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-   -   Stay on the Sidelines? (http://www.early-retirement.org/forums/f44/stay-on-the-sidelines-92025.html)

ToneGod 05-18-2018 01:13 PM

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.

REWahoo 05-18-2018 01:20 PM

Since you are asking about how to time the market, whatever advice you are given is likely to be wrong - including this post. :laugh:

razztazz 05-18-2018 02:02 PM

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.

flintnational 05-18-2018 02:05 PM

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. :)

Aerides 05-18-2018 02:50 PM

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.

W2R 05-18-2018 03:16 PM

Quote:

Originally Posted by ToneGod (Post 2050511)
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

Red Badger 05-18-2018 03:26 PM

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.
Buy and hold, baby!! :dance:

calmloki 05-18-2018 03:31 PM

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!

Lsbcal 05-18-2018 04:43 PM

The U.S. leading index is fairly high now so I would buy in now.

See my thread in this forum for reasoning.

GrayHare 05-18-2018 05:02 PM

Quote:

Originally Posted by W2R (Post 2050593)
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.

HNL Bill 05-18-2018 05:06 PM

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!

UnrealizedPotential 05-18-2018 05:17 PM

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

Mark24609 05-18-2018 05:25 PM

My thought is to derisk your portfolio once you reach critical mass and then keep only 20% equities

joeea 05-18-2018 05:28 PM

Quote:

Originally Posted by ToneGod (Post 2050511)
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.)

97guns 05-18-2018 05:44 PM

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.

NYEXPAT 05-18-2018 10:35 PM

One word "PLASTICS"!

DrRoy 05-19-2018 03:45 AM

Quote:

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.

corn18 05-19-2018 04:40 AM

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.

pb4uski 05-19-2018 06:17 AM

Quote:

Originally Posted by ToneGod (Post 2050511)
.... 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.

ToneGod 05-19-2018 08:37 AM

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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