All Cash? Low Equity? Got out Early? -- Post Here

[ERD50]

Ahhh, so THAT'S where the "Ignore This Thread" tool is!

Just kidding, congrats to the people who timed it right, or have been conservative during the right times.

You know, an interesting FAQ for the forum would be a list of topics that reflect poster sentiment whenever we are nearing some inflection point in the market. So we couldn't add a thread to the list until it was history. I came across one the other day in a search for something else, interesting to read contemporaneous accounts at those points.

Good thing they locked down that "edit" button, or we'd ALL be geniuses. But some of us would be poor

Razer was the guy wanting to get in/out around 14,000 right? He sure would not be trading much these days. I think the consensus was that you could probably buy puts cheaper than what he was doing, probably not at this point though. dunno.

-ERD50

 

[haha]

I'd like to say I dumped everything in June of 08. I'd have about 2KK more than today.

Are you saying that you are down $2 million since June 08?

WooHoo! you are probably the grand prize winner. But you must still be very wel off.

Ha

 

[riskadverse]

I used to trade mutual funds on a daily basis. It was not unusual for me to do 2 round trips of a million $ plus per week. In early 2000 the mutual fund companies blocked me from doing these transactions without large penalties. I have spent a lot of time since then backtesting investment schemes, but have yet to find another "sure thing". Other than a few day trading "test" attempts since then, I have been 100% in "cash". From 2000 through 2002 I felt pretty good about staying out of the market, but it was frustrating having to watch the market rise from 2003 to 2008. Obviously, I've felt like a genius since then as the market even erased the gains from 2003 to 2008. Now I worry that I've been out so long that I won't be able to pull the trigger when this market turns around.

I must confess, I haven't escaped unscathed though - my house has dropped probably $300K . . . maybe more . . . from the peak, although it will have to more than double that before I show a loss.

 

[socca]

My portfolio is up modestly since Oct 07. This is not a surprise, since my portfolio is always up only modestly. When the next round of euphoric stock buying takes hold, y'all can switch quickly from jealousy to scorn. It's happened before, and will most likely happen again.

I don't know how I ever came up with the idea of investing primarily for income rather than capital appreciation (this hasn't been the conventional wisdom during my lifetime), but this strategy has served me well in all types of economic climates for over 20 years.

 

[Ed_The_Gypsy]

(riskadverse---shouldn't that be 'riskaverse'?)

I used to be almost 100% equities, but last year I began to build cash and bought some bond funds and a big 5-year CD to build a CD ladder in anticipation of retirement. I have been 50/50 US/foreign for a long time. I am now about 60/40 equities/bonds etc. (yeah, I was rebalanced by the market, too)...but none of this prevented me from an over 45% drop in total portfolio value. I am set back only 5 years, which is not too bad considering the Dow and the S&P 500 are as low as they were first in 1997. They are set back 12 years. I am planning that it may take me 5, maybe 7, years to recover.

I am looking at shifting some of my index funds to a couple of high-yield ETFs (SDY and PID). That is the only thing I am doing different as a result of the market collapse. If and when I am in the situation where I cannot find work anymore and therefore have the time, I will consider individual stocks.

I rode out the Crash of '87 and I will ride this one out.

 

[mark500]

In May of 2008, I was speaking with a ER'd neighbor who retired from Microsoft and manages his own money (a lot of it) and gives advice to others. He said he was very wary of the market then. Somehow he knew of the problems developing in the credit markets and that a major correction would likely happen in the next few weeks. I said I have no idea what the market is going to do. I said it could go up or drop 45% like 1973-1974. He was off a few weeks in the time to the market crash. I don't know if he was lucky or good. I did not take him seriously at the time and of course did not change my AA. Little did I know a Papa Bear market was around the corner.

 

[SlowTwitcher]

Pure luck on my part. I had many small to midsize accounts that I began to consolidate in the summer of 2007 - all to a Vanguard account. I didn't want to make small purchases into the market as all these accounts slowly rolled over. So I decided to wait until all the money was there and then allocate it. The market started to slide by Autumn so I just let it sit there. Still sitting collecting dust... can't decide if I should invest it all in the market vs. pay penalty and the taxman on a withdrawal and pay off my house (I know, different thread x 100).

PS-if it makes you feel better I didnt cash out of an annuity because I would have incurred $1000 in fees. Instead, by leaving it, I'm down about $30K

 

[Darryl]

Need to call BS on Dawg even though he declared his own BS with the head pounding for the last six months or longer, ask Runnng Man for a link to subscribe to his newsletter and then soak in for a moment from the "scaredy cats" and conservative folks.
A Dave Ramseyism no matter how many times he reads the tortoise and the hare the tortoise always wins.
I'm 75/25 right now 45 and still working. Really no reason to be 100% stocks and if I had used a 50/50 or lower equities the last 25 years I would be further ahead more risk for more reward? Maybe maybe not depending on who sets up the game, plays the game and who referee's the game.

 

[slouch]

• Got spooked and sold everything in May, 2008; this time, unlike the last time, I was really going to stick to my technical indicator for reentry:

http://www.early-retirement.org/forums/f29/what-did-you-do-today-37868-10.html#post708328

You have to expect the downward trend to continue - especially through September given this month's historical trend. I got out of every mutual fund I owned in May (selling portions into the rallies on up days) based on the 6mo/12mo simple moving average bearish trend on major US Indices:

S&P 500 INDEX ($INX) - Stock chart, Index chart - MSN Money

Now the tough part (for me in previous downturns anyway) is sticking to the signals and only re-entering on the long term trend reversal and not getting back in too early.

• Fast forward 4-5 months and I'm already throwing caution to the wind, trying to buy back in ahead of what I thought was the bottom:
  
  http://www.early-retirement.org/forums/showpost.php?p=720208&postcount=5
  
  

  I'm slowly moving from cash back to stock at this point.

Next time will be different, honest

 

[jrobb45]

I was out, except for about 5% in a healthcare mutual fund, by November of 2005. I was working about 18-20 hrs. a week, off and on, from 2003 to 2005 for our oldest son, who is a residential construction contractor.

Except for 2 houses, all the houses we put up were between $425K and $750K. A lot of the homeowners were complaining about how they were on the edge(payment wise) and getting ARMS and still had new, or nearly new luxury cars, SUVs, vans(usually 2).

Their ideas of conserving money was to paint the attic over the 3 car garage themselves or drywall a half wall in the basement; not build a smaller house. At that time I realized the world was moving too fast for me, so I just dropped out and went to CDs. It was just about a total flight to safety, thanks to the people who were in over their heads and scared the financial daylights out of me.

jr

 

[Koolau]

As mentioned elsewhere, I became risk averse during the 74/75 unpleasantness. Sold all my MFs at the bottom and went to stable value fund for all of MY money. The good news is that I let my company's matching stock in 401(k) ride until late 90s and then sold most of it, adding it to my stable value fund. That single stock provided me the bulk of my invested assets as the stable fund only outpaced inflation by a relatively small amount while company stock exploded for the last 10 years I had most of it.

Still have quite a few shares of old company stock and it's taken a huge hit, but is STILL worth WAY more than I paid for it (as 401(k) match and stock options). All in all, I'm up from my retirement date (05) and maybe down very slightly from my all time high (do have some MFs again, slowly adding since 99).

Given a do-over, I'd have stayed in back in the mid 70s and averaged out of company stock much sooner. Still, I've done very well by luck. As always, luck is better than brilliance any day - at least for me. All of this to say I have no insight nor do I claim any bragging rights. I do feel fortunate, however. I could have done better and I could have done a lot worse.

 

[CuppaJoe]

....

Their ideas of conserving money was to paint the attic over the 3 car garage themselves....

jr

That is so funny, definitely an indicator.

It was the age of "conserving money [by] paint[ing] the attic over the 3 car garage themselves."

Yes, that is what is was.

 

[wallygator69]

Hi,

After my "UGH, almost ready to give into Panic" post in June of 2008 I started selling but didn't mention it here because I didn't want to be a dirty market timer. I sold all my old B shares and am down to 20% stocks.

Unfortunately I didn't get rid of a bunch of GE and I actually bought some more and averaged down a bit. Had I sold it, I would have cut my losses into the upper teens from the peak but still down less than 30%.

Woulda coulda shoulda.

Good Luck from here.

W

 

[Dawg52]

Need to call BS on Dawg even though he declared his own BS with the head pounding for the last six months or longer.

Actually my stocks are down so much I feel like I'm 100% cash.

 

[W2R]

Actually my stocks are down so much I feel like I'm 100% cash.

Ain't it great?

 

[noworkethic]

Those of you who have avoided losses, paper or real, may be reluctant to talk about it amid all the suffering experienced by the rest of us.

Feel free to post here. Were you risk adverse? Lucky?

.

Al,
If I were one of those lucky individuals who was reluctant to talk about this subject before you gave me permission to post here, I would certainly thank you for the freedom you bestowed. If I were being interrogated and you were the good cop I would certainly spill my guts, feeling so free and all...

 

[noworkethic]

Knew a guy who made a consistent profit playing poker. He didn't have much of his money in the stock market...felt too much like gambling.

 

[JustMeUC]

I mostly got out in the fall of '07. Got back in a little when the DOW was around 10,500, which I now regret of course.

I am not a very financially savvy person to be honest, I just got lucky.

Why did I get out when I did? My sister and I sold a huge chunk of land to a developer in late '06 who ended up having about 7 subdivisions going up all around me. I looked around me and said "All this building is CRAZY". A good friend was a RE Agent and he kept telling me about these insane loans people were taking out and how when they reset there were going to be a LOT of people in for a world of hurt.

It was a Gut Feeling to get out when I did and I got it right. Getting partly back in? Obviously Wrong!

ps - those subdivisions? Most all of them are growing up weeds instead of houses and the developer is Bankrupt.

 

[Independent]

Those of you who have avoided losses, paper or real, may be reluctant to talk about it amid all the suffering experienced by the rest of us.

Feel free to post here. Were you risk adverse? Lucky?

Perhaps we can get some vicarious pleasure in reading about how your portfolio is up instead of down.

As I've mentioned before, I haven't owned any stocks since mid-80's. Our retirement money was in a company thrift/401k plan only had a fixed rate until 1994 when they added a couple managed equity funds. I'm risk averse and my wife is more so. But, I thought I'd move about 25% into equities (50% of half the money). But, when I looked at P/E ratios, they looked awfully high. I thought I'd wait until prices got down to a "historically reasonable level". Of course, they only went up. I didn't want to jump on just before the market tanked, so I kept waiting, feeling pretty stupid all the way up.

The price dip after 2000 still didn't bring P/E ratios down. My dad retired in 1972 with no pension but a reasonable stock portfolio. Because of him, I noticed how long the bear ran in those days. So it seemed plausible that the market would go into a long bear after 2000.

I retired in '06 and moved a lot of money into TIPS (I have a non-COLA pension so inflation is a concern).

I think everyone has one big chance to buy and one to sell in their investment lifetime. I missed my buy opportunity in the 80's. By the time the next opportunity comes, I'll be too old for equities. (Note that the S&P 500 Price/(10 year trailing earnings) is just now getting down to 15. That's not a strong "buy" historically.)

 

[jug]

I went 100% cash in 10/07. Locked in 10 year cd's at 6%. Never looked back.

Did something very similar, but don't like to talk about, not the those who brag about all the dough they were making in market.

Heard too much bragging as I was sitting on sidelines, felt bad, so why should I make others feel bad.

Jug

 

[boont]

Too Much Reality

I too hesitate to post my record, but since you asked...

I was quite a Market Bull up until December of 1999. I sold most of my stocks then and a little more in 2000. I did it because I was going to retire in 2002, and because I didn't want to be in the market after Clinton left office. I didn't like where I suspected the country was going, politically.

When people asked me about this I said, "It's called retirement planning". If you own a building outright and it pays rents, what's the chance that your income will take a hit? Small. If you hold a stock portfolio, what's the chance it will take a hit, dividends and equity? Large. End of story in my book.

The S&P was somewhere around 1360 when I got out. Right now it is 682.

Mostly, I invested in well located California real estate in the S.F. Bay Area, which enjoys predictable and stable property taxes and good price support as far as value is concerned, at least in some areas, so far. Also, my rental income has gone up.

After Enron and Madoff I just have to laugh at investing in a market where the pillars of Wall Street (Madoff) are literally crooks operating in an environment of little supervision (SEC) and no accountability (Rating Firms).

When the world was awash with cash I remember Greenspan noting that it was a "conundrum" as to why, with all this cash to spend, companies were not investing in plants and equipment? We now know why. Many companies were leveraging that cash and gambling with it through exotic financial instruments making, for a while, huge profits. Now those instruments have turned toxic and once great companies like General Electric go down the drain with little warning.(My post "Too Much Savings" 7/05)

If anyone ever fixes that I will consider jumping back in. I have plenty of room between 682 and 1360

boont.

 

[HFWR]

I'm getting pretty close to all cash, as in all I have left...

 

[FIREd]

I just checked my Vanguard accounts. I am down to 40% stocks / 60% AAA bonds & cash. That across all accounts, retirement and taxable!!! LOL! Pretty conservative for a 34 year old, huh?

No, I never got out of the market... It used to be 65% stocks / 35% bonds & cash, and I even rebalanced once late last year, but between the slide in the stock market since then and keeping our 2008 bonuses in cash, that's where we are... Oh well...

 

[Alan]

A year ago I was 40% in equities, planning to move to 35% in 2 years ready for RE in 2010. Last year I had to re-balance to get UP to 35% equities 'cos of the stupid market This year I'm already down another $100K to put me in the +300K club so I decided to stop buying equities and just concentrate on saving cash for RE next Jan. However, at the weekend DW asked what our allocation was and shouldn't I re-balance since we were down to 30%. So I re-balanced back up to 35%

If the downward cycle goes on for the rest of the year I don't think I could bring myself to re-balance back up again next January.

 

[Dawg52]

I just checked my Vanguard accounts. I am down to 40% stocks / 60% AAA bonds & cash. That across all accounts, retirement and taxable!!! LOL! Pretty conservative for a 34 year old, huh?

No, I never got out of the market... It used to be 65% stocks / 35% bonds & cash, and I even rebalanced once late last year, but between the slide in the stock market since then and keeping our 2008 bonuses in cash, that's where we are... Oh well...

Well as they say......time is on your side. But if you retire early like I did(52), be very conservative when you do. I thought I was, sticking close to the 100 rule as I had around 50% in stocks. At least I had always heard that was a conservative rule of thumb. Heh heh heh...........boy, was I wrong.

I've got around 10 years worth of cash to live on. Another 7 years before SS kicks in at 62. A decent inheritance coming my way in a few years.(assuming I don't smash my head in first) So I should be ok even if stocks never come back. But it sure is a pisser to go from a very comfortable retirement to one that might just be ok.