Forget Balancing - sold all my 401k equities funds and put it in the safe short term

[LOL!]

rayinpenn forgot to tell us that his 401(k) is only 2% of his total assets, so that selling all in it don't mean thing.

I don't think I'll sell any equities until at least 3 people say they are switching to 100% equities in their 401(k)s.

 

[marko]

One time I thought about that but then realized I still might live another 50 years. Market will probably double 5 more times in my life.

Someone once posted here that if you stand back a few feet from the Dow's 100 year historic graph, it's a pretty straight line in the upward direction.

 

[foxfirev5]

This thread is another reason why I'm capping my equity stake at around 45%. In this market the dividend w/d's (currently a whopping 1.65% for TSM) barely make a dent. If it loses 50% I'm still OK. If it gains 50% and I'm only at 40% equity due to taking gains I'm still good.
I can't use the sleep well at night test since I slept well when I was broke and I still sleep well.

 

[Major Tom]

rayinpenn - you must do whatever it is that makes you feel comfortable and helps you sleep at night, but I hope you have thought out what you are going to do in the long term now that all your equity money is out of the 401K. Without a solid plan, the stress that caused you to sell could just be stretched out over a longer period as you try to decide what to do next - as in, when do you get back in?

Over the course of the years, my balance bobbed up and down, but I didn't pay it too much attention. When the next inevitable correction (dip, precipitous dive?) comes, I'll just mentally readjust to a point a few years ago,and realize that I still have more money than I did at that point. But mostly, I won't think about my money that much - I like to think about it more when the balance is going up

If this helps you sleep at night, then that is the most important thing.


EDIT - I just saw this -

rayinpenn forgot to tell us that his 401(k) is only 2% of his total assets, so that selling all in it don't mean thing.

Now I feel silly, because it doesn't matter too much what you do with it. It's not enough to significantly affect your long term outlook.

 

[Which Roger]

I’ve been investing so long it is more money then this guy from very humble beginnings could have every imagined.

If what you mean by this is "I've more than won the game", i.e., you have more money that you would ever possibly need, then getting out is a perfectly rational strategy.

 

[exnavynuke]

I don’t believe in trying to time the Market

... but I'm trying to time the market could have finished your post. I'd wish you luck, but I'm hoping the market continues to climb (overall) until I'm long-dead and you're betting it's about to fall.

I'm guessing you don't have a defined strategy/timing for getting back into the market either?

 

[Dawg52]

I see no problem with your plan. If you sleep better then it's the right thing for you. At the end of the day that matters a lot! If it were me I might consider just a less aggressive portfolio. It doesn't have to be all or nothing.

That's been my thinking for a while now. I've missed out as compared to many, but so has someone with a 50/50 blend as compared to someone all stocks. The problem is finding the right mix for longevity and taking care of the pucker factor. The old pucker can get in the way.

 

[NW-Bound]

I am going to do a rebalance. From high-flying semiconductor stocks to Powerball tickets.

Just kidding.

But I have written more out-of-the-money call option contracts. If the stocks keep on rising and they buy these from me, it's OK. Stock AA keeps on rising, and it's at 73% now. Maybe I set the strike price too high, and the options keep expiring worthless.

 

[REWahoo]

I've missed out as compared to many, but so has someone with a 50/50 blend as compared to someone all stocks. The problem is finding the right mix for longevity and taking care of the pucker factor. The old pucker can get in the way.

+1

The Market Unpleasantness of 08/09 educated me on where I needed to be to manage the pucker factor. For me, an AA in the 40-45/60-55 range does the trick and keeps the urge to "sell now before the crash" at a non-lethal level. Thanks to the Wellington and Wellesley management team and crack computer staff, I can maintain that AA range by doing what I do best - nothing.

 

[HadEnuff]

+1

The Market Unpleasantness of 08/09 educated me on where I needed to be to manage the pucker factor. For me, an AA in the 40-45/60-55 range does the trick and keeps the urge to "sell now before the crash" at a non-lethal level. Thanks to the Wellington and Wellesley management team and crack computer staff, I can maintain that AA range by doing what I do best - nothing.

I agree. I have missed a lot of the BIG returns others brag about, because I have kept my AA around 45-55, but thankfully, that 45 has boosted my NW. I am 64, and I believe I have enough to last my days. If the market continues it's run-up, the 45% will be more than enough to keep me in clover, and if/when it tanks, I'll have enough money handy to reset my AA, maybe even a tad higher.

I am an habitual checker of my balances, which is great fun while the market soars, however, I have to try to keep reminding myself that number could be 80% smaller tomorrow, and that's OK...I'll still be OK

 

[easysurfer]

I agree. I have missed a lot of the BIG returns others brag about, because I have kept my AA around 45-55, but thankfully, that 45 has boosted my NW. I am 64, and I believe I have enough to last my days. If the market continues it's run-up, the 45% will be more than enough to keep me in clover, and if/when it tanks, I'll have enough money handy to reset my AA, maybe even a tad higher.

I am an habitual checker of my balances, which is great fun while the market soars, however, I have to try to keep reminding myself that number could be 80% smaller tomorrow, and that's OK...I'll still be OK

When the market soars, I check my balances. When the market tanks, I don't panic and check the number of shares.

 

[audreyh1]

I prefer to hedge my bets by staying diversified. I can’t see getting completely out of any major asset class. A small reduction maybe.

Do you have any taxable investments in equities? Or are you completely out.

 

[Ready]

I keep my allocation at 55% equities, which is probably far more conservative than I need to be but it allows me to sleep at night. Well, actually I'm an insomniac, so I don't sleep anyway, but it's not because of the stock market.

I do worry about how much the market has run up and the inevitable correction, but I remind myself that it's just part of the risks associated with being in the markets and trying to time the swings is virtually guaranteed to fail.

 

[Lsbcal]

Just sold stock yesterday. A whole 1% of portfolio to rebalance back to 50/50. I had gone from 60/40 in November to 50/50.

Bonds are no bargain but won't loose as much as equities should we have a bad period.

 

[Big_Hitter]

Bonds are no bargain but won't loose as much as equities should we have a bad period.

I don't think anything is a bargain right now. That's why capital market expectations are so low.

 

[redduck]

.

Ray, instead of market-timing when you get nervous, perhaps you can just tuck yourself in under your blanket.

 

[CaptTom]

Ohhhh you will get a lot of backlash here for doing that. Market timing, not keeping up with inflation and all the rest.

Call it market timing, but it makes perfect sense to me. If you've enjoyed the ride up, and have more now than you planned and hoped for, why not take your gains and sit out the next hand?

Or, to put it another way, it sounds to me like the OP has won the game and decided not to play anymore.

I'm not there yet (still more greed than fear) but I can relate. And I did use the excuse of taking out some of my unexpected gains when I rebalanced recently to be a little more conservative.

 

[street]

One time I thought about that but then realized I still might live another 50 years. Market will probably double 5 more times in my life.

Well , I won't live another 50 years but hope to have 30 to 35. I see no need to sell stocks now or anytime if you don't need the money. If you need it to live then that is a horse of a different color.

Each one has their own risk levels and that is great and should do what they feel is right for them.

 

[W2R]

[CRABBY OLD LADY]
We all know how to make money in either an "up" market, or a "down" market. Remember those "blue light specials" back in 2008? Some of our members made a killing. If the market crashes again, most of us will end up wealthier than if it didn't.

In 2008, I truly felt absolutely terrible for those who were posting that they had lost everything, had to go back to work, were selling low, and so on. It really affected me, to the point of losing sleep worrying about all of us. But I wonder - - perhaps if we had another crash now, I'd be not only less worried, but also less sympathetic.

C'mon, members, we already learned those hard lessons and we know what to do and what not to do. There is absolutely no reason to sell everything today and miss out on part of the market surge, or to sell everything low later on and lock in your losses. Just go play golf or something and things will all work out in the long run.
[/CRABBY OLD LADY]

 

[jollystomper]

I don't have any problem with rayinpenn's choice. I have thought about it with my 401K. I have the luxury of having a stable value fund in it that has never returned less than 3%. With a projected SWR of around 2.5%, moving my entire 401K to that would generate 70% of our SWR (and over 100% of it once SS starts in 3-5 years). The interest and dividends from my non-401K investments would cover the balance of the SWR before SS. So I can understand the temptation of stepping out of the market.

 

[Texas Proud]

Call it market timing, but it makes perfect sense to me. If you've enjoyed the ride up, and have more now than you planned and hoped for, why not take your gains and sit out the next hand?

Or, to put it another way, it sounds to me like the OP has won the game and decided not to play anymore.

I'm not there yet (still more greed than fear) but I can relate. And I did use the excuse of taking out some of my unexpected gains when I rebalanced recently to be a little more conservative.

Since his post did not say anything like this, I will go with market timing...

You do have a point though and I would agree with anybody doing what you said if they have 'won'....

 

[43210]

I don’t believe in trying to time the Market and I’ll probably miss gains but the unfounded ‘Market Exuberance’ got hold of me; Yesterday I sold all my 401k equity funds (S&P, Large Cap, International).

rayinpenn forgot to tell us that his 401(k) is only 2% of his total assets, so that selling all in it don't mean thing.)

Is this true? I'm annoyed to read this far, only to find it's much ado about nothing.

 

[Midpack]

"Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves." Peter Lynch.

+1000.

If you just stayed the course in 1987, 2000 and 2008-2009, you did very well. If that doesn’t discredit market timing, I don’t know what will.

Optional: If you want good returns, the market has to make new highs over and over, periodic pullbacks are part of the drill and have been for 140+ years (US). Every time people have said “this time is different,” they’ve been wrong every single time for 140+ years. When I see folks post about being nervous about new highs, I always scratch my head...

Getting out is easy, getting back in before you’ve missed the train is where people go wrong. I suspect few of us can cite an example of anyone you know who’s timed out and back in well once, much less more than once. Even the occasional pro who seems to have been prescient never fails to miss the next downturn, remember Elaine Garzarelli? Everyone I know who has panic sold at a high, high P/E or on the way down, got creamed trying to get back in, not to mention the tax losses and commissions.

Unless you’re never going back to equities - if you’re thinking about bailing, just think long and hard about how you’ll get back in FIRST.

 

[easysurfer]

A good market crash separates those who are true buy and hold investors vs those who think they are .

 

[Mdlerth]

I do worry about how much the market has run up and the inevitable correction

I see this sentiment here a lot, and it begs the question: Would we all feel better if the market had spent the past year or two just running in place and going nowhere? (FWIW, DJIA hovered around 16,000 in Jan 2016).