Anyone else hoping for a market plunge?

[i-like-gin]

Waiting for a bear market is, in my experience, a really bad idea. I'm 100% invested.


"Buy low, sell high" is garbage. You can't actually do that. People who say they do are lucky.

 

[audreyh1]

Waiting for a bear market is, in my experience, a really bad idea. I'm 100% invested.


"Buy low, sell high" is garbage. You can't actually do that. People who say they do are lucky.

Except for rebalancing.

 

[i-like-gin]

Except for rebalancing.

My rebalancing strategy is mostly going to have me selling into lows (higher volatility periods), which is totally counterintuitive to most people, but it ultimately works out better.


So even when it comes to rebalancing, I don't think "buying lows" is really the way to go.

 

[audreyh1]

My rebalancing strategy is mostly going to have me selling into lows (higher volatility periods), which is totally counterintuitive to most people, but it ultimately works out better.


So even when it comes to rebalancing, I don't think "buying lows" is really the way to go.

Its just that when you rebalance, you sell your winners at some "high" to buy your losers and some "low". So you are are selling high to buy low. It doesn't mean that you are hitting some specific peak or trough or coincide with a particular market high or low.

 

[i-like-gin]

Its just that when you rebalance, you sell your winners at some "high" to buy your losers and some "low". So you are are selling high to buy low. It doesn't mean that you are hitting some specific peak or trough or coincide with a particular market high or low.

I see what you mean. If you're committed to a 50/50 cash/bond or something like that, then a rebalance means taking cash away from the winner at intervals.


Yup!

 

[ponyboy]

Why do people always insist on saying "they're hoping for a market drop?"

You do realize if you buy now...and the market doubles in 5 years...you're ahead. The market doesnt have to drop to come out ahead.

Stop with the mindset of hoping the market drops so you can get some sort of deal. Its such a narrow minded way of thinking.

 

[TwoByFour]

But wouldn't you still have the subsequent gains in the index funds become a capital gain tax issue later? So in effect you are just delaying the payment of taxes.

This sounds like tax loss harvesting, pushing off taxes to the future. I TLH when I can but I have to confess I am skeptical of whether it is really a good thing or not. I suppose if I die before all those taxes are due, I come out ahead.

 

[sengsational]

Stop with the mindset of hoping the market drops so you can get some sort of deal. Its such a narrow minded way of thinking.

Some of us feel it's inevitable, so just wanted to get past it.

 

[NYEXPAT]

Why do people always insist on saying "they're hoping for a market drop?"

You do realize if you buy now...and the market doubles in 5 years...you're ahead. The market doesnt have to drop to come out ahead.

Stop with the mindset of hoping the market drops so you can get some sort of deal. Its such a narrow minded way of thinking.

I find "hoping" for something does not work, unless you click your heels three times!

 

[gerntz]

I'm not hoping for a plunge but I do feel some sort of significant market decline will occur sooner rather than later.

It's absolutely bound to be sooner than later given later happens after sooner.

 

[gerntz]

If you want a plunge before November, seems you're asking for a particular elections outcome.

 

[Oz investor]

If you want a plunge before November, seems you're asking for a particular elections outcome.

not just major uncertainty ( in the elections )

to say , a dominance of the more radical ( independent minded ) arms of the major political parties , or just more non-aligned candidates with a strong chance of success

in Australia the current ruling party has a very slender majority ( and sometimes has to work with independents to get policies past )

 

[Oz investor]

Why do people always insist on saying "they're hoping for a market drop?"

You do realize if you buy now...and the market doubles in 5 years...you're ahead. The market doesnt have to drop to come out ahead.

Stop with the mindset of hoping the market drops so you can get some sort of deal. Its such a narrow minded way of thinking.

in my case i may not be able to control my affairs in 5 years time , and i suggest some older members might have a similar risk .

( trusting a manager to make timely decisions is an additional risk many don't need )

and yes i have a narrow mindset in this regard , but it is also prudent (imo )
being wrong about thing has less downside for me than being correct but not prepared for it .

cheers !!

 

[Oz investor]

Waiting for a bear market is, in my experience, a really bad idea. I'm 100% invested.


"Buy low, sell high" is garbage. You can't actually do that. People who say they do are lucky.

my nickname was 'lucky ' many decades before thinking of investing for my future .. and is often 'LUCKY B@STARD !!! ' to several close fiends .

and yes i am mostly invested in the market but conversely waiting for a bear market , with some 'inverse index ' plays in my holdings as insurance and a 'liquidity buffer ' assuming banks will restrict cash outflows in the very stressed times .

buy low / sell high is a mix of relativity and patience ( and panic resistance ) more of an art than a science ( imo)


please note this is ALWAYS risk in investing , otherwise there would be no gains offered to induce you to participate ( the often ignored risk is underlying inflation )

 

[sfbrown]

I do, but it's because I'm 56 and on the cusp of retiring. I have enough to retire today, assuming the market doesn't plunge withing the next few years. The problem is, nothing can guarantee that. As such, if it is going to plunge, I far prefer it do so before I retire rather than right after when I'm trying to live off my stash.

That said, if I was in my 30s like you, I wouldn't be in any hurry. There will be plenty of buying opportunities. Just keep your powder dry, set an allocation, and when it gets out of balance, rebalance.

 

[Oz investor]

i am hoping to obtain Financial Independence , since i have been retired earlier than planned , and having that crash sooner rather than later , would give me some insight of how my plan is actually going to work under stress .

 

[jIMOh]

Ok, this will be sacrilege to some, but I find myself daydreaming about a stock market plunge. The reason is that it's inevitable that it will occur at some point, there are a lot of indicators saying it should be relatively soon, and the sooner we get there, the sooner there will be buying opportunities and also the sooner we can start recovering from it and moving toward higher highs. As they say, "The waiting is the hardest part."

Anyone else share my daydream?

I went to 75% cash and commodities last week.
I am BANKING on it

 

[Oz investor]

i can't afford to wait , but i do need to stress-test my efforts so far ( just in case i need a major re-think )

i expect a nightmare , but one at least i will have some plans to try out during it .
for example i am low on the Large Caps , and heavier on the small and mid-caps , so will be looking for blue chips as a major focus either directly or via LICs and ETFs

 

[Gumby]

You don't need an actual market plunge to work off any present excess valuation. A prolonged sideways market coupled with a continuation of positive earnings will make multiples drop back to a more historically normal range. For someone already fully invested, that would certainly be the preferred outcome.

 

[PointBreeze]

Yes, I am unfortunately sitting on way too much cash right now.

 

[Helen]

I'm not sure I understand.

I, too, have large unrealized gains in individual stocks. But if I wanted to switch to indexes I wouldn't be hoping the gains evaporate. Better taking gains and paying tax than waiting for value to decline.

I don't need the risk I'm taking to achieve my goals. I'm just having a hard time modifying my behavior from letting winners run and deferring tax (avoiding tax for heirs), to adopting a more conservative AA.

Writing calls and letting a few shares get called away isn't putting a dent in my equity allocation. Please convince me to reduce risk by significant selling and "paying 'the man' his money" in capital gains tax, if you think I should.

I probably should reduce like the OP, but from 65% down to maybe 35%, and it would probably allow me to smile through a big decline.

Our situations are different. I want to sell individual stocks and move the money to stock index funds - stock to stock. Therefore, I would like the market to drop then let the index funds ride until they get passed to my heirs.

It sounds like you want to sell some stocks and move the proceeds to a more conservative investment like perhaps bonds. In that case, I would want to sell when stocks are high and reinvest.

 

[gooddog]

No, I stay fully investing according to my AA, so "buying opportunities" would be wasted on me. It doesn't help to jump in on a 15% drop if I've missed out on a 25% run up.

Agree 100%, market timers lose out. That said, keep a few 100k set aside and if the market takes a dump - invest in leveraged broad market indexes and ride it up.

 

[NW-Bound]

You don't need an actual market plunge to work off any present excess valuation. A prolonged sideways market coupled with a continuation of positive earnings will make multiples drop back to a more historically normal range. For someone already fully invested, that would certainly be the preferred outcome.

Yes. I prefer that the market turns out this way, because my out-of-the-money option strategy will continue to work well.

In case the market crashes, well, I am not fully invested and can participate in buying on dips if it is called for.

 

[RunningBum]

Agree 100%, market timers lose out. That said, keep a few 100k set aside and if the market takes a dump - invest in leveraged broad market indexes and ride it up.

Rather than set a few 100K aside, I've kept it fully invested and have been riding this bull market up for a few years. I doubt any drop will be as severe as the gains I've had during this time. It seems to me you are saying "market timers lose out, but time the market a bit anyway". Be my guest, but that's not what I'm going to do.

 

[teejayevans]

Once I get to 59.5, I might increase IRA withdrawals while market is down, reinvesting it in taxable accounts. I have to run the numbers, assuming a 2 year rebound, a 20% drop and the reduced taxes vs increased taxes from being in higher tax bracket.