Correction and Rebound

I missed it. That correction? happened between dates that I checked my portfolio. My balance a couple weeks after the correction was a little higher than the balance before.
 
I just retired in early August, so I will admit I was starting to get a little nervous. I had been laid off during the 08/09 market decline and was concerned it could be a repeat. Thankfully that wasn't the case. I didn't sell back then or during the recent "blip".


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I had to sell a bit to cover living expenses. Along with the drop I had a computer virus earlier in the month that made me nervous to login to Fido until I was sure it was resolved. That resulted in my cash in hand going to close to not covering expenses. It did show me that I do need to keep more cash in the AA than a 1 percent average for my comfort level and to keep some of that cash local.

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OK, I will admit to panicking somewhat. :eek: I thought I had to "do something". All that talk about the S and P and the moving 200 day average is what worked on me. Convinced that the bottom was dropping out, I sold SOME of my equities in one of my 401K's and moved the money into cash. It was at the very lowest day of the drop, of course, I think 10/15/2014.

Once I had the emotional catharsis of "doing something" in that 401K, I somehow allowed myself to "do nothing" with two other 401K's that I have. I left their allocations alone, and avoided losing any money in those. :)
 
John Galt III said:
OK, I will admit to panicking somewhat. :eek: I thought I had to "do something". All that talk about the S and P and the moving 200 day average is what worked on me. Convinced that the bottom was dropping out, I sold SOME of my equities in one of my 401K's and moved the money into cash. It was at the very lowest day of the drop, of course, I think 10/15/2014.

Once I had the emotional catharsis of "doing something" in that 401K, I somehow allowed myself to "do nothing" with two other 401K's that I have. I left their allocations alone, and avoided losing any money in those. :)
Click to expand...

I'm a tournament chess player and one of the fundamental ideas in chess improvement is to always review our games and identify what we could have done better so that the next time we don't repeat the same mistakes.

I think the same idea should be applied to any pursuit where one's decision making affects performance, EG managing our portfolios.

Kudos to you for doing that.
 
John Galt III said:
All that talk about the S and P and the moving 200 day average is what worked on me.
Click to expand...
If you had chanced upon Mark Hulbert's column before you sold, you may very well have treated the S&P500 falling below its 200 day moving average as an extremely strong buy signal. His column from October 14 indicates that since 1990 the market has trounced its average performance measured over the four and 13 week periods following a 200 day MA sell signal.

What breaking the 200-day moving average for stocks really means - MarketWatch

Another option, of course, is to treat all such signals as mere noise that doesn't help at all in making sound investment decisions.
 
John Galt III said:
OK, I will admit to panicking somewhat. :eek: I thought I had to "do something". All that talk about the S and P and the moving 200 day average is what worked on me. Convinced that the bottom was dropping out, I sold SOME of my equities in one of my 401K's and moved the money into cash. It was at the very lowest day of the drop, of course, I think 10/15/2014.

Once I had the emotional catharsis of "doing something" in that 401K, I somehow allowed myself to "do nothing" with two other 401K's that I have. I left their allocations alone, and avoided losing any money in those. :)
Click to expand...
Build a margin of confidence into the signal. For example, this chart shows VFINX with 2.5 SD built on either side of the 200SMA. If your plan specified such, you would not sell until NAV pierced the lower channel.
VFINX - SharpCharts Workbench - StockCharts.com
 
I just retired about 6 months ago. I realized that the bull market has been going on for 4-5 years, longer than the previous bull. I've been to at least 2 bad bear markets in the past. I knew the pain. My equity investment has gained a lot thru the years. I cannot afford to lose much of what I gained. Upon much study, I learned that the Schiller PE is 25, and the VIX is low. Warren Buffet's
assessment of Equity income/ GDP is 50% overvalued. Market goes into cycles, we all know that.
I sold my biggest gainers, which in realized gain is about 5 years of living expenses. It's nice to have the money right where I want it.
When do I know when to get back in.? I don't. What if it continue to go up. I'll wait. What if there is a major correction of more than 20%. Then, I am validated. I'll go in gradually on the upswing. I have been a buy an hold for 30 years. I know the market goes into cycles, but goes up. I just don't want to regret a big lost. This time, I'm a classic buy low and sell high.
 
Whenever people talk about technical analysis, my mind always goes back to --

Caro’s Roulette System #1
First, never bet simply red or black. Also don’t bet odd or even. These are equally poor, consistently losing wagers.
Second, don’t be suckered into betting zero or double zero, despite what some experts may suggest. This may seem like you’re betting with the house, but for technical reasons you are actually betting against the house — and you are taking the worst of it.
So, in order to negate the house advantage, you MUST stick to straight non-green number bets. All odd red numbers turn out to be bad choices, based on over two trillion computer trials. Don’t bet them.
All even black numbers fair poorly, and cannot be bet, for much the same reason, which I won’t explain here.
Let’s get straight to the money-saving advice. Any bet you decide to make MUST cover only even-red or odd-black numbers. There are no exceptions.
Finally, you need to be very disciplined in excluding the number 30 and the group of consecutive numbers that begins with 11 and continues clockwise through and including 14.
This system may seem mystical, but I take gambling quite seriously, and this works for me.
 
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