Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Don't recover yet!
Old 04-20-2008, 05:35 AM   #1
Recycles dryer sheets
 
Join Date: Jan 2008
Posts: 126
Don't recover yet!

We rearranged our budget this year to put as much cash as possible in the market during the downturn. I also rolled 200k out of employer's 401k to my Fidelity IRA last week which I plan to put 3/4 in Index funds and the rest in individual stocks.

I feel trapped on the sidelines because I hesitate to plug this money into a market at 3-month highs.

I really don't care to DCA this money back into the market, because I want to believe we haven't seen the last of the fear-selling. I was really hoping the doom-and-gloomers were contagious and we would see a Dow in the 11k range through the Fall.

If the Dow stays >12,500 and growing, I will cut back our monthly investments and we will resume some "real-estate enhancement" projects that we postponed for this buying opportunity.

Do you think the big sale is over?
Gazingus is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-20-2008, 06:34 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
There is no way to know what the market will do and whether the big sale is over. Certainly a month ago was a reasonable time to buy in hindsight (but not even in hindsight since you could easily see the Dow dropped 293 points in one day which is a big buy signal on that day). But even now, I would not cut back on monthly investments.

Just don't forget that the market will have to sit around it's all-time market highs for awhile before it eventually goes even higher. So pick an asset allocation and implement it. As part of your asset allocation (AA), you will have a little bit of cash. You can use that bit of cash to buy on dips if you like because your AA will be specified in ranges (i.e. stocks 70% to 80%, ....).
LOL! is offline   Reply With Quote
Old 04-20-2008, 06:54 AM   #3
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
Quote:
Originally Posted by Gazingus View Post
I feel trapped on the sidelines because I hesitate to plug this money into a market at 3-month highs...

I really don't care to DCA this money back into the market, because I want to believe we haven't seen the last of the fear-selling...

Do you think the big sale is over?
Gazingus, your angst and your question is the other side of the equation for those who attempt to time the market. Simply put, once you are out, how do you know when to get back in? I gave up attempting to time my investments when I discovered how tough it was to sleep when I worried about having to be right twice - when to get out and when to get back in.

It is almost impossible to know where and when we've reached the bottom. I certainly have no clue (see my sig), so I can't give you any advice on when to reinvest. But once you do, I'd recommend you find an asset allocation you are comfortable with, stick with it and don't worry about trying to time the market.
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Old 04-20-2008, 07:06 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
I think you have some time.
MarketGauge by DataView, LLC
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Old 04-20-2008, 07:19 AM   #5
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,594
Listened to a little Brinker yesterday (yeah, yeah, financial porn) ... he's projecting new all time market highs in 2009.

Another bull vote.

Quote:

having to be right twice - when to get out and when to get back in.
Had the same discussion with my BIL. He pulled out of the market near the peak and was patting himself on the back until I said " now the hard part, when to get back in."
__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Old 04-20-2008, 07:37 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Dec 2003
Posts: 1,375
Quote:
Originally Posted by REWahoo View Post
don't worry about trying to time the market.

Well, that may be easy for you to say, but it's been a problem for us since we retired 21 years ago, and built a place in the Sierras.

The nearest market to us is about 2 miles away, and has changed hands 6 times since we've been here. Down for a few months, and then new hours with new owner.

Easier for us to drive the l6 miles to a place down the hill that's open 24 hours a day, and "go crazy" while we're there.

I'm done with market timing.
Jarhead* is offline   Reply With Quote
Old 04-20-2008, 07:38 AM   #7
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,610
Quote:
Originally Posted by Gazingus View Post

I feel trapped on the sidelines because I hesitate to plug this money into a market at 3-month highs.
If you want to feel better about the charts---stop looking at the 3 month chart and check out the one year version. It will make you feel like you are getting a much better bargain.
Now if you want to be a filthy, rotten, market timer you may want to wait for the next dip. The market could run a bit more here, but it is going to get overbought fast---besides, we still have not proven we can punch out of this range.....................Sooo, I think I'll take a shower now, all this talk of market timing has made me feel dirty---really dirty
JPatrick is offline   Reply With Quote
Old 04-20-2008, 07:51 AM   #8
Thinks s/he gets paid by the post
Eagle43's Avatar
 
Join Date: Jan 2005
Location: DFW
Posts: 2,016
Well, my asset allocation has kept my total investment pile fairly stable. During the current "crisis" I have done what I do best; nothing. I predict that my pile will be higher, come year's end. I don't need no stinkin' timing.
__________________
Resist much. Obey Little. . . . Ed Abbey

Disclaimer: My Posts are for my amusement only.
Eagle43 is offline   Reply With Quote
Old 04-20-2008, 08:36 AM   #9
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,337
Quote:
Originally Posted by tryan View Post
Had the same discussion with my BIL. He pulled out of the market near the peak and was patting himself on the back until I said " now the hard part, when to get back in."
Mine did the same thing. He pulled out as the market plunged late in 2007. I don't know what his asset allocation was but I suspect it was mostly individual stocks. I think I'd be slightly ahead if I had dumped my mutual funds at the same time but not by more than a few percent.

That is always the question if you get out. "When do you get back in?" He's still predicting the end of the financial system as we know it but he also lives in California.

I'm down almost nothing since the beginning of 2008 (<2%) so it would be hard to justify getting out if I had. Of course, selling at the absolute market top and buying at the absolute market bottom sounds so wonderful. I should just do that all the time.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 04-20-2008, 10:28 AM   #10
Moderator Emeritus
 
Join Date: May 2007
Posts: 12,894
Quote:
Originally Posted by Gazingus View Post
We rearranged our budget this year to put as much cash as possible in the market during the downturn.
My wife and I are doing the same, taking advantage of the sale...

But we don't really try to time the market though. We invest the money using value cost averaging. On the 12th and 25th of each month, our money gets invested based on which asset class has the best relative value at the time, as per my homemade spreadsheet. That spreadsheet tells me what to buy and how much of it to buy. I completely removed emotions and decision making out of the process. The last injection of new money was actually on the 14th (since the 12th was a saturday), which happened right before last week's big run up, so that was a lucky break.
FIREd is offline   Reply With Quote
Old 04-20-2008, 10:41 AM   #11
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,856
Quote:
Originally Posted by Gazingus View Post
I was really hoping the doom-and-gloomers were contagious and we would see a Dow in the 11k range through the Fall.
Do you think the big sale is over?
Oh, I suspect that you still have time for at least another couple rounds of bargain shopping. Frankly the last six months have been nothing like the real market swings we've seen in 2000-2003, Oct 1987, or 1966-82. So if this little airpocket is causing you heartburn then you have a lot of pain ahead of you in the coming decades.

I say that there will be more buying opportunities because we're usually early to the party. We started rebalancing in Feb and we've been fully invested since March. Most of the dividends are being reinvested, too, so for our sake I hope the next year or two really suck.

The real problem isn't the market-- it's your attempt to time it. You'd probably do better in the long term to pick an asset allocation, plunk the money into it, and walk away for a while. The more you educate yourself on the subject, the less you'll be subject to investor-psychology emotions. Eventually you'll realize that you're either the next Lou Simpson... or Homer Simpson.

But you don't have to take our word on it when you can analyze your own performance data. An alternate approach would be to put aside 10% of your portfolio for your "brilliant investor" career. Then you can feel that you're dealing with market volatility in an appropriate manner (whatever you determine that may be) without potentially crippling your long-term returns. After a few years you can see which has done better-- hands-off or hands-on-- and decide how you're going to handle the coming decades.
__________________
*

Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."

I don't spend much time here— please send a PM.
Nords is offline   Reply With Quote
Old 04-20-2008, 11:31 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
Quote:
Originally Posted by Jarhead* View Post
Well, that may be easy for you to say, but it's been a problem for us since we retired 21 years ago, and built a place in the Sierras.

The nearest market to us is about 2 miles away, and has changed hands 6 times since we've been here. Down for a few months, and then new hours with new owner.

Easier for us to drive the l6 miles to a place down the hill that's open 24 hours a day, and "go crazy" while we're there.

I'm done with market timing.
BIG golf clap for you, sir!
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 04-20-2008, 02:01 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Dec 2003
Posts: 1,375
Quote:
Originally Posted by cute fuzzy bunny View Post
BIG golf clap for you, sir!

Thanks for giving me the clap, CFB.
Jarhead* is offline   Reply With Quote
Old 04-20-2008, 03:01 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
You know I'm always good for it
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 04-20-2008, 03:06 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,309
You said you rolled out of a 401k last week, but how was the money invested? If it was in stocks, plugging back into equities is really just a sideways move.
jazz4cash is offline   Reply With Quote
Old 04-20-2008, 03:11 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ziggy29's Avatar
 
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
Quote:
Originally Posted by Gazingus View Post
I feel trapped on the sidelines because I hesitate to plug this money into a market at 3-month highs.
All I will say is this:

(1) My crystal ball is broken; I can't help here. I gave up trying to predict the near-term future of the market long ago. And the funny thing is, my performance relative to the market has consistently been MUCH better since then.

(2) I'm sure that some people didn't buy into the market in January 2003 because they were afraid of buying into a recently bad market "at 3-month highs." They would have left something like a 70% gain in the next four years on the table if they let their fears guide their actions. Granted, this market since October is nothing compared to the overall 2000-2002 losses, but who knows (other than in hindsight) how long a crappy market will last?

IMO, if you're afraid but you KNOW you want this money in the market long-term, at a minimum I'd DCA if I were afraid to go all-in.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
ziggy29 is offline   Reply With Quote
Old 04-20-2008, 03:49 PM   #17
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,337
Market timing doesn't work unless you are just plain lucky.

I lost a job in February 1982. I almost lost our house which I had stupidly put all of our cash into the downpayment to avoid the 14% interest rate. There was no emergency fund to carry us past 3 months. Luckily, the house sold before foreclosure and I got a pile of cash at closing.

I got a new job and put only 10% down on a new house. The rest went into Fidelity Magellan in late July 1982. Now that was perfect market timing.

That whole experience was probably the best thing that could have happened to me. I had my "Scarlett O'Hara" moment. After almost losing the house I vowed to never be poor again.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Don't recover yet!
Old 04-20-2008, 06:03 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 9,067
Don't recover yet!

Wash your mouth out! I'm ready to go up up and awayyyyyyyyyyy..........
__________________
Retired 3/31/2007@52
Investing style: Full time wuss.
Dawg52 is offline   Reply With Quote
Old 04-20-2008, 06:06 PM   #19
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
Leave it to Jarhead* and CFB to link market timing with a STD...
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Old 04-20-2008, 06:42 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
We were just the men for the job.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
It took almost 7 years to recover! SP500 Sam FIRE and Money 40 05-21-2007 04:53 PM
I'm in AMT Hell - anyone understand how to recover AMT Credit from ISO exercise? JB FIRE and Money 4 04-14-2007 09:39 AM

» Quick Links

 
All times are GMT -6. The time now is 10:47 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.