For the first time ever I sold all my stocks

[OldShooter]

... If you still have your TD contact, I wonder what the data point would be for 2018-19?

Yes, that would be interesting but it was a one-time visit and I have not maintained contact. Probably it was a number that she was not supposed to give me anyway. It is hardly flattering for their marketing efforts.

 

[stevemac]

Undoubtedly true. And sometimes "intuition" has been the exact wrong thing to follow. Random guesses are like that.

I don't think you and I are as far apart as the discussion might suggest. I don't disagree that "random guesses" about where the market is headed will yield great results. This post started as someone saying they had cashed out "for the first time", and I responded that I understood because after a long pause I cashed out this week as well, for reasons based on overall movements and seeming knee-jerk (negative) responses to virus information that normally wouldn't spook the market (in my opinion).

So intuition for me has worked great overall, which is based on extensive research. So it's more educated than "random guess". But it's not for everyone.

And frankly, the downside of cashing out if you're positive (as I am) is simply potential lost gain. If that doesn't change your anticipated future withdrawal rate, sleeping better is worth the price. But to be clear, when I feel things have settled down to my liking (which admittedly is purely subjective, and I like it that way ), I'll be back in the market.

I simply wanted to let anyone else know, who is in a similar position, that it's OK to cash out temporarily and not feel that you've failed. Taking a breather occasionally -- and not for too long -- can still yield tremendous results over the long haul. But you still have to be ready to ride the roller coaster.

 

[tdv2]

Time to re-watch Daniel Kaneman at CFA 2018. For those interested...the first 14.5 minutes apply.

Daniel Kahneman - Thinking, Fast and Slow - Conference Live | Day 4 | CFA Institute Annual Conference | 16 May 18 - Archive - CONFERENCE LIVE - Broadcasting live from the 71st CFA Institute Annual Conference

 

[WhenIsItTime]

I don't think you and I are as far apart as the discussion might suggest. I don't disagree that "random guesses" about where the market is headed will yield great results. This post started as someone saying they had cashed out "for the first time", and I responded that I understood because after a long pause I cashed out this week as well, for reasons based on overall movements and seeming knee-jerk (negative) responses to virus information that normally wouldn't spook the market (in my opinion).

So intuition for me has worked great overall, which is based on extensive research. So it's more educated than "random guess". But it's not for everyone.

And frankly, the downside of cashing out if you're positive (as I am) is simply potential lost gain. If that doesn't change your anticipated future withdrawal rate, sleeping better is worth the price. But to be clear, when I feel things have settled down to my liking (which admittedly is purely subjective, and I like it that way ), I'll be back in the market.

I simply wanted to let anyone else know, who is in a similar position, that it's OK to cash out temporarily and not feel that you've failed. Taking a breather occasionally -- and not for too long -- can still yield tremendous results over the long haul. But you still have to be ready to ride the roller coaster.

Another effect is you get to settle taxes on your entire net position. That’s a full reset.

 

[stevemac]

Another effect is you get to settle taxes on your entire net position. That’s a full reset.

But only for taxable accounts, right? In the case of this week, as I mentioned I have a minor loss on the taxable account (and only had two funds -- VTXAS and VDADX), far more than made up for on the gains in the tax-advantaged account. So settling the taxes shouldn't be too big a problem.

But you're right about keeping in mind the tax issue overall.

 

[tdv2]

Another effect is you get to settle taxes on your entire net position. That’s a full reset.

Another drag on overall performance unless all assets are held in an IRA.

 

[Chuckanut]

Not stocks, but, today I did dump several bond funds that were or medium or long term. So, most of my non stock allocation is now in cash or short term high quality bonds. This was done in an IRA.

Earlier I got rid of a foreign fund I have not been happy with. I harvested some losses.

 

[Montecfo]

I heard two interesting facts:

1/3 of all investors over 65 cashed out and

20% of all investors cashed out.

Sure does place a lot of cash on the sidelines that is usually in the market. I heard that figure was nearly $5T.

 

[VanWinkle]

I heard two interesting facts:

1/3 of all investors over 65 cashed out and

20% of all investors cashed out.

Sure does place a lot of cash on the sidelines that is usually in the market. I heard that figure was nearly $5T.

Those figures were later disputed and retracted by the source.

 

[Montecfo]

Those figures were later disputed and retracted by the source.

Yes it was far fewer in case of the sellers, I chased down the course and correction.

But the $5T is true.

 

[richardf]

Excellent move, cash is the best. I’m about 1/2 into cash. I think taxes are the lowest they are going to be for a long time so maybe I’ll dump the rest.

 

[2177V]

Excellent move, cash is the best. I’m about 1/2 into cash. I think taxes are the lowest they are going to be for a long time so maybe I’ll dump the rest.

I agree. Cash is king during a risky pandemic. I reallocated my portfolio from 60/40 to 100% treasuries in 2019 because the yield curve inverted and Jeffrey Gundlach stated that 2019 is an asset preservation year. This is my best bear market ever because VUSUX 1 year performance is +25% and having treasuries are like having cash.

I am 30% stock which I had purchased after the market had declined 30% after the first crash in late March. I am in prime position to buy more stock with my 70% treasuries when I expect the market to crash a second time at the end of this year due to the election and second wave of the pandemic.

 

[Markola]

I agree. Cash is king during a risky pandemic. I reallocated my portfolio from 60/40 to 100% treasuries in 2019 because the yield curve inverted and Jeffrey Gundlach stated that 2019 is an asset preservation year. This is my best bear market ever because VUSUX 1 year performance is +25% and having treasuries are like having cash.

I am 30% stock which I had purchased after the market had declined 30% after the first crash in late March. I am in prime position to buy more stock with my 70% treasuries when I expect the market to crash a second time at the end of this year due to the election and second wave of the pandemic.

But 2019 turned out not to be an “asset protection year.” It was an enormous bull market. How did your market timing perform over 2019 and 2020 YTD?

 

[COcheesehead]

Every financial board I participate in has a prevailing notion by many members that the market is going down again in the 2nd quarter and then again at the election.
So neither will happen because everyone “knows” it’s going to happen. Those things are baked into the market already. The train has left the station. Just stay on it, it will get you to where you want to go. Choo, choo.

 

[karen1972]

Every financial board I participate in has a prevailing notion by many members that the market is going down again in the 2nd quarter and then again at the election.
So neither will happen because everyone “knows” it’s going to happen. Those things are baked into the market already. The train has left the station. Just stay on it, it will get you to where you want to go. Choo, choo.

Some of it is baked in but do you really know how many evictions are baked in? With the delays in certain states going to the next phase there will certainly be more people running out of unemployment checks and without that extra boost will not be making mortgage/rent payments. Then there is the corporations that loaded up on debt because it was "cheap" and everything was booming... that is just a ticking clock there. Lots of balls still up in the air, I wouldn't call anything settled yet. I'm sure everyone will be watching to see what the next stimulus drop will be.

 

[COcheesehead]

Some of it is baked in but do you really know how many evictions are baked in? With the delays in certain states going to the next phase there will certainly be more people running out of unemployment checks and without that extra boost will not be making mortgage/rent payments. Then there is the corporations that loaded up on debt because it was "cheap" and everything was booming... that is just a ticking clock there. Lots of balls still up in the air, I wouldn't call anything settled yet. I'm sure everyone will be watching to see what the next stimulus drop will be.

Famous sayings to live by now.

Don’t fight the Fed.
Best time to plant a tree was 30 years ago and today.

After 35 years of investing experience, I can tell there is never certainty in the short term, but almost certainty in the long term.

 

[2177V]

But 2019 turned out not to be an “asset protection year.” It was an enormous bull market. How did your market timing perform over 2019 and 2020 YTD?

You mean asset preservation year. You can't time the market to the exact day. Here are the VUSUX (Lg term treasuries) versus VFIAX (S&P500) performances:

2019 +14.83% vs +31.49%
1st qtr 2020 +20.86% vs -19.61%
2nd qtr 2020 +0.47% vs +20.54%
1 year +25.41% vs +7.47%

Since I reallocated 1 year ago, it is really the 1 years comparison that counts in my portfolio. Looks like I am ahead +25.41% vs +7.47%.

The 2019 performance does not count because I did not buy VUSUX on 1 Jan 2019 and sold 31 Dec 2019. I am also ahead in 2020 but it is really the 1 year performance that is relevant since it captured 6 months of 2019 (when I reallocated) plus the 6 months of 2020.

For the future: I believe that S&P500 is now overpriced due to the composite PE ratio of the S&P500 companies. S&P500 will decline since the "earnings" of the PE ratio will be declining due to the pandemic. When the PE ratio explodes, investors hesitate to buy companies with huge PE ratios.

 

[harllee]

Every financial board I participate in has a prevailing notion by many members that the market is going down again in the 2nd quarter and then again at the election.
So neither will happen because everyone “knows” it’s going to happen. Those things are baked into the market already. The train has left the station. Just stay on it, it will get you to where you want to go. Choo, choo.

We won't know the impact of the second wave, the election, the drop off of unemployment payments, the evictions, the foreclosures, etc until months from now. Check back then and we will see if the train is in reverse. No one can predict what will happen to the stock market but those of us who have gone to cash at least can predict the amount of our cash. In addition I can sleep at night without waking up in cold sweat worrying about the stock market. Whoo, Whoo!

 

[COcheesehead]

What history says...
https://www.cnbc.com/2020/07/03/han...us-about-the-odds-the-comeback-continues.html

 

[Tiger8693]

What history says...
https://www.cnbc.com/2020/07/03/han...us-about-the-odds-the-comeback-continues.html

After skimming it, I'm not sure what this is saying....

 

[COcheesehead]

After skimming it, I'm not sure what this is saying....

Pretty good chance we continue higher.

 

[Tiger8693]

Pretty good chance we continue higher.

I'm on board with that!

 

[2177V]

Here is a recent video on Jeffrey Gundlach...

To summarize:

1. Fed is holding up the market but there is a higher risk of holding fix income assets.
2. Fed does not support negative interest rate.
3. Fed will suppress treasury interest rates to manage national debt.
4. Dollar may decline due to the higher federal debt. This impacts US investors holding overseas stocks and bonds.
5. V shaped recovery is highly optimistic and not plausible.
6. Recovery may not happen in 2020 and 2021 due to unemployment.
7. A third political party may emerge after this election.

 

[COcheesehead]

From the same guy who said he is shorting the market...2 months ago.

 

[2177V]

From the same guy who said he is shorting the market...2 months ago.

You are the only one I know who make investments based on a 2 months time horizon.