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Old 03-25-2020, 07:56 AM   #41
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How did we miss it indeed!

I am one of those who believes in keeping to my asset allocation. I saw the writing on the wall, but didn't act. But then I see the writing on the wall at least 10 times for each time I should have acted.

I lost a lot of money in the internet meltdown when I thought I was a stock picking genius. At almost the bottom of that market, I sold every individual stock that I owned and moved to widely diversified, low cost mutual funds to assemble a portfolio & decided then to stick to a previously defined AA (IIRC, my AA then was 80/20.) That experience has molded my thinking about investing.

Having said that, I wish I had listened to the discussions I was having with my friends in early February of the wide impact this virus could have on the economy - not to mention the thoughts that Brewer and others were sharing here.

However, as part of my investment plan, I have 2-3 years in near-cash, so I can ride this out.

The real question for me is - will I rebalance regularly to keep my AA?

In 2008, I started rebalancing (as I have this time), but at some point I just couldn't do it & stayed on the sidelines. The result - it took my portfolio longer to return to the pre-crash values.

In 2008, I was calm because I figured I could get back into the workforce without too much of a problem if I needed to (I ER'd in May '08). This time, I have the '08 experience behind me, I'm 12 years older and SS is just around the corner if I absolutely need it. Having said that, it still hurts to see our portfolio crater.

I could have written this post verbatim. I made a lot of money in the tech bubble only to give most of it back. It did change me from a stock picker to an asset allocater. Fortunately, I preserved enough and saved enough to meet my long term plan of pulling the plug in my 50's. I viewed the 08 crisis as an event that got me to the finish line quicker because I was saving like mad through that period.
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Old 03-25-2020, 09:55 AM   #42
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But the core of my strategy is NOT to jump every time something "could" happen. I'm quite sure anyone who did that will be worse off in the long term.
I do not think anyone can predict whether others "who jumped" will be worse off or not. As we all know, "jumping" is an individual decision, relative to age and whether it's possible to recoup with the years remaining. We are used to financial disruptions, recessions, etc. However this time we are in unchartered waters with a pandemic added to it as well as an economic "shut down". For me, this significant economic shut down has been the other half of the black swan. The foreseeable future is much harder to predict than before.

I did not miss the signs but boy when it started, it sure happened fast. It took three years for this to happen in 1929 rather than the short three weeks this time. (read that somewhere).

For full disclosure, while I had significant cash on the sides (over 20 years worth) and should have been comfortable riding this out, I liquidated my accounts but not before loosing most all unrealized gains on the books. Why did I do this?

1) I am 64
2) As I rode the market down, I was willing to loose the unrealized gains to see if this thing would correct. I was not willing to loose "principle". We all have to have "our line in the sand" moment.
3) The markets were shrugging off the Fed announcements of asset buying, zero interest rates, etc.
4) Wish I had listened to my gut and sold when the niggles started In January much like when I sold Boeing at 375.
5) I can live with the decision and can always get back in when things settle.

Sometimes it is about preserving your wealth.
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Old 03-25-2020, 09:55 AM   #43
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Originally Posted by walkinwood View Post
How did we miss it indeed!

I am one of those who believes in keeping to my asset allocation. I saw the writing on the wall, but didn't act. But then I see the writing on the wall at least 10 times for each time I should have acted.

Having said that, I wish I had listened to the discussions I was having with my friends in early February of the wide impact this virus could have on the economy - not to mention the thoughts that Brewer and others were sharing here.

However, as part of my investment plan, I have 2-3 years in near-cash, so I can ride this out.
So, if you had known then what you know now, you would have gone ahead and sold more stocks, so you could have say 6-7 years in near cash? Or would you have sold all hoping to get in after a market crash? What exactly are you regretting?

This is probably a good time to evaluate what amount in cash and other fixed income one is really comfortable with to “ride out” such a situation.

Of course it’s no where near over yet.
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Old 03-25-2020, 10:33 AM   #44
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I didn't think what was going on in China would affect us in US. At least on the scale that we're looking at now, and what we will be looking at soon. I pooh-poohed what was happening, probably thinking in the back of my mind, it will be localized like many of the past viruses. I had no idea on the "novel" part of it, it's ability to spread without showing symptoms, etc. Besides, if one watches the media, on a daily basis, it's nothing more than than fear-mongering.

The reason I got out of the market (Feb) was that I believed the virus was created in China's only Level 4 Bio facility. I believe I've been proven wrong on that, but still I'm not so sure.
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Old 03-25-2020, 10:43 AM   #45
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Yes you did, you said that the market might 'pull back a tad over the next week or two' - then you sold them the next day and bought some more.

All credit to you for having some foresight, but even you weren't envisioning a 35% pullback at that time.

Also, most of us who buy and hold don't read stock threads. I have them set to ignore generally. That won't be changing either...
No, I totally messed up in my guess as to how this would play out. I thought it would be more contained in Asia and the market would react with a serious of small dips and drops as we headed into April and May earnings. My plan was to walk the market down with puts. It started off great, but the $30,000 in puts I once owned are now worth $1.1 million and I only managed to grab about $45,000 of that in total. Major screw up.

I also did not convince my wife any of this was real and her 401K is down like $300,000 so net I am probably losing more than most on here.
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Old 03-25-2020, 10:49 AM   #46
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The real question for me is - will I rebalance regularly to keep my AA?
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I could have written this post verbatim.
Maybe not verbatim from me, but close enough for a forum post, hehe! I thought pretty hard about reducing equity exposure before the market tanked, but decide not to act.

I thought more about reducing equity exposure now that the market has tanked and came to the conclusion that if I sold and somehow I miss out on a recovery, not only would I have gone against my principles, I would have been out a bunch of money too. This is the scenario I don't want to have to live with. I wouldn't mind going against my principles and winning, but losing, no, that would cause me too much strife. So I stuck to the plan, and will stick to the plan, no matter how painful it becomes.

So now, it's about when to rebalance. If one says (as I did before the market tanked), I have 10 years of spending in the SVF, if I rebalance, that number would go down, of course. Maybe I could justify reducing that duration to 7 years. But the timing and scenarios for rebalancing, although in the written plan, don't feel like they're hard and fast principles that, if not followed, will cause me strife. I always knew of this problem of 'if the SHTF, you'd need to raid your spending cash to rebalance' problem. My plan was to wait for CAPE-10 to be 18 before switching my allocation from the inflated 80 year old to the actual 60 year old. I realized and realize that may never happen, so was willing to stay with the 80 AA 'forever'. Now I'm thinking we might see 18 and I'd need to have the courage to act on my plan.
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Old 03-25-2020, 10:55 AM   #47
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I don't want to jinx anything, but the Dow is up 15% in the last day-and-a-half of trading. We don't know what will happen going forward, but I can say for certain that I didn't anticipate this any more than I anticipated the virus developments causing it to drop so much so fast. So let's not kick ourselves for not seeing what nobody could be expected to see.
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Old 03-25-2020, 11:40 AM   #48
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I don't want to jinx anything, but the Dow is up 15% in the last day-and-a-half of trading. We don't know what will happen going forward, but I can say for certain that I didn't anticipate this any more than I anticipated the virus developments causing it to drop so much so fast. So let's not kick ourselves for not seeing what nobody could be expected to see.


Am I the only one buying a few SPY puts at this afternoons pricing?
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Old 03-25-2020, 12:27 PM   #49
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For those who decided to go cash, are you going back-in to the market now that the S&P is up two days in a row? With what we know at this time, and without the magic of 20-20 hindsight, at what point are you going to invest?
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Old 03-25-2020, 12:45 PM   #50
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Am I the only one buying a few SPY puts at this afternoons pricing?
I priced them earlier and found them to be around 10% out just a month or two.

My decision was to hold my nose and sell of a bit more of the last of my non cash down side protection and see if the sp500 can get back to 3000ish before repurchasing puts. I still have a number of way out of the money leap calls that could pay off if it gets that high or higher.

Volatility is still way high still. My belief is unless the death toll is beat into our heads over and over like 911 was by the media the market could come back at least one more time short term.
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Old 03-25-2020, 12:56 PM   #51
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I have seen a few reports indicating 21 million cellphone subscribers disappeared in China over the past 3 months. Although the data China provides is suspect, so talking about missing something if this is true, is this even more severe than we think?
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Old 03-25-2020, 01:05 PM   #52
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My first thought on this was is there another possible simple explanation? I know the Chinese have had some work turmoil as well, is it possible they people pay for subscriptions and a few kid phones or lines were shut down to save a few bucks?
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Old 03-25-2020, 01:21 PM   #53
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I found something online that suggested the loss was laid off unemployed temporary workers returning to their homelands elsewhere in Asia.
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Old 03-25-2020, 01:22 PM   #54
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Just some food for thought, but maybe it is not too late to miss the worst of it, at least financially? The U.S. wasn't as prepared as other countries, we didn't do the testing early on, so far no nationwide lock downs, we have less hospital beds than countries like Italy, no universal care, no paid sick leave, a population where some states or those in government still aren't taking the threat seriously and one of the highest obesity rates in the world (obesity is linked to the critical cases).

Your thoughts?
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Old 03-25-2020, 01:31 PM   #55
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Am I the only one buying a few SPY puts at this afternoons pricing?

I bought some yesterday morning. They’ve held up amazingly well, especially since S&P is up today. One is slightly green, the other slightly red. I thought about buying more today, but I think the big gains are gone at this point. Best not to get too greedy.
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Old 03-25-2020, 02:11 PM   #56
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For those who decided to go cash, are you going back-in to the market now that the S&P is up two days in a row? With what we know at this time, and without the magic of 20-20 hindsight, at what point are you going to invest?
My thoughts? This is just the early beginning and testing has not yet ramped up to know exactly how wide spread it is, especially for those that are asymptomatic and unwittingly spreading it. We would have to test practically everyone much like South Korea. Maybe as testing ramps up we will get to this but we are no where near this yet.

The initial modeling projects infections peaking in June for the United States. Our Governor closed all schools for the remainder of the year and all non-essential businesses for the next 30 days but could be longer. The modeling also predicts a second wave of infections. So the question is how much economic devastation will there be and/or how long the Fed will print money to prop all of it up (and how much will THAT be?).

I won't be looking at getting back in much before May or June...and/or until we know more about the economic impacts for the U.S. and globally. Remember it's not just us that is infected. At this point, I am not swayed by 2 days positive in the markets.
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Old 03-25-2020, 02:19 PM   #57
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I have seen a few reports indicating 21 million cellphone subscribers disappeared in China over the past 3 months. Although the data China provides is suspect, so talking about missing something if this is true, is this even more severe than we think?
So Taiwan, South Korea and Singapore are doing something similar? Because otherwise, it's definitely not 'more severe' than China's numbers indicate. If you were getting laid off for a couple of months, would you keep your business cell phone, or any extra accounts that weren't crucial?
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Old 03-25-2020, 02:34 PM   #58
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Here is a thread started by yours truly from March 2nd. 92 people replied to the poll. 69 commented. Only 10% were willing to sell and not Stay the course or buy. https://www.early-retirement.org/for...ce-102406.html
To be fair, you did call it a "dead cat bounce". Unless you are saying the US economy will completely fail, this is not that is. A "dead cat bounce" is a business that is doomed to go out of business and has had a huge drop, but has an uptick on optimism that the business will hang on or it's assets have more value that the stock market cap.

In any case, I am one to stay the course, because I don't have a feel for just how much of a drop this should be causing.
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Old 03-25-2020, 03:07 PM   #59
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So Taiwan, South Korea and Singapore are doing something similar? Because otherwise, it's definitely not 'more severe' than China's numbers indicate. If you were getting laid off for a couple of months, would you keep your business cell phone, or any extra accounts that weren't crucial?
Hopefully that is the case for most cancellations.
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Old 03-25-2020, 05:17 PM   #60
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So, if you had known then what you know now, you would have gone ahead and sold more stocks, so you could have say 6-7 years in near cash? Or would you have sold all hoping to get in after a market crash? What exactly are you regretting?

This is probably a good time to evaluate what amount in cash and other fixed income one is really comfortable with to “ride out” such a situation.

Of course it’s no where near over yet.
That's a good question. What exactly am I regretting? I wish I'd sold ALL my equity holdings & moved to intermediate treasuries.

I understand that's just step 1. Step 2 - getting back into the market would be another gamble. This tempers the regret mentioned above.

My "regret" is really theoretical. I'm not beating myself over the head with it.

Being 60/40, I have over 10 years of expenses in cash/bonds, so I'm not worried about that. I will rebalance till the bond portion is worth 5-7 years of expenses based on last year's expenses. At that point, I think it will be wise to stop the rebalancing.
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