Correction and Rebound

[karen1972]

Quote:

Originally Posted by Live And Learn Interesting. How do you know when to get back in ?

When it stops going down There are lots of sites or you can calculate yourself basic support levels in the market... when they hit those targets, the market either pushes through those levels and keeps going in the direction it was going or it stops and reverses direction. Since there are so many technical traders out there and automated trading, the support levels are a pretty good basis to find entry/exit points. I use those as the basis of when sell or buy.

[haha]

I am somewhat overinvested in oil and gas, and since the commodities got clobbered, have not come back and could easily go lower, the stocks have not come all the way back either. And of course, they could easily go lower too. I only sold a bit back in the summer when they were very high, because I had large gains and realizing them would have pushed my taxes pretty high, so I am not going to sell any now either. I would have sold more this summer had I not already sold other stock earlier in the year, before the oil issue run-up.

I think that unless we have an easy winter natural gas may perform reasonably well, but oil seems to be pretty weak, and it will go down until it comes back up, at least somewhat. It seems that demand is not what it was projected to be, and of course unconventional oil has also upset the supply applecart.

Cést la vie!

[Al in Ohio]

Quote:

Originally Posted by Options I honestly didn't know a correction had occurred. The market has been up and down all year. I rebalance in January regardless of what the market has done. My favorite word used by MM is "unexpected". Isn't it all unexpected?

As discussed in an earlier thread. We did not have a market correction. Just volatility that some folks with shorter memories regarding the markets ups and downs had quickly forgot about.


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[FIREd]

Our portfolio reached a new high a few days ago. I just added a few thousand dollars to my international equity fund during the pullback because my allocation to international fell well below target, but that's it.

Because of DW's stock options, our portfolio has been bouncing up and down tremendously recently, enough to completely obscure the volatility in the stock market.

[heeyy_joe]

Just watch, there will be another pullback right before those wall streeters get those fat bonus checks. Coming soon in 2015!

[Ronstar]

I missed it. That correction? happened between dates that I checked my portfolio. My balance a couple weeks after the correction was a little higher than the balance before.

[Dog]

I just retired in early August, so I will admit I was starting to get a little nervous. I had been laid off during the 08/09 market decline and was concerned it could be a repeat. Thankfully that wasn't the case. I didn't sell back then or during the recent "blip".


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[GravitySucks]

I had to sell a bit to cover living expenses. Along with the drop I had a computer virus earlier in the month that made me nervous to login to Fido until I was sure it was resolved. That resulted in my cash in hand going to close to not covering expenses. It did show me that I do need to keep more cash in the AA than a 1 percent average for my comfort level and to keep some of that cash local.

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[John Galt III]

OK, I will admit to panicking somewhat. I thought I had to "do something". All that talk about the S and P and the moving 200 day average is what worked on me. Convinced that the bottom was dropping out, I sold SOME of my equities in one of my 401K's and moved the money into cash. It was at the very lowest day of the drop, of course, I think 10/15/2014.

Once I had the emotional catharsis of "doing something" in that 401K, I somehow allowed myself to "do nothing" with two other 401K's that I have. I left their allocations alone, and avoided losing any money in those.

[AnIntentionalRoad]

Quote:

Originally Posted by John Galt III OK, I will admit to panicking somewhat. I thought I had to "do something". All that talk about the S and P and the moving 200 day average is what worked on me. Convinced that the bottom was dropping out, I sold SOME of my equities in one of my 401K's and moved the money into cash. It was at the very lowest day of the drop, of course, I think 10/15/2014. Once I had the emotional catharsis of "doing something" in that 401K, I somehow allowed myself to "do nothing" with two other 401K's that I have. I left their allocations alone, and avoided losing any money in those.

I'm a tournament chess player and one of the fundamental ideas in chess improvement is to always review our games and identify what we could have done better so that the next time we don't repeat the same mistakes.

I think the same idea should be applied to any pursuit where one's decision making affects performance, EG managing our portfolios.

Kudos to you for doing that.

[karluk]

Quote:

Originally Posted by John Galt III All that talk about the S and P and the moving 200 day average is what worked on me.

If you had chanced upon Mark Hulbert's column before you sold, you may very well have treated the S&P500 falling below its 200 day moving average as an extremely strong buy signal. His column from October 14 indicates that since 1990 the market has trounced its average performance measured over the four and 13 week periods following a 200 day MA sell signal.

What breaking the 200-day moving average for stocks really means - MarketWatch

Another option, of course, is to treat all such signals as mere noise that doesn't help at all in making sound investment decisions.

[target2019]

Quote:

Originally Posted by John Galt III OK, I will admit to panicking somewhat. I thought I had to "do something". All that talk about the S and P and the moving 200 day average is what worked on me. Convinced that the bottom was dropping out, I sold SOME of my equities in one of my 401K's and moved the money into cash. It was at the very lowest day of the drop, of course, I think 10/15/2014. Once I had the emotional catharsis of "doing something" in that 401K, I somehow allowed myself to "do nothing" with two other 401K's that I have. I left their allocations alone, and avoided losing any money in those.

Build a margin of confidence into the signal. For example, this chart shows VFINX with 2.5 SD built on either side of the 200SMA. If your plan specified such, you would not sell until NAV pierced the lower channel.
VFINX - SharpCharts Workbench - StockCharts.com

[Birchwood]

I just retired about 6 months ago. I realized that the bull market has been going on for 4-5 years, longer than the previous bull. I've been to at least 2 bad bear markets in the past. I knew the pain. My equity investment has gained a lot thru the years. I cannot afford to lose much of what I gained. Upon much study, I learned that the Schiller PE is 25, and the VIX is low. Warren Buffet's
assessment of Equity income/ GDP is 50% overvalued. Market goes into cycles, we all know that.
I sold my biggest gainers, which in realized gain is about 5 years of living expenses. It's nice to have the money right where I want it.
When do I know when to get back in.? I don't. What if it continue to go up. I'll wait. What if there is a major correction of more than 20%. Then, I am validated. I'll go in gradually on the upswing. I have been a buy an hold for 30 years. I know the market goes into cycles, but goes up. I just don't want to regret a big lost. This time, I'm a classic buy low and sell high.

[Hamlet]

Whenever people talk about technical analysis, my mind always goes back to --

Caro’s Roulette System #1
First, never bet simply red or black. Also don’t bet odd or even. These are equally poor, consistently losing wagers.
Second, don’t be suckered into betting zero or double zero, despite what some experts may suggest. This may seem like you’re betting with the house, but for technical reasons you are actually betting against the house — and you are taking the worst of it.
So, in order to negate the house advantage, you MUST stick to straight non-green number bets. All odd red numbers turn out to be bad choices, based on over two trillion computer trials. Don’t bet them.
All even black numbers fair poorly, and cannot be bet, for much the same reason, which I won’t explain here.
Let’s get straight to the money-saving advice. Any bet you decide to make MUST cover only even-red or odd-black numbers. There are no exceptions.
Finally, you need to be very disciplined in excluding the number 30 and the group of consecutive numbers that begins with 11 and continues clockwise through and including 14.
This system may seem mystical, but I take gambling quite seriously, and this works for me.