I think I heard this since the 1980s. If the market is moving up, it is, by definition, at a record high. I'm in the "stay the course, think long-term" camp. I was in my 20s when the Crash of 1987 happened, and it taught me that "don't panic" was the best advice I ever received.
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Old 01-27-2017, 05:01 PM   #19
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I think I heard this since the 1980s. If the market is moving up, it is, by definition, at a record high. I'm in the "stay the course, think long-term" camp. I was in my 20s when the Crash of 1987 happened, and it taught me that "don't panic" was the best advice I ever received.

And the times that you don't hear it, the market is crashing and you don't buy because, well, the market is crashing.

I'd probably DCA over a year and call it good. I know that historically, lump sum is better, but I got burned by this in 2008. More important is defining the right equity/fixed income mix and then staying the course.
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Old 01-27-2017, 05:31 PM   #20
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Another vote for #2. An asset allocation approach (50/50 in my case) has helped me tremendously on the what to do question over the last many crises and market tops. There is always something. I don't do anything unless things get way out of order (10% bands in my case since I'm lazy and don't want to have to react to every minor wiggle)
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