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

[TromboneAl]

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.

 

[haha]

If they do, I'm taking names.

Ha

 

[REWahoo]

T-Al, have you taken up a new hobby as an internet troll?

 

[Westernskies]

I am in the low equity category, but not by choice. The market rebalanced my portfolio for me.

Does this count?

 

[guest]

I'm going to wait and read before admitting anything......

 

[Peter]

I considered getting out in September but didn't want to pay the capital gains tax. Oh, what a lesson learned!!!!

Peter

 

[FinallyRetired]

OK, I'll step up and take the rotten tomatos. First of all, I'm very risk adverse and always have been. But, most importantly, I was lucky this time around, and I'll take luck to smarts any day.

The most I was ever invested was maybe 50% stocks and the rest in cash equivalent, and that was during the dot com boom. I got out of that crash maybe 15% down, and lost most of whatever trust I had in the market.

When I saw the market recovering in the last few years, I increased my equity to maybe 25%, and felt silly about my conservatism as I saw how so many were making very good returns. I felt uncomfortable with the market a year or so ago when I saw home sales stalling and prices beginning to fall, so I pulled out of the market except for what I consider some play money (most of which I've lost).

So, today, I'm about 1% down from my peak, though this means I've lost to the market the 5% or so that I gained from my CDs and cash equivalents.

Bottom line, it pays to be a scaredy cat every now and then. And even a stopped clock is right twice a day. But I'll take it.

 

[CuppaJoe]

If you re-read posts since summer 2007, you can dig up about eight or more people who said they cashed out. I think there is more vicarious pleasure to be had in reading farther back, when the market could only go up and many of us were still unaware of the sub-prime effect. Nostalgia, that's where it's at.

 

[FinallyRetired]

If you re-read posts since summer 2007, you can dig up about eight or more people who said they cashed out.

Not to rub it in, since I was half joking, but:
http://www.early-retirement.org/forums/f44/i-knew-we-hit-the-top-28111.html

 

[tryan]

I posted earlier about my BIL pulling the plug with the DOW at 14k. We talked about needing to time the TWICE (out AND in). Well, be got back in at 10k and is now riding the rollercoaster with the rest of us.

 

[FinanceDude]

Where's Ruinning Man? As I recall, he called the top and got out. He's probably in some Caribbean resort getting the high interest payments on Austrailian CDs sent to his bank account ACH.............

 

[FUEGO]

A good buddy of mine who is a complete boglehead asset allocator efficient market kidn of guy (well educated like me! ) got out at just the right time. Late 2007, he decided to pack it up, quit his job, leave San Fran and spend the next 4 months traveling the country and returning to my East Coast town. His plan was to buy a house in the early part of 2008 once he settled, so he was furiously buying chinese stocks and funds in 2007 to get up a big down payment. And he admits he got lucky and sold out completely at the right time. He said he didn't want to let his money run on autopilot while he was away from technology for the most part for 4 months while traveling.

I guess he put 20-30% down on his house, and he is just now getting around to investing in the market via his 401k at his new job and after tax accounts.

He's smart because he knows he can't replicate this success again. He knows he was darn lucky and not necessarily smart for investing this way.

 

[OAG]

 

[FUEGO]

Where's Ruinning Man?

Ruining Man? Don't be bitter just because his portfolio outperformed yours!

 

[Running_Man]

Where's Ruinning Man? As I recall, he called the top and got out. He's probably in some Caribbean resort getting the high interest payments on Austrailian CDs sent to his bank account ACH.............

Nice play on my screen name!

I reduced from 25% stocks to 0 percent in early 2007. Here is one of my early sell posts:
http://www.early-retirement.org/forums/showpost.php?p=497304&postcount=20


Was back up to 8 percent equities or so by October 2007 (I was adding 1 percent per month) when I got concerned at new high and sold again. This is a post in early November in response of asking for a short play - I reccomended Citicorp since I thought there was a good chance they would fade out of existence"
http://www.early-retirement.org/forums/showpost.php?p=576404&postcount=2

December 2007 my thoughts that Fed rate cut would not be helpful to stocks or market. This post caught me ALOT of flack
http://www.early-retirement.org/forums/showpost.php?p=587676&postcount=8

Nearly doubled my stock allocation to 25 % on Feb 24th of this year ( added 1% stocks Dec '07-Jan 09)
http://www.early-retirement.org/forums/showpost.php?p=787878&postcount=55

 

[Architect]

I won't post about my case having been burned on that. But for people who want to learn from this experience, I can offer some thoughts

• People generally take extreme positions - either you can't predict anything, or you can predict what will happen tomorrow. People on this board seem to fall into the first camp. Another position is to expect that at least some of the time you can reasonably forecast events in a large sense (forest vs trees)
  Case in point, this crash was clear long before the event, the only question was timing. Many people saw it, Shiller, Shilling, Roubini, CR, etc. I was about nine months early in my planning. It wasn't a black swan, despite the advertising.
• Consider all investing ideas, especially those that disagree with you, even and especially if you don't do anything from it. My approach has been very different from what people do on this board, but I come back because of that. I'm continually questioning what I'm doing.
• Be willing to change your approach when reality changes. People here generally take a 'buy and hold until you die' approach. I like buy and hole - but not now. I believe there are times that approach works, and times when it doesn't.
• Don't believe any particular investing advice blindly, 100% of the time. This includes Bernstein, Bogle, etc. Example, I know a close friend of Bernsteins, one of his early acolytes. This guy retired early after making a lot of money during the 1982-1999 period following Bernsteins approach. You know what he did in 2001? Sold everything and bought REIT's. Then later I think he diversified again (don't know how he did recently). I learned from him that there are times (big turning points) to change tactics.
• Don't believe every finance study, in fact, have a healthy skepticsm all finance studies. Yes, I know the studies that show that most investors lose more money by moving things around than by staying the course. I did terribly by following that general advice, and did much better by taking a somewhat more active approach (there is a big difference between day trading and investing for big trends.)
• Especially, beware of group think, unless your investing in it on purpose (investing in full knowledge in a bubble)

Basically it comes down to not always reinforcing your beliefs, but instead pay attention to your non beliefs. It helps catch the blind spots. For example, drop the tin foil hat jokes, it's just setting you up with a blind spot. Sometimes the guy who says something crazy is right.

 

[Texarkandy]

I was 100% in the TSP "C" fund (S&P 500 index) for years.

I took notice of the subprime warnings early on & was becoming increasingly aware of how close I was getting to my hoped for ER date (09 or 10) I guess you could say my risk tolerance changed - so I went 100% into the "G" (Treasuries) in April 07.

Luck, intuition, trying to pay attention to trends? - I don't know, I'm not the savviest investor, but I do LBYM & try to keep up with events - I'm just glad now I bailed.

TSP tells me my 2008 performance was +3.75%

Started buying "C" fund again in Jan 09 with new money - going to decide by this Fri whether to quit doing that. (all advice/comments welcome re: that!)

Now, Let the rotten tomatoes fly.

 

[JOHNNIE36]

I've posted once before on this subject so I won't bore you with the details again. I'll just say again that I've always been a very conservative investor and for the last three years have been in income funds. November 08 I moved everything into CD's at 5%. Two thirds of this is in an IRA. After watching Fox News do a story about what happened at GE, I don't see how anyone could ever trust the market. The CEO of GE said they would not cut their dividend and then went ahead and cut it by 70% (I think that was the figure). There has to be some serious repercussions from statements like this. Lot of people buy stocks just for the dividends and this is flat out fraud. The BOD should fire him.

 

[Dawg52]

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

 

[ikubak]

If anyone tells me they went from 100% stocks to all cash in October 2007 and then shorted financials in August 2008 I'm either going to call BS or sign up for their newsletter. Had I done those things I would be retired right now.

 

[Dawg52]

Ok, maybe I've had one too many meds today.

 

[CuppaJoe]

Ok, maybe I've had one too many meds today.

Parallel universe?

 

[Sue J]

We have avoided losses on stocks because we've never owned a stock. I know everyone says you can't accumulate wealth without being in the stock market. Yup, we're not wealthy. Instead we "invested" in sure things like paying off our house and cars. And I buy CDs.

As for retirement my husband is a public employee and is in his 25th year and hopes to stay until 30 and get his pension. I'll get a small Social Security payment when the time comes. So far it looks like we can actually live on this.

I realize my risk tolerance in just about zero. I need to be able to sleep at night and I don't want to wake up and turn on the news and find out that something somewhere has happened and I've lost money. Buying stocks just looks too much like gambling.

Someday, I may get brave enough to get into a mutual fund.

I know my husband's state pension fund is partially invested in stocks, that's about as close as it gets.

 

[kumquat]

I'd like to say I dumped everything in June of 08. I'd have about 2KK more than today. I did sell about 15% of my holdings in a high flyer (that represented >50% of NW). All that means is I have slightly more than when I ER'd in June 07 (including enough cash for 5 - 8 years that I've never had before).

I really want to get back in, but that would bump my AA to >80% equities and I'm a big chicken.

 

[youbet]

Soooooo....... has anyone looked at the numbers and done a comparison of portfolio performance for some lengthly time period, say 20 years, comparing an equity heavy portfolio vs an all fixed portfolio, including the impact of taxes?

If someone went 100% TSM in March, 1989 while another went CD ladder or total bond market at the same time, how would they compare today? Has this downturn removed all of the incremental gains the equity portfolio would have had going into it?