Has anybody changed their mind about their investing strategy going forward?

[atmsmshr]

This forum educated me on Sequence of Returns Risk. I am no expert, but the discussions and linked articles / books saved me from major mistakes of my FA (aka myself). While working, spent a LOT of Saturday mornings reading threads here and at Bogleheads - and going back to 2007-2009 threads to read the pain of the last crash.

Up to 2 years ago, I was 100% equities while working into my late 50's. Clearly not sustainable (actually in hindsight it was stupid), and just plain lucky to ride the bull. Random Walk down Wallstreet.

My strategy became early retiree conservative and a rising equity glidepath ala Michael Kitces. Some tweaks like MM funds while Fed was raising interest rates, and switching to intermediate bonds when they stopped. Going to FUAMX intermediate Treasuries in February just because I did not know what to do with that part of the portfolio and benefited from dumb luck on that bond fund this past six weeks. The forum taught me about rolling to an IRA and benefits of NUA - a huge benefit for me in LTCG earlier this year when raising cash cushion. Looks like executing LTCG any further is a few years off.

Now at the crossroads of indecision with the crash in progress. Just stand there and do nothing until the bitter end? Probably not since I am optimistic about long term American economic health. Holding FUAMX now looks safe because there are no corporate bonds in that fund - the downgrades and bankruptcies will start soon and challenge other bond funds. At a minimum, rebalance back to the planned 40/60 position this summer is a no brainer. However, I may go to the planned 60/40 position of the glide path much sooner - like this year. Additionally, I may cash out the pension instead of annuitizing. If that is the case, then I will throw that money into the 60/40 equation as well - and consider a private annuity later. I just feel like annuities are going to suck wind for quite awhile, and then inflation will bite hard 10 years down the road. May have to decide the pension cash out soon - although the pension was overfunded in January, that may not be the case now and redemptions could be limited.

For the moment - I am a deer in the headlights, hoping to not get run over.

 

[tdv2]

No. Primarily because my long term outlook (10 to 20 years) for business around the world has not changed. The only thing I question is loaning my money to the U.S. government and getting 0.8% in return when they have a mandate to keep inflation around 2%. I guess that's the price I'm paying to sleep at night.

 

[Markola]

This forum educated me on Sequence of Returns Risk. I am no expert, but the discussions and linked articles / books saved me from major mistakes of my FA (aka myself). While working, spent a LOT of Saturday mornings reading threads here and at Bogleheads - and going back to 2007-2009 threads to read the pain of the last crash.

Up to 2 years ago, I was 100% equities while working into my late 50's. Clearly not sustainable (actually in hindsight it was stupid), and just plain lucky to ride the bull. Random Walk down Wallstreet.

My strategy became early retiree conservative and a rising equity glidepath ala Michael Kitces. Some tweaks like MM funds while Fed was raising interest rates, and switching to intermediate bonds when they stopped. Going to FUAMX intermediate Treasuries in February just because I did not know what to do with that part of the portfolio and benefited from dumb luck on that bond fund this past six weeks. The forum taught me about rolling to an IRA and benefits of NUA - a huge benefit for me in LTCG earlier this year when raising cash cushion. Looks like executing LTCG any further is a few years off.

Now at the crossroads of indecision with the crash in progress. Just stand there and do nothing until the bitter end? Probably not since I am optimistic about long term American economic health. Holding FUAMX now looks safe because there are no corporate bonds in that fund - the downgrades and bankruptcies will start soon and challenge other bond funds. At a minimum, rebalance back to the planned 40/60 position this summer is a no brainer. However, I may go to the planned 60/40 position of the glide path much sooner - like this year. Additionally, I may cash out the pension instead of annuitizing. If that is the case, then I will throw that money into the 60/40 equation as well - and consider a private annuity later. I just feel like annuities are going to suck wind for quite awhile, and then inflation will bite hard 10 years down the road. May have to decide the pension cash out soon - although the pension was overfunded in January, that may not be the case now and redemptions could be limited.

For the moment - I am a deer in the headlights, hoping to not get run over.

If you’re reading the Bogleheads Forum, have you read the Three Fund Portfolio thread? If you were invested that way you wouldn’t have to worry about all this stuff.

 

[pb4uski]

I have made a number of changes.

In December I drained our ~5% cash position, which was earning ~1.7% in an online svings account to pay off our 3.375% mortgage. Since our previous target had been 60/35/5... I set a new target at 65/35 which was derived as 60/(100-5) and 35/(100-5)... in other words, I wanted to adjust my AA so the mortgage prepayment ended up from that lower earning cash component. At the time that I did that, we were ~60/40 and the plan was to let the AA creep up over time to 65/35.

Over the last 12 months, I have found 3.0-3.5% credit union CD specials totally unresistable and have loaded up on them. It is very surprising to me because prior to these CDs I had only owned one CD in my life and that was the 3.0% 5-year PenFed special from Dec 2013. Prior to that I had viewed CDs as stodgy and never had any interest in them. Yesterday, I also found Navy Federal's taxable account 2.25% 17-month CDs and IRA 3.0% 37-month CDs irresitable as well. So when all is said and done, various CDs... mostly 3.0-3.5%... will end up as 48% of our portfolio and they have a blended APY of 3.13%. Unless inflation spikes... which I find hard to fathom at this juncture, that seems to be a good ballast position.

The recent volatility and our portfolio total drifting towards what it was when we retired in early 2011 spooked me a bit and I am currently out of equities for the first time in 40 years. While I still believe in equities in the long run, the uncertainty about how deep and long the recession that will result from the disuption of the economy from the COVID-19 contagion is so hard to assess I'm standing on the sidelines until the smoke clears a bit. I'm search for less risky ways to participate in equities, like perhaps buying equity index leap calls, but at the end of the day it may a whild goose chase.

The good thing is that it will give me the opportunity to reposition things and somewhat of a fresh start once I decide the way forward.

 

[Dawg52]

Staying the course. Conservative.

 

[Stormy Kromer]

I can stomach a 30% decline in my equity portion, I've done it every time since I started investing in October of 1987, just in time for the famous Black Monday drop.


What bothers me more is the 10% decline in the bond portion.


I am with RobbieB and will be rebalancing to more cash and less bonds. I'll keep about 3 years living in cash with the rest invested in 3 or 4 index equity funds at VG (including a reduced holding in a bond fund).

 

[Ready-4-ER-at-14]

I'm more of a tinkerer than most of the people here.

Around feb 12
46.8% stock
30.9% annuity
2.1% cash
20.2% fixed

yesterday at close 3/24/2020
31.0% stock
2.9% antistock
35.6% annuity
7.1% cash
23.3% fixed

regarding gross effect down 13.4%

but this is misleading as I chose exactly the worse time(at least short term) to convert ira to roth on 2/21/2020. moved 1/4 of all ira to roth and paid for it from roth account cash sending 26% to irs.

If I figure that in down 10%.

 

[cooch96]

Nope, but I reserve the right to change my mind. Im sticking with all equities and a modest mm safety net until further notice.
If short term cd’s or treasuries jump to high single digits, I’ll eagerly buy. If silver ever rises to $40/oz, I’ll happily sell. Etc.

 

[Time2]

I'd say looking back, I have made an error. All my investing life I've been aware of the 'rule of thumb' as you near retirement move to a higher percentage of bonds. Because I followed advice from another group, that says 100% stocks forever and bond returns have been so low as I neared retirement, I just never bought any. I retired 1-1/2 years ago at 63 yrs old. I have about 2.5% in bonds. However, I have about 30% of my money invested in 2 or 3 non bond/equity items. So, I can say I had 70% in equities, which has helped during this downturn. These numbers were at the peak.
Towards the end of last year, I withdrew 8% (of my equities) just to use my LTCGs and generate money for 2020 expenses. Then after the market had dropped, on 2/28 I sold another 18% (of my equities).
They value of my sold equities dropped another 17%, and this morning I bought it all back.
I may be too early, but I have a fear on missing out. You have to be in to take advantage of big days. (I did miss the 10% gain yesterday)
Just to clarify, Last year I sold taxable LTCGs, this year, I sold and bought back in tax deferred accounts.

 

[street]

No change here from a ~75/25 just have to ride this out and doing nothing right now. In the future I will protect my holding and will change my strategy but for now and in the near future , staying the course.

 

[Corporateburnout]

Staying the course. In fact I have not looked at my portfolio since Jan 31 when I downloaded dividends and interests from my financial institution into Quicken. We have enough cash or cash equivalent for 3 years of spending.

 

[Lsbcal]

I have a somewhat different take on this thread. It seems just about everyone is staying the course with their strategy. That is, if you are a buy-holder you stick with that. If you are a timer you stick with that.

I'm just wondering if anyone here is reading these posts and modifying their basic strategy?

 

[Mountain skier]

We are now approx 33/67 (cash). We sold about 15% equities from non-ira account in early March to lock in some gains. Retiring in May. Will have pensions that will help.

We are both age 59.

I don't understand bonds or bond funds so I stay in CD's and MM for my fixed portion. We hopefully have enough in cash and won't need our IRA's for 10-15 years or longer depending on circumstances.

We were strongly considering going more into equities but decided the risk/reward percentages were not in our favor.

Will stick this out from here.

Best of luck to us all.

 

[RetireAge50]

Our investing strategy has not changed but our spending strategy may be cut back a bit. Our investments include 5 years of cash, 5 years of bonds, and the remainder stocks.

We may try to spread the existing cash out over maybe 7 to 10 years (which will reduce our spending) until this panic calms down. The reduced spending is basically cutting out travel which is not a thing anymore for now anyway.

 

[Stormy Kromer]

I have a somewhat different take on this thread. It seems just about everyone is staying the course with their strategy. That is, if you are a buy-holder you stick with that. If you are a timer you stick with that.

I'm just wondering if anyone here is reading these posts and modifying their basic strategy?

Yes, I'm replacing bonds with cash or cd's for the non-equity portion of my portfolio.

 

[Spanky]

Plan to lower the equity portion of AA. However, the market automatically does it for me.

 

[Ready-4-ER-at-14]

I have a somewhat different take on this thread. It seems just about everyone is staying the course with their strategy. That is, if you are a buy-holder you stick with that. If you are a timer you stick with that.

I'm just wondering if anyone here is reading these posts and modifying their basic strategy?

I have been replacing my individual stock holdings with index funds over time.
So that part of this place has appealed to me.

In fact as the market declined in feb.. I sold the majority of anything stand alone that was down 15% to raise cash. So I have been simplifying ever since I came here.

 

[Jeffman52]

Ive been playing the odds, so to speak, by staying heavily in the market. That decision of course looks painful right now, but I havent sold or moved anything so, when it comes back up, I will realize those gains again. The difference for me is that I am still W******, so I have time for the market to recover and still get my paycheck.

What it did change for me on a temporary basis, is that I am in a no-spend and pile up money mode right now. Bonus payouts are next week and we had plans for new carpet and a new garage floor but instead I am going to sit on that cash.

The good thing is we have only the mortgage and utilities and no other bills. So our needs for cash are fairly low and our reserves/emergency fund will last quite a long time before I would need to even consider dipping into any of my accounts that currently show a loss of value.

 

[dvalley]

I just feel stupid.

Several people I personally know who weren't in the market before and were sitting on a big pile of cash instead because they thought the market was too high to buy are now much better off than me buying equities at a 30%+ discount than I did.

What has worked though is having 1.5yrs of expenses in cash so I'm not panicking. Hopefully I can use some of it to take advantage of the fire sale on the way back up.

Going forward, I will probably hold 3-4yrs cash as I get closer to retirement.

 

[daylatedollarshort]

We haven't had a huge allocation to stocks but we decided to sell off what we have on the bounces. We've been reading up on the worst case and best case outcomes for the epidemic and decided we weren't prepared to hold stocks through the worst case. We have been more interested in capital preservation than growth in general, but now even more so.

 

[racy]

We were taking dividends and capital gains from our taxable mutual fund account as cash. A couple of days ago I made the switch to reinvest both (thinking "buy low").

 

[NoiseBoy]

I am still working, but planning on retiring this year. Nonetheless, I did not watch the markets with an eye to reducing my equity position in part because I am already a fairly conservative investor (55/45) and I just wasn't thinking about selling. Also, I will have a pension from megacorp that covers my basic needs, so my portfolio is for extras and, of course, the great unknown. My 5 year retirement plan includes my megacorp pension and selling off my CD ladder until I reach 62, so I can ride out a 5 year Bear if I have to.

Going forward, I am watching for an opportunity to buy low, possibly by moving my megacorp 401k from a 55/45 fund to a 90/10 fund. I am trying to use the CAPE ratio as my guide, so I'm not going to be a market timer. And the reality is that I will probably do nothing, at least this year.

After retirement, I may drift down to around 40/60 in my portfolio. My hazy plan is to work on getting my dividends up by scoring some of the higher yielding CDs that get talked about on this forum. My I-Bond ladder is solid as a rock!

 

[Closet_Gamer]

Ironically, this event has made me more confident in my approach.

I've lost oodles of money on paper, but overall my balance sheet (which is built like Fort Knox and reflects my learnings from 2000 & 2008) is doing exactly what its supposed to do.

Some parts let me sleep at night through the hurricane, some parts put the brakes on the losses, investing across a range of asset classes/company sizes/countries creates rebalancing opportunities, clear buckets of money with specific purposes allow me to think clearly on different aspects of the situation & some extra cash has been available to push into the market a bit more quickly.

My only changes are tactical:

1) Put about 3 months worth of normal investing pace to work in 4 weeks

2) Nibbled on the high yields in the energy sector. Bought twice but got weak knees on the 3rd buy as the bottom just continued to fall out. Intend to put a buy in well below the now recovered price. Shouldn't kept my conviction!

3) Not selling company stock that vested. I normally sell as soon as it vests, but I'm not selling any equities at this level.

4) Being very aggressive about tax loss harvesting

I may also accelerate the purchase of a beach house. Perhaps.

 

[audreyh1]

I can stomach a 30% decline in my equity portion, I've done it every time since I started investing in October of 1987, just in time for the famous Black Monday drop.


What bothers me more is the 10% decline in the bond portion.


I am with RobbieB and will be rebalancing to more cash and less bonds. I'll keep about 3 years living in cash with the rest invested in 3 or 4 index equity funds at VG (including a reduced holding in a bond fund).

10% drop in bonds happened if you were investing in high yield bonds.

Very high quality bond funds have seen slightly positive, flat or very slightly negative YTD, nothing like a 10% haircut.

 

[Aerides]

I'm fine with our cash position, and will always keep 3-4 years that way. And I won't change my overall strategy.

But, I might think a little more conservatively, and take money off the table sooner than later in future highs. Rather miss out on a few extra up-digits for a bit more comfort on the way down. But who knows... ask me in 5 years!