Would selling right now be such a poor decision?

[redduck]

The photo is not relevant to the reply.

I think they were teasing you. In your original post, you referred to a 3rd person.

That I did. I need to pay closer attention.

 

[NW-Bound]

Well, if your mind wanders off like that, it may be good as it keeps you from selling at the wrong time.

But then, who can say what is the wrong or right time with the market going crazy like this? The S&P closed at 2620 today. It was at this level on Nov 29, 2017, two months ago. Someone said he rebalanced at that level. If you rebalance late, that makes it bad?

 

[NW-Bound]

Here's some more distraction for you. With soothing music too.

 

[ERD50]

The mistake I made in 2008-2009 was not having several years of expenses in cash like vehicles so I did end up selling a small amount really really low . ...

I keep near zero cash, but I did check my records recently, and I was buying stocks (selling bonds) near the bottom. Were you 100% equities? Even the divs from equities would provide ~ 2%. Shouldn't be any need to sell much of anything.

Duck, you could always justify a sale by stating you are "rebalancing" into cash.

Like in another recent thread, if it is a permanent change to a lower AA, that's different. If it's not, it is market timing.

Here's some more distraction for you. With soothing music too.

Well thank you! In some circles, it seems like Diana Krall "get's no respect". Like if you are pretty, and show it off, you can't be a serious musician? I'm quite discriminating in my music listening, and I thought that maybe the 'pretty' was a gimmick, but I've listened closely, and I think she's a great and diverse player, and I love her voice. And photogenic to boot. What's not to like?

-ERD50

 

[sengsational]

I have been thinking about the absolute need for "a hard and fast rule" about getting back into the market. The only thing I could come up with is to go back into the market on a pre-determined date no matter what was going on at the time (e.g. putting whatever money I pulled out of the market and then putting it back April 24, 2018). That, and having a 50/40/10 allocation.

Any other ideas about actionable hard and fast rules that are easy to follow through on?

What I was thinking when I said that was a specific PE10 ratio. There are plenty of people that say it's different this time. I'm not so sure. If you searched "Rock Breaks Scissors" you might find a thread here that talks about how (in hindsight) you could have beat a buy and hold guy if you made three round trips in and out of equities in 100 years or some such thing. That's why I said you might never get back in.

 

[Dash man]

Don’t sell out of fear. But sell if you’ve got a rational reason to do so. I have a couple of stocks I plan on selling next week after they go ex-dividend because I can harvest a tax loss to offset a fifty five thousand capital gain we took out a month ago. I’ll either reinvest in different stocks, hold off until the wash sale date passes and rebuy, or keep the money in cash for a while. No need to make a rushed decision in a volatile market.

 

[copyright1997reloaded]

Well thank you! In some circles, it seems like Diana Krall "get's no respect". Like if you are pretty, and show it off, you can't be a serious musician? I'm quite discriminating in my music listening, and I thought that maybe the 'pretty' was a gimmick, but I've listened closely, and I think she's a great and diverse player, and I love her voice. And photogenic to boot. What's not to like?

-ERD50

Saw her in concert sometime in the late 90's/early 2000's. Very nice show, great voice.

 

[dallas27]

Selling is stupid. If you think you know the market is going to fall, buy a put.

 

[flintnational]

I try and determine if my reasons for wanting to make portfolio changes are for emotional or logical reasons. I tend to follow through on the logical reasons and veto the emotional decisions. FWIW, logic really doesn't care what the market did yesterday or last week. And, about 99% of the time my reasons are emotional. Just sayin.

 

[NW-Bound]

Well thank you! In some circles, it seems like Diana Krall "get's no respect". Like if you are pretty, and show it off, you can't be a serious musician? I'm quite discriminating in my music listening, and I thought that maybe the 'pretty' was a gimmick, but I've listened closely, and I think she's a great and diverse player, and I love her voice. And photogenic to boot. What's not to like?

You are welcome.

I do not analyze the music that I hear. Some I know I like, and that is enough. Yes, I heard Diana Krall on CD before I knew what she looked like.

However, there's one thing. Songs that I like, I search out different singers covering them to see different styles of interpretation. And because I pay attention to the lyrics, I spotted a difference between Krall's and Bennett's versions.

Krall:

You laugh tonight and cry tomorrow
When you behold your shattered dreams​

Bennett:

You laugh tonight and cry tomorrow
When you behold your shattered schemes​

In my book, a singer cannot change the lyrics if he respects the songwriter. So, I searched for more renditions, and heard Sting and Nat King Cole sing "schemes". In all likelihood, this points to Krall's sloppiness.

 

[RenoJay]

Selling now would be roughly equivalent to selling in November 2017 on the way up. If you could have justified it then as taking some profits, it’s the same story now.

 

[limeyx]

I have been thinking about the absolute need for "a hard and fast rule" about getting back into the market. The only thing I could come up with is to go back into the market on a pre-determined date no matter what was going on at the time (e.g. putting whatever money I pulled out of the market and then putting it back April 24, 2018). That, and having a 50/40/10 allocation.

Any other ideas about actionable hard and fast rules that are easy to follow through on?

All you have to do is find the lowest point of the market and buy back in (after selling at the top, or nearly so) ....

 

[Meadbh]

I think this is good advice.

Andrew Coyne: Why are stock markets falling? No one knows. What should you do? Nothing | National Post

 

[DrRoy]

Selling is not bad if it was part of your plan and not a market drop induced decision.

+1. Perhaps you do not have an AA that you are comfortable with. Try reading "Your Money and Your Brain" by Jason Zweig.

 

[joeea]

I do appreciate your suggestion about "going with whatever is right for you" but regarding finances, I've never been able to figure that out.

That is rather telling.

You may wish to engage a financial professional for a few sessions to help you come up with a viable financial plan that you could stick to.

A few hours of a CFP's time might be money well spent, rather than relying on what works for a bunch of random folks on the interwebs.

 

[joeea]

If you think you know the market is going to fall, buy a put.

If you think you know the market is going to fall, think again.

 

[mrfeh]

Yep.

That's not a good reason to sell.

 

[OldShooter]

... Any other ideas about actionable hard and fast rules that are easy to follow through on?

" ... there is always a well-known solution to every human problem — neat, plausible, and wrong." H. L Mencken 1917

 

[NW-Bound]

Any other ideas about actionable hard and fast rules that are easy to follow through on?

" ... there is always a well-known solution to every human problem — neat, plausible, and wrong." H. L Mencken 1917

Maintain constant AA and rebalance at beginning of year? Sorry, but I could not help noticing the irony.

If I posted the above on another Web site, they would ban me (I visited there once or twice, a long time ago, did not register). Even here, I just made myself more of a pariah.

 

[GravitySucks]

Duck,
Are you thinking of changing your AA as you found it didn't meet your risk tolerance, plan to buy back in low, fund living expenses, or trade the BA for another asset?
2015 and 2016 tested my risk tolerance and my AA failed. I went from 80/20, to 70/30, now at 60/40. When my AA didn't meet my true risk tolerance I wasn't happy. The stress was not worth the extra possible earnings. If I'd stayed at the 80/20 the portfolio would have been much better off by now but those two little bumps kept me from sleeping well. Not worth the price!
I wouldn't feel bad about selling a single stock at this point. I rebalanced frequently last year and at least twice was before the point where the market is now so really left some money on the table, but looking at the bond ladder today and realizing the equities market alone doesn't control my fate was worth the few buck foregone.
I would not sell if you figure you'll buy back as soon as it goes low. I'm not that smart.

 

[Out of Steam]

With retirement under two years away, I'm trying to come up with a few defensive moves without over-reacting.

I rebalanced my main retirement account from just over 50% stock to just under 50% in early January.

We're also planning to put away about $25K in non-retirement accounts in the next 18 months so as not to have to pull from retirement accounts for transition expenses at retirement. This will be for moving at retirement, and bridging the 6 months until my wife meets the 59 1/2 age test for withdrawing from her accounts. Not enough time to bother with SEPP.

 

[OldShooter]

Maintain constant AA and rebalance at beginning of year? Sorry, but I could not help noticing the irony.

If I posted the above on another Web site, they would ban me (I visited there once or twice, a long time ago, did not register). Even here, I just made myself more of a pariah.

Not sure what you're spun up about. The context of the OP's question is clear in his post. He's talking specifically about a rule for buying back in. IMO Mencken's observation applies:

I have been thinking about the absolute need for "a hard and fast rule" about getting back into the market. The only thing I could come up with is to go back into the market on a pre-determined date no matter what was going on at the time (e.g. putting whatever money I pulled out of the market and then putting it back April 24, 2018). That, and having a 50/40/10 allocation.

Any other ideas about actionable hard and fast rules that are easy to follow through on?

But if you want to talk about rules like "Maintain constant AA and rebalance at beginning of year?" they are neither right nor wrong, really. They are never going to be right in retrospect because they will never consistently maximize total return. But they are never really wrong, either, because they are useful in contemplation of a totally uncertain future. Really they are not rules at all, rather they are sort of aphorism.

 

[97guns]

They only thing you should be concerned with in retirement is having your finances set so you would never have to work again, if your NW is in stock and it takes a huge hit would that cause you to go back to work?

 

[easysurfer]

Not sure what you're spun up about. The context of the OP's question is clear in his post. He's talking specifically about a rule for buying back in. IMO Mencken's observation applies:



But if you want to talk about rules like "Maintain constant AA and rebalance at beginning of year?" they are neither right nor wrong, really. They are never going to be right in retrospect because they will never consistently maximize total return. But they are never really wrong, either, because they are useful in contemplation of a totally uncertain future. Really they are not rules at all, rather they are sort of aphorism.

For me, maintaining a declining equities AA based on my age and rebalancing beginning of the year is right for me for the #1 reason of keeping my emotions out of the investment equation. To avoid greed when the market is on a tear and to avoid fear when the market does't look so rosy. The worse thing I'd want to do is go chasing headlines or a "hot tip" here or there.

 

[redduck]

Duck,
Are you thinking of changing your AA as you found it didn't meet your risk tolerance, plan to buy back in low, fund living expenses, or trade the BA for another asset? ...
2015 and 2016 tested my risk tolerance and my AA failed. I went from I wouldn't feel bad about selling a single stock at this point. I rebalanced frequently last year and at least twice...
I would not sell if you figure you'll buy back as soon as it goes low.

Thanks, GS...
Yes, I'll be tweaking my AA just a bit (it might just be where I want now it due to the recent market activity). I see where finding an AA that works for me is a trial and error activity.

As for selling a single stock, as my old buddy, NW-Bound pointed out, individual stocks can be treated differently than a broad-based mutual fund or ETF. I'm taking his word for it.

Anyhow, I started this thread because was just wondering if selling off a bit of the portfolio right now would be such a poor decision because I'm pretty sure that after any market drop of 20-30% would be unwise. ( I guess that's the point of having an AA and sticking to it--protects the investor from making unwise decisions).