heeyy_joe
Thinks s/he gets paid by the post
Damn Magic 8 Ball is broken. So I keep at least two years cash.
Perhaps Ms./Mr. FedEx Courier was speaking hyperbolically ...
I thought he was asking if the OP was throwing us a curve...Do you mean hypothetically?
Ride and rebalance seemed to have been the rallying cry for many of us who weathered the roller coaster ride(s). It helps to have a sufficient amount set aside in cash or short term bonds to fund expenses for a couple of years (or more). This prevents having to sell equities during any 'market unpleasantness'.Do you ride the market downturns out or do you have plans in place to pull a percentage of your investment out of harms way when the market drops a certain amount?
It helps to have a sufficient amount set aside in cash or short term bonds to fund expenses for a couple of years (or more). This prevents having to sell equities during any 'market unpleasantness'..
Ride and rebalance seemed to have been the rallying cry for many of us who weathered the roller coaster ride(s).
Ride and rebalance seemed to have been the rallying cry for many of us who weathered the roller coaster ride(s). It helps to have a sufficient amount set aside in cash or short term bonds to fund expenses for a couple of years (or more). This prevents having to sell equities during any 'market unpleasantness'.
The age old problem of "pull[ing] a percentage of your investment out of harms way when the market drops" is figuring out the other side of market timing - when to reinvest.
This is going to rub some readers the wrong way . A few will think I should be run off the web . I went through several downturns in my 40+ years of investing. One was the Oct 19, 1987 Monday crash. The worst in retirement was the 2008 drop.I read with interest the past posts that were given in this thread. The good news is that you survived it and seemingly well....you all are still here and posting. Do you ride the market downturns out or do you have plans in place to pull a percentage of your investment out of harms way when the market drops a certain amount?
Since I'm working right now and putting money in my 401k every month I have always ridden the downturns out as I dollar cost average in with each paycheck. But in retirement I will only be rebalancing my stock/bond portfolio each year.
If I sold, then bought back a stock at a lower price than what I sold at, I considered that timing move a success already. The repurchase did not have to be perfectly at the bottom, which was of course not possible all the time.The age old problem of "pull[ing] a percentage of your investment out of harms way when the market drops" is figuring out the other side of market timing - when to reinvest.
Lots of folks who sold into the downturn in 2008, or after the downturn, couldn't bring themselves to reinvest while the market was down. They essentially locked in their losses and stood on the sidelines while the market recovered. It's very hard to get back in psychologically after you bail - especially if you did so after suffering some steep losses already.
I was just a wee investor back in '87 - only a few thousand dollars in the market. The max for IRAs was only $2000/year back then.
Anyway, I worked in a "bull pen" setting, where all the engineers on the project were in one room and shared telephones. Big fun (not), but we did know what was going on with everyone else.
On Black Monday I recall watching the plunge in the market with interest. A woman I sat next to called her husband and they decided that "we need to get out!" and they sold all their stock holdings.
The market actually recovered rather quickly and they stayed out of the market well past the time it took for stock prices to recover. I noticed they the only reason they lost money was that they panicked. I didn't do anything and didn't lose a penny.
This made a lasting impression on me and I've never felt the urge to sell when the market plunges since then.
If the markets sells off before your plan kicks in, then plan to ride it out.
And there is a caveat here. Suppose you were wondering what to do in December 1929. The year-to-date loss was -9% but Sept through Nov losses alone were -31%. So a big up and a big downer. You decide to stay in the market. By Sept 1930 you are up 2% from that December 1929 point. You congratulate yourself on staying the course.That's the big one there. For good market timing you need to be (roughly) right twice.
If the market tanks, it goes fast and deep usually. If you weren't out when it started, ride it out. Conversely, if you weren't in when it boomed, don't go in.
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We retired early on Jan 1 2008. Fortunately we had pensions and adequate cash holdings. A tad frightening then as we were and still are heavy equities. Started the first leg of 62/70 SS strategy a little over two years later. Now like other drops it is a yawn in the rear view mirror. The key for us was the pensions and staying the course.
+1. This is our plan. We will have enough in cash to cover projected withdrawals for 7 years, to keep from being forced to sell in a down market. I'm willing to accept the low interest on cash for peace of mind.
Thanks Andre.Jut out of curiosity, I went through my records to see how many times I've experienced a drop of ~20% or more.
An active asset allocation rebalancing approach would have emphasized the corrections depending on your chosen cycle: quarterly versus annually, for example.FedExCourier said:Do you ride the market downturns out or do you have plans in place to pull a percentage of your investment out of harms way when the market drops a certain amount?
Congratulations... It's nice to hear that you were able to weather the 2008 crisis. As you mentioned, it was mainly due to the fact that you have a pension; I presume that if you had to dip into your investments, you wouldn't be as comfortable today. Many people these days don't have pensions and are forced to live off of their own 401k/IRA. So many people don't plan for their retirement and are forced to continue working. It's also nice to hear that you used the 62/70 SS strategy, way to go! Nice to hear success stories...
It helps to have a sufficient amount set aside in cash or short term bonds to fund expenses for a couple of years (or more). This prevents having to sell equities during any 'market unpleasantness'.