Will you hold - if there's a new Covid Crash?

[Lsbcal]

Happy thought: it could turn out that the Omnicron is more transmissible but less dangerous. Apparently there is some evidence from S. Africa that this was the case although the cases were in university students, so not obvious how this affects the general population.

 

[Out of Steam]

My wife and I are under 40% stocks right now. I'm prepared to hold through a drop, and re-balance at minimum.

 

[Skyward1]

In the past I have always bought into deep pullbacks but I retired early this year so I now have to be more aware of the remote possibility of buying/rebalancing into oblivion if the market were to take deep dive and stay there. My AA is currently 50/50, or more accurately 52/27/21 equities/bonds/cash and ibonds, and I would go to up to 60/40 if there was a major drop but I would be hesitant to go beyond that.

 

[youbet]

My wife and I are under 40% stocks right now. I'm prepared to hold through a drop, and re-balance at minimum.

Let us know when ya call that "minimum," will ya?

 

[SecondAttempt]

Please don't take this as advice. It is merely what I will do and my history with stocks is different than yours. I don't claim any talent advantage but I have always done well in stocks so I think my temperment is different from yours. I am not one to sell in a panic. That said:

If there is a significant sell off because of Omicron fears I will definitely load up on stocks. One thing we know is that we (as humans) have been through 2 scary virus waves with market downturns and significant deaths yet most of us have made it through to see things mostly come back. As a species people all over the world have stepped up to get us vaccines, treatments, and so forth.

Essentially, I AM worried about a new wave from this variant but mostly because I was planning a trip over Christmas that I am now in "wait and see" mode with. I think it is too early to tell what will happen in the short term. I believe the scientists when they say there is reason for significant concern.

But 5 years (or less or maybe more) from now, we will have all of this behind us and things will return to normal. I don't mean just the virus. I think it will take some time for supply chains and stuff to return to normal. But at some point they will!

I am nearly 100% certain that 10 years from now stocks will be significantly higher than they are now. I would view a big decline as a buying opportunity like a sale.

 

[SecondAttempt]

I've been through crashes before. In March, 2020 I was a tourist in Bolivia watching the Dow sink to 18,500. I did nothing. What I've learned from past crashes is that the good stuff recovers and the Enrons don't. It's important to weed out the under-performers periodically.

I have enough cash right now in the after-tax accounts to get me through a year but I may do some buying with the cash in my newly-inherited IRA.

The moments that make me cry are not the general market dips. I have always been confident that over the long haul the stock market will go up.

One day that made me cry was when I held about 1000 shares of a biotech developig cancer therapies. My average cost was about was about $2 so I did not have a lot at stake...until...a rumor broke that the company had developed a cure for breast cancer. The stock shot to about $250 within an hour!

Not being one to panic, I was excited waiting for the news to break and did not sell. Then the company announced the rumor was false and we dropped back to about $5 almost immediately. I actually had my finger on the button to sell but did not, probably out of greed. I should have at least sold half my shares. Lesson learned!

 

[GravitySucks]

I'd wait, it might go lower, then I'll sell.

Unfortunately, this is the way the lizard part of my brain tries to make me behave.

 

[Dtail]

Doesn't look like a crash today.

 

[Out of Steam]

Let us know when ya call that "minimum," will ya?

I certainly don't expect to be able to call the minimum, but am open to a higher stock allocation than our current 40% after any drop.

 

[rodi]

Hold, and I might add a little - also known as rebalancing.

As always - I'm a REWahoo lemming.

 

[Lsbcal]

Positive comments by Scott Gottlieb in his Twitter feed today:

https://twitter.com/x/status/1465679760948973575

 

[Dean56]

I have never sold during a pullback. I actually bought more stocks in March 2020, it has paid off well.

 

[SecondAttempt]

I bet with my money today. Added ~8% of my net worth to VTI today.

 

[PointBreeze]

No, I'll live on the bond funds that no one seems to like these days.

VW

Exactly! The cash & bond funds we have will last for decades, plenty of time for stocks to recover.

 

[ychuck46]

Will Add

I have a certain approach to our investments, including a mix of ETFs, individual stocks (mostly good dividend payers), some bonds (tax exempt fund and I Bonds), dry powder in the form of cash, and a number of options plays. During a downturn I will do the same as in 2020, namely add to my stock holdings and aggressively go after options. It worked then and I expect the same to happen in another downturn. Good luck to all.

 

[GoodLife59]

Not me.

I’ve never sold in a downturn going back to the 1987 October crash. Also, never tried to time my way in or out. Before I retired I made monthly contributions (dollar cost averaging) and rebalanced when necessary to meet my diversified portfolio goals. Retired a few months before my 60th.

 

[meleana]

The bond funds seem to go down with the stock funds.

 

[iRent2u]

Will you sell with another Covid crash?

No

 

[rubytuesday]

If 20% drop, I would start to look at painful levels of Roth conversions. Then rebalance if still down at rebalancing time...

I knew I could have an early pension (which I do have now), so was never investment-minded, but still I did just that, converted at painful level of Roth in a 20% drop in 2020, which worked out great. If there is another 20% drop or worse, I would finally BUY! (in addition to, of course, holding the stuff in Roth, holding it for a long time)

 

[Deuce]

My question is why are you only 45% in stocks? At your age I find that extremely low.

 

[skyking1]

no.

 

[stan101]

Didnt sell in 87 or '00 or 08 or '20. Never sold to cash, only to exchange one stock for a better opportunity.

How did you manage your withdrawal strategy in 2005 - 2013? That was a tough time x2. Good for you for surviving that era. Curious how you paid your expenses during that time.

 

[DeborahB]

I’m almost entirely in individual stocks. Most pay dividends. I only sell if I’m uneasy about what’s happening in a company - take my profit & sell. If I have enough cash, I buy when the market drops. Best of luck!

 

[Bunker]

No sell.



My cautionary tale, which isn't unique among newbs and know-nothings, began late 90s, my first foray into stocks during the tech/internet start-up craze. Several guys at work were into it so I joined in, without knowing what I was doing, and became a statistic when the Dot Com bubble popped. Lost some, not too bad, but the experience left an impression.


Held what cash I scraped out of that and began saving in simple CDs before dipping my toe in again with mutual funds around 2003, building up a small portfolio until I saw the 2008 Crash kicking off. Reacted more quickly this time, sold everything, and got out with about $20,000 over what I'd put into it. Whew! The oft repeated lesson, which I had to learn myself the hard way, was seeing that the modest portfolio I sold, recovered nicely in the following 1~2 years. I was working, making good coin at the time, but the take-away lesson was I should have stayed in and gutted it out.



Held that cash, saving in CDs and Money Mkts along the way again, then got back into the market early 2014 with a more substantial amount, this time with a Financial Advisor @ .90% AUM, and put everything on auto-reinvest divs.



During this COVID downturn, I resisted the urge to react, and continued to let it ride on auto-reinvest, taking solace in snapping up more shares at lower prices along the way. 2 years later, things are looking ok again, for now.



At the same time, just before COVID hit, started dabbling with stock positions in a separate brokerage account. When COVID hit, I chanted the old adage to myself, "Buy when there's blood in the streets", bit my lip and began building more. All looking good now. The luckiest among them being Tesla in the $3-$400 range, before the split.

 

[VanWinkle]

The bond funds seem to go down with the stock funds.

Not the quality bond funds with a high percentage of Treasuries.....