Reduced Stock holdings to 25% today from 50%

[Ed_The_Gypsy]

quoting myself:

I am planning to retire at the end of Feb (end of Dec, if there are problems).

There have been changes. The project was cancelled (while we are on annual leave ). We have to be out of the country by 15 Jan. We will have 10 calendar days to vacate when we get back.

We are also taking out a new HELOC on our almost-paid off mortgage while I am still working, to preserve some options.

We paid off the house yesterday.

Better HELOC rates, better service with Key Bank. For us. YMMV.

 

[NW-Bound]

The Russell 2000 index closed yesterday almost at the high of the year in 2014. I would suspect that the small caps did well overall.

Well, the Russell 2000 was up 6.07% in 2014, which is OK I guess, but the S&P was up 14.7%.

 

[audreyh1]

The Russell 2000 index closed yesterday almost at the high of the year in 2014. I would suspect that the small caps did well overall.

My small cap funds did magically recover in December. I was all set to add funds to them in rebalancing, and all of a sudden it was no longer required!

 

[audreyh1]

But their E's have not been growing this year, hence their P's. They trailed the S&P badly this year.

Probably an investment opportunity. Some years small caps outperform, others large caps do.

 

[LOL!]

Well, the Russell 2000 was up 6.07% in 2014, which is OK I guess, but the S&P was up 14.7%.

Small-cap value did well though with a 10.4% return.
Small-cap growth went back to where it belongs with a return of 4.0%.

 

[Running_Man]

Back to 25% stocks as of 1:00 pm today with S&P500 @ 1986. Falling new orders, the new record high in average PE stock and John Hussman & James Grant writings have convinced me that FED will not be initiating an inflationary expansion which would mean a higher stock holding will be needed, instead likely to be resolved as a debt problem which means sinking stock prices. This sale is in my IRA so no tax implications but will get in if S&P manages to get to new high.

At this point is just barely in red for the year (less than 1%)

 

[audreyh1]

Does that mean you sold the position you had bought when the market crossed 2020 late last year? Or had you already sold prior to this week?

 

[Running_Man]

Does that mean you sold the position you had bought when the market crossed 2020 late last year? Or had you already sold prior to this week?

I sold not the exact position I bought at 2020 because I had some individual stocks I had sold and my individual stock allocation was already lower than I normally run so I have kept some index funds, but for practical purposes yes I sold @ 1986 what I had bought back @ 2020, less dividends about a 1% loss.

 

[Farknight]

Back to 25% stocks as of 1:00 pm today with S&P500 @ 1986. Falling new orders, the new record high in average PE stock and John Hussman & James Grant writings have convinced me that FED will not be initiating an inflationary expansion which would mean a higher stock holding will be needed, instead likely to be resolved as a debt problem which means sinking stock prices. This sale is in my IRA so no tax implications but will get in if S&P manages to get to new high.

At this point is just barely in red for the year (less than 1%)

I have been holding DW and my 457 portfolios at an 80/20 mix with the guaranteed insurance value fund the 80%. Slow and steady growth and barely a twinkle due to the late market volatility.

 

[Corporateburnout]

An article posted on Fidelity originally from CNN Money on moves for a volatile market.

The first move about gauging the actual impact on someone portfolio is exactly what I did before I established my AA a couple of years before I retired. If the market drops to the levels of the 2008/2009 crash I was willing to accept a 25% loss in portfolio value with an AA of 50/50.

https://www.fidelity.com/insights/investing-ideas/3-moves-in-a-crazy-market

 

[Running_Man]

Hussman Funds - Weekly Market Comment: If You Need To Reduce Risk, Do It Now - August 31, 2015

John Hussman charting why expected 10 year stock returns are zero.

 

[aja8888]

Hussman Funds - Weekly Market Comment: If You Need To Reduce Risk, Do It Now - August 31, 2015

John Hussman charting why expected 10 year stock returns are zero.

Thanks.

 

[Dawg52]

Hussman Funds - Weekly Market Comment: If You Need To Reduce Risk, Do It Now - August 31, 2015

John Hussman charting why expected 10 year stock returns are zero.

He's predicting a 40-45% decline in stocks over the next 18 months. If you believe him, why not go all cash? I'm not suggesting he's wrong........just asking.

 

[audreyh1]

Isn't Hussman pretty much a perma bear managing funds that have performed very poorly - that is negative returns - over the last 3, 5 and 10 years?

 

[NW-Bound]

I do not follow any guru and only know of Hussman here.

But even if he's been wrong, what if he finally turns out right? Just sayin'...

 

[audreyh1]

I do not follow any guru and only know of Hussman here.

But even if he's been wrong, what if he finally turns out right? Just sayin'...

Sure - right every bear market.

Just needs to be taken with a grain of salt - Swedroe: Why Care What Hussman Forecasts? | ETF.com

 

[NW-Bound]

Did he say "Buy, buy, buy" after the market reached bottom? If so, he would not be all wrong.

 

[Dawg52]

Hussman Funds - The Funds

Returns have been negative over the last 10 years. Maybe he gets it right over the next 10........ or maybe not.

 

[NW-Bound]

Seriously, even Bogle recently says that the market is fully valued. If it goes up, it would not be much. And so, the market may just bounce around +-10% as it often does.

Maybe it can even drop 20% if there's something cataclysmic happening. But does anyone have a plausible reason to think a 50% drop can happen, the same magnitude as the RE bubble in 2008?

Note that in 2007, I happened to read a few pundits who said that the financial shenanigan was bad, really bad, but I did not believe it. To the people who knew, it was not a black swan. So, what is the potential problem for a 50% market drop now?

 

[audreyh1]

Did he say "Buy, buy, buy" after the market reached bottom? If so, he would not be all wrong.

Well, he didn't buy in his funds in March of 2009 from what I have read. But I just hear bits and pieces now and then.

Forecasters may be very knowledgeable and all the arguments extremely logical, but it still doesn't mean their predictions are going to come to pass when they say they will and the way they say they will.

 

[NW-Bound]

If the guy keeps on selling, after all these years what does he have left to sell?

Anyway, as for myself I think the upside to the market is more limited now at this valuation. Last month, I reduced my stock AA from 70% to 60%. I am looking to reduce it further to 50%. Then, I will tighten up my buy/sell threshold trying to make a bit more out of a flat market, and/or selling covered calls or puts to enhance the return a bitty bit.

That's the current plan anyway, and I will change my mind if something shocking happens.

 

[papadad111]

The entire year has been a flat market and once again we are in that same trading range after the brief downdraft ...

Could this be the coming "double dip" of the Great Recession that pundits suspected could happen back in 2011 or 2012? We certainly have not hit escape velocity from 2008 in terms of overall economy (despite the market highs earlier this year). It happened in 1932 and 1933 as the fed began to raise rates post market crash of '29. It could happen again

Then again - a U.S. election is coming, China will find her footing, the euro zone is awash in QE money, emerging markets are devaluing currency to be competitive, global inflation is very low, and the dividend yield is higher than the yield on 10 year treasuries!!!!

I was mostly cash in 2007 and 2008. It felt good til around 2011 when, by then, i had stayed in cash and missed the solid bull run of more than a couple years. Doh!

 

[audreyh1]

Too many years have gone by for a double dip, and markets reached new all-time highs and climbed even higher. The economy has recovered in several key areas even if it is not as robust as 90s or early 2000s. If we enter a recession soon - it will be a new and separate one.

 

[Running_Man]

He's predicting a 40-45% decline in stocks over the next 18 months. If you believe him, why not go all cash? I'm not suggesting he's wrong........just asking.

Because while I believe there is a likelihood that there will be a large decline in stocks there can never be certainty in a forecast like that, it is also possible that a large inflation could take hold and stocks would protect value better in that circumstance. In 2007 I was a whole lot more convinced and was at zero through most of 2007 & 2008 but that was not something I plan on doing in the future. I continue to believe in what Benjamin Graham sad that in analyzing markets one should develop a comfort on what they believe value to be and usually be 50/50 and if feeling values are very good go to 75/25 and if very poor go to 25/75.

25 percent for me is as low as I will ever go from now on and here I am at that level.

 

[Running_Man]

Isn't Hussman pretty much a perma bear managing funds that have performed very poorly - that is negative returns - over the last 3, 5 and 10 years?

Yes, those are valid criticism of him but I was not advocating for investing in his funds nor whether his advice over a long time is correct or not. That is irrelevant to me, the question I have is does his idea at present hold merit to me in view of everything else I am seeing. His article was not significantly different than Bogle's view that the market is fully valued. Yes the market can go up another 100% from here, but is the likelihood of gain greater than the risk of decline?

I advocate that individuals should stick with what they believe, but most individuals I have noticed tend to believe buy and hold and the tops and sell to a more comfortable percentage at the bottoms if their million dollar retirement fund has fallen to 600K. That is surely human nature and not the case for many on this site, who are pretty confident in their investments.

The market came back up close to the high giving me a chance to eveluate the odds and I prefer to watch for a while. I am willing to let Larry Swedroe tell me I told you so, but even if I turn out to be right he will still claim, just as Hussman claims today that he is still right.

Unless of course he turns into Bernstein and changes to a 20 year cash guy, the biggest example of an indexer as mentioned above as I have ever seen.