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jjquantz 07-10-2015 06:41 PM

I'm not a market timer, but...
 
As some of you may have read, we just replaced our AC and Furnace and we are also underwriting most of DD's wedding this summer. This will exhaust our cash cushion before the end of the year comes around with the usual refill. When I paid the AC bill yesterday, I remarked that the timing was perfect, I just hit the first day of the new billing cycle on my CC. So the question is:

If you have an known expense due in 55 days and need to liquidate some of your equity positions to pay it, when would you sell?

NW-Bound 07-10-2015 07:13 PM

A poll about something very applicable to my own situation. My bill is more than $12K, and I have 6 months to get the cash. As a self-proclaimed market timer, of course I vote accordingly.

PS. The truth is if the market keeps on tanking, I will more likely dip into my cash hoard, ie. I-bonds, rather than be selling stock low.

Walt34 07-10-2015 07:24 PM

In that situation, with the recent "sort of" settlement with Greece, I'd bet on market going up at least for a short time and sell in a few weeks.

But for myself I'd have raised the cash 6+ months ago for the wedding and had enough in the "stuff happens" fund for the A/C.

FIREd 07-10-2015 07:30 PM

I'm not a market timer, but...
 
The third option sounds good on paper, but the "right time" will only be evident in hindsight. If I knew that I needed the money for sure in 55 days, I'd sell now.

jjquantz 07-10-2015 08:11 PM

Quote:

Originally Posted by Walt34 (Post 1612889)
But for myself I'd have raised the cash 6+ months ago for the wedding and had enough in the "stuff happens" fund for the A/C.

Yeah, that was the original plan. With DW still working I was playing the "stuff happens" fund a little too close to the vest figuring that "most stuff" could have been handled through cash flow until the next rebalance at the first of the year. Wedding costs have needed to be fronted to the kids a little earlier than planned, DW's take home pay was notched down a bit in adjusting withholding for taxes, and that was a result of the tax bill in April being just a little larger than expected. With my lumpy part time gig income, it's actually more that the timing was wrong rather than the income not being there over the course of the year. I could, God forbid, pay interest on the CC for a couple of months until things balance out.:nonono:

I figure it's all part of figuring out the details of the cash flow situation in my first year of retirement.

The new plan is that the equity cash out will also fill up the "stuff happens" bucket to where I should have had it.

Next year will be better with one year of experience. ;D

jetpack 07-10-2015 08:20 PM

Id try to plan better so I don't need to sell things you want. To get more cash, you can turn off auto reinvest on mutual funds. If I had to sell stuff, I'd pick those with loses (depending on tax situation).


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Walt34 07-10-2015 08:24 PM

Quote:

Originally Posted by jjquantz (Post 1612904)
Next year will be better with one year of experience. ;D

Understood, I had that experience myself. Did you know that brand new houses do not come with curtains or blinds on any of the windows?:facepalm:

LOL! 07-10-2015 09:45 PM

We pay for college from the portfolio. There is no doubt that we cash in something about 4 days before payment is due. That gives 3 days to settle the trade and one day to ACH transfer the money into checking.

And by "payment is due" that means paying off the credit card bill since we charge college expenses to a 2% cashback card (and the college charges no extra fees for that as well), so that reduces college expenses by 2%.

MRG 07-10-2015 09:52 PM

Quote:

Originally Posted by Walt34 (Post 1612906)
Understood, I had that experience myself. Did you know that brand new houses do not come with curtains or blinds on any of the windows?:facepalm:

What about yard, landscaping, storm doors, and all the rest of the missing stuff? Almost glad I was still w*rking during that time.

Texas Proud 07-10-2015 10:30 PM

Quote:

Originally Posted by Walt34 (Post 1612889)

But for myself I'd have raised the cash 6+ months ago for the wedding and had enough in the "stuff happens" fund for the A/C.


+whatever the next number is....

audreyh1 07-11-2015 05:51 AM

None of the above.

I don't like to sell assets from the retirement fund during the year to pay for current expenses. I take a withdrawal each Jan which will cover the whole year, and I have cash set aside for those one off items that exceed the normal budget plus unexpected expenses. I don't have to worry about cash flow in the short term.

As for selling stuff, sell whatever is up the most YTD assuming you were rebalanced at the start of the year. As for when, Lord only knows. It really doesn't matter.

Do you have to sell specifically from equities?

MichaelB 07-11-2015 07:05 AM

I dislike selling equities during the year if not part of a reallocation scheme and would take from fixed income. Will the equity sale create an unplanned tax liability?

jebmke 07-11-2015 08:07 AM

I sell monthly for the next month. Whichever is out of balance compared to target equity/fixed.

hesperus 07-11-2015 08:35 AM

None of the above.
We keep a large cash cushion so we don't have to sell equities, except for rebalancing.

ERD50 07-11-2015 08:53 AM

Quote:

Originally Posted by audreyh1 (Post 1612957)
None of the above.

I don't like to sell assets from the retirement fund during the year to pay for current expenses. I take a withdrawal each Jan ....

Quote:

Originally Posted by MichaelB (Post 1612963)
I dislike selling equities during the year ...

What is special about a specific calendar date?


Since I don't know which way the market will go over the course of any given year, it seems to me it makes no difference when I decide to sell. Only hindsight will tell me that.

I didn't vote in the poll, my selection would have been, whenever.

I don't know if the market will be higher "Immediately" or "At the last minute", so I have no basis to pick between them. And if I "watch the markets and wait for the right time", how do I know what the "right time" is?

"I'm not a market timer, but..." really?

I just don't think you can time this over a 55 day period. Now, if you were talking about some permanent sell off (I guess this counts), and never planned to adjust your AA back to the previous level, I think something like the Schiller PE10 could provide some guidance as to the relative level of the stock market, and probably give some clues as to relatively good/bad times to sell. But that is a long term indicator.


edit/add: Hah! I just looked at the poll results, we have a bunch (largest group so far) of Dirty Market Timers here! Who knew! :)

-ERD50

Sunset 07-11-2015 03:32 PM

Over a 55 day period, you are pretty well helpless. But if I know I'll need a big chunk of cash say 15K or more in about a year, I'll watch the market carefully.

If its really low... I'll wait... if it goes up near its 52 wk high, I'll sell and put the cash in an interest bearing account.

Yes it's market timing, but I do that when I shop at the grocery store as well, I will refuse to buy chicken if the price jumps to $10/lb , but I'll easily buy it at $1/lb.

Everyone market times in various ways on lots of things, otherwise they overpay often.

I do feel like a Dirty Old Market Timer :D

NW-Bound 07-11-2015 03:44 PM

Nah, I attempt to time the market all the time, and feel whistle clean as long as I take a shower daily.

Texas Proud 07-11-2015 03:50 PM

Quote:

Originally Posted by ERD50 (Post 1612991)


edit/add: Hah! I just looked at the poll results, we have a bunch (largest group so far) of Dirty Market Timers here! Who knew! :)

-ERD50


Well, as an example I sold a bit in the past week... I thought I had put in my orders to sell last Friday, but missed a couple by seconds... so I sold on the big down Monday...

If I had known, I would not have sold on Monday.... hoping that it was a short term drop and I would get that extra 1 or 2%....

The timing cost me a couple hundred bucks, so not any big deal.... but yea, I would not knowingly have sold that day...

audreyh1 07-11-2015 06:24 PM

Quote:

Originally Posted by ERD50 (Post 1612991)
What is special about a specific calendar date?

Since I don't know which way the market will go over the course of any given year, it seems to me it makes no difference when I decide to sell. Only hindsight will tell me that.

-ERD50

Purely logistics. Early Jan is a good time for me to withdraw and rebalance because I have a large number of MF distributions by then, and it's the start of a new tax year and a new budget year. So that date is convenient for managing my portfolio and cash flow. All my calcs - withdrawal, AA, rebalancing - are based on the Dec 31 portfolio value.

ERD50 07-11-2015 07:00 PM

Quote:

Originally Posted by audreyh1 (Post 1613212)
Purely logistics. Early Jan is a good time for me to withdraw and rebalance because I have a large number of MF distributions by then, and it's the start of a new tax year and a new budget year. So that date is convenient for managing my portfolio and cash flow. All my calcs - withdrawal, AA, rebalancing - are based on the Dec 31 portfolio value.

Oh, I understand the inconvenience/logistics of it. Hey, ya gotta do it sometime, Jan sounds as good a time as any. You've got your year-end statements, you probably can't do much on taxes yet, so why not?

I just didn't see how that fit in with the OP question, like if he didn't do it in Jan he shouldn't now, or what?

My thought process is, on average I expect the markets to go up, so I might as well wait until my cash buffer is low before refilling. But lots of other ways work as well.

-ERD50


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