Going to 100% cash

I give dex high marks for courage and certainly hold his actions far above the after-the-fact "I told you so" types. However, I think anyone who posts here about their attempt to time the market should expect criticism or praise once the results of their [-]gamble[/-] strategy plays out. Simple human nature.

As best I can tell, Dex is engaged in strategic market timing, or variable allocation. As I understand his techniques, he gets out when he perceives risk to be high.

The fact that one month later he is not ahead of where he would be if he had not sold IMO is meaningless. People confuse a plan to over time beat the market on a risk adjusted basis with a plan to always, every week and every month and every year beat the market. No one has done the latter as far as I know, but plenty people have done the former, whatever apostles of failure might say about it.

And no, I am not interested in debating this question. Differences of opinion are good, I don't want to change anyone's opinions, and I won't pay any attention to anyone who might attempt to change mine. :)

Ha
 
Differences of opinion are good, I don't want to change anyone's opinions, and I won't pay any attention to anyone who might attempt to change mine. :)

Ha

Agree. And I'd never try to change your opinion;)
 
The lesson I take away from this is that none of us can predict the future with any great degree of accuracy. It is easy to become fearful and it's just as easy to get greedy. I have no idea what the future holds so I will continue to keep a portfolio with a mix of equities and fixed income and try to keep it balanced while ensuring I have several years of "guaranteed" monies.

That's why I believe that things aren't as black and white as all-or-none (0 or 100%). Everything in moderation. Sometimes, balanced, boring, middle of the road isn't too bad :D
 
Right. I hesitated to post that, and hoped the that smiley would indicate the good-natured ribbing that was intended.

I also think that a time-frame of one month isn't enough to prove dex's move right or wrong.

I tend to agree with Dex on this particular issue, although he's bolder than I am.

That said, the chart and comment were pretty funny. :D
 
No one has done the latter as far as I know, but plenty people have done the former, whatever apostles of failure might say about it.

Ha

"apostles of failure" - wow, that's a good one, haha! Google search comes up with only 40 hits, most of those duplicates of three or four refs.

Gotta tuck that away for the proper moment... apostles of failure, apostles of failure, apostles of failure - got it - Thanks!

-ERD50
 
And no, I am not interested in debating this question. Differences of opinion are good, I don't want to change anyone's opinions, and I won't pay any attention to anyone who might attempt to change mine.
Ha, you need one of those "write only" computers... :D
 
The lesson I take away is that the human mind has a remarkable capacity to see patterns in randomness (have you ever looked at the constellations?). Technical analysis is no different.

"Chaos is not dangerous until it begins to look orderly" - Max Gunther.
 
FWIW I can relate to Dex.

In early January 2000 I went with my gut feeling and sold all my equity positions and went to 100% cash. Some of the factors I considered important to my decision were really not factors in what happened to the market that year. During February and early March I was not feeling all that great about what I did. Then the March 2000 crash came. I continued to stay out of the equity's market and then 9/11/2001 happened. I stayed in fixed income accounts until Aug 2003.

Sad to say in the Apr 2008 - Aug 2008 I had the same urge, to get out. It seemed to me that with the Fed raising interest rates and oil at $147 a barrel two BIG brakes were being applied to the economy. Seemed simple enough to me. I moved some money out of equities, about 10% and decided against moving more because of cap gain taxes :mad:. Then Sep '08 - Feb '09 came and I was feeling pretty stupid for not following my gut once again.

I don't know which is worse getting burned when one does not follow their gut feeling or getting burned because you do. Both scenarios have a "what if" regret component.

I am think finally coming to terms with keeping at least 5 years of guaranteed money to live on and maintain a portfolio mixed with equities and fixed income and stop worrying (I am working on the latter).

For me it's been hard not to worry some nights especially since the meltdown in '08. FIRECALC has said all along I am good. My FA says I am good. Sometimes it's hard to believe that. I'd probably do better if I avoided watching cable tv, especially CNBC. I hope it does not hurt anyone's feelings but sometimes I think I should limit my visits here when times are bad or markets anxious. Some threads here are informative for sure, others can needlessly fuel anxiety.

ER can be tricky trying to balance not running out of money before one runs out of life and yet try to enjooy one's money as much as possible before checking out. Even a mixed or balanced portfolio requires some faith. I don't know about anyone else here but the last two years of really tested my faith. I am still OK yet still a bit nervous. ER'ing in spring 2008 was it seems setting out on a voyage around the world only to run into a hurricane a few miles off shore. My ship is bit battered, the crew is fine, but the crew is jumpy about being hit with a rogue wave. It would be easy to get more nervous than greedy and try market timing again. I keep looking at FIRECalc and fight the urge. :)

Dex what does FIRECalc say about your 100% cash position vs. expected/needed longevity?

PS. I ended up taking a long nap today on a rainy afternoon, I am paying for it now.
 
Right. I hesitated to post that, and hoped the that smiley would indicate the good-natured ribbing that was intended.

That's the way I took it.

Dex what does FIRECalc say about your 100% cash position vs. expected/needed longevity?

I don't think he plans to be all cash long haul.

Originally Posted by dex
Mentally, I am prepared to be in cash until the end of the year. I'll be watching along the way for an entry point.




For me, I'm somewhat of a dirty market time too. I did a poor job of it when the market crashed a couple of years ago. I rode it down and rode it back up(with the help of med's) and sold off 1/2 of my stocks when the rebound approached 10k. A little early but no complaints. I reshuffled some things and amazingly, I'm almost back to where I was pre-crash. Of course it helps to have a very low w/d rate.

I'm looking to trim some more. Probably a little this quarter.
 
Dex what does FIRECalc say about your 100% cash position vs. expected/needed longevity?

This is not a lifetime move. Even if it was I have 7 years until SS and a small pension, my investments only have to fill in the gap.
There will come another secular bull market when you can leave your money in equities for 10-18yrs like previous ones. I do suggest people expand their investment choices to foreign currencies, foreign stocks, and foreign bonds as that is where the greater growth will be in the future.
 
I would not post my moves, or should I be deluded enough to think I knew what would happen I would not share this as advice. Way too easy to appear wrong, whether you are wrong or right eventually, or whether there even is a wrong or right. Once you have gone public you are in a sense fair game, and although members here are as sweet as Mom's apple pie, I'd just as soon walk in the shadows. I talk over some moves (before acting) with my brother, who has a similar mentality, though he is more risk averse.

I do adhere to a method which is basically varying asset allocation depending on PE10 or Tobin's Q valuations. I don't pay any attention to any other valuations, athough there may be others as good as these. But this method only has promise if in fact markets are mean reverting, and that is a long term phenomenon if it exists at all lately. Every day and every years conditions are different. So this could be an invalid strategy.

Investing is for money, not for social approval, and I am almost sure that seeking social approval, even in very small degree, is apt to be negative for the main goal of making money.

As far as whether after the fact postings are to be distrusted, I kind of doubt it. I reflexively distrust anything put forth on this board or elsewhere that is linked to a selling scheme by the poster, no matter how small the stakes are claimed to be, or no matter how much the poster tries to make it appear that s/he is actually performing a public service. If I had something to sell, I would do like every other person marketing, tell partial truths if forced too, otherwise "keep it happy".

But the only payoff to sugarcoating our performance reports would be mixed at best. Many will distrust the reports anyway if they seem too positive. I remember the recent crash. Pretty much everyone's investment schemes were blowing up, mine were more exposed than most because of a too heavy equity allocation. As far as I could tell, people were honestly posting about how badly they were being mauled.

Just before the climax of the crash I noticed that Genworth common was being heavily bought by important insiders at that firm. I bought enough to matter, but not enough to get killed. (With penny stocks, this is not hard.) But I had a meeting scheduled with my Fido rep to discuss Roth conversions, and he asked me about the Genworth in my TIRA. So in the course of explaining my thoughts to him it looked like just what it was, a rank speculation, based only of what insiders were doing. But as he pointed out, insiders had been getting blown up all through the crash, why would I trust this?

He was correct, but his comments (not really criticism) led me to forget that I knew it as a spec going in, so re-calling it a spec shouln't haved invalidated the suitability/or unsuitablilty of the move. It was a good move or a bad move on its own terms. I sold for what turned out to be a very small gain compared to where it got to because this encounter moved me off my center. I should let my all or none bets ride, as that was the plan. Sometimes they will win, sometimes they will lose but it is not helpful to change based on what someone else says, unless perhaps that someone made a meaningful fortune solely by investing his own money.

IMO, only for practitioners of non market sensitive asset allocation should investing be a social activity. For them, I suppose it could be helpful, the old "Keep the faith" idea. For others, brag after the fact if you want to, confess errors after the fact if you want to- but publishing a log of your moves, either here or elsewhere will expose you to criticism and/or jokes that may hurt emotionally and also hurt your performance. It is different if you have an honest need or desire for help at arriving at a decision before the fact, or perhaps to sell or hold. Certain people who got absolutely killed in the crash may have been helped by some ordinary be "be safer and diversify" advice such as the kind that is rightly given out on this board.

Ha
 
I am glad dex posted his move in advance--I think we've all (including dex) had fun with it, and still are. We had a chance to re-touch on the active vs fixed allocation debate (and even had a bizarre diversion whereby "fixed" was re-defined as "active" if the participant ever re-balanced).

I think most here are posting for fun and to learn something. But I agree that anyone with a fragile ego who comes here for validation would be best to avoid making predictions. For the rest--game on!
 
But I agree that anyone with a fragile ego who comes here for validation would be best to avoid making predictions. For the rest--game on!
I think what I am referring to has little or nothing to do with supposed ego strength. It has more to do with wasting time and mental-emotional bandwidth debating things that many investors will long ago have settled in their minds. Have you seen how long some of these absurd debates can go on? In fact, here I am posting again on this topic! :)

As regards validation, look carefully at many of the threads, especially during stressful times. One of their main functions is to validate or find agreement with a course of action the poster or OP is taking.

Why else so many threads about how ridiculous and wasteful and perhaps morally questionable the unwashed not-us are?

Ha
 
I think what I am referring to has little or nothing to do with supposed ego strength. It has more to do with wasting time and mental-emotional bandwidth debating things that many investors will long ago have settled in their minds. Have you seen how long some of these absurd debates can go on? In fact, here I am posting again on this topic! :)

As regards validation, look carefully at many of the threads, especially during stressful times. One of their main functions is to validate or find agreement with a course of action the poster or OP is taking.

Why else so many threads about how ridiculous and wasteful and perhaps morally questionable the unwashed not-us are?

Ha

I belong to a labrador retriever forum and you should see the endless debates on nutrition. You wouldn't believe how ridiculous some of those threads are concerning dog food.:LOL: Basically as you described.

That is the nature of most forums. People like to validate what they do. I'm guilty as well. :blush: But I will do better.;)
 
Sometimes they will win, sometimes they will lose but it is not helpful to change based on what someone else says, unless perhaps that someone made a meaningful fortune solely by investing his own money.

Ha

So true Ha. Kenny said it true. "Got to know when to fold 'em"....

 
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