How do you feel now? (4 Months later)

[REWahoo]

Duck and cover folks - Monday is coming and the voodoo queen augurs ill for the market!

Stand down. Check who posted the "W" word...it wasn't W2R.

 

[calmloki]

But but but - post #27?

wonder if Walmart still needs greeters?

 

[REWahoo]

But but but - post #27?

wonder if Walmart still needs greeters?

Hey, I'm doing my best here. Don't go fact checking me and screwing things up!

 

[kevdude]

Everything we had in equities stayed in equities. We had a fair amount still sitting in cash from a property sale last November, so I bought more equities at the end of February, the last week of March, and mid April. In June we decided to remodel our kitchen and baths so I sold out of Wellington (which I don’t really consider equities since it is a mix of stocks and bonds), which will pay for all of that, buy DW a new car later this year, and fund two years of tuition at Northeastern University for our son (we already had two years in a 529).

So, the net effect of all that is we have approximately the same amount of cash/liquid investments that we had as of the market highs in February. Well, except for that little $140k tax bill we just paid.

 

[Dash man]

We’re doing fine. We did some Roth conversions when this all started, followed by selling some equities in our taxable account to build up our cash a bit, but not too drastic a move. Some was tax loss harvesting and some was to buy into some stocks I thought would do better with pandemic. It turned out well for us. We also sold some to buy a townhome for my son and his family when they moved to be near us. Overall we’re very pleased with our situation and have enough in cash to last 5+ years.

 

[RVplusDog]

We're fine with our 60/40 AA. I'd like to understand fund management. For instance, you buy the Total Stock Market Fund. Do the fund managers move companies in and out based on their success or failures? Say Apple has the highest number of shares in that fund then Facebook (or whatever) down the line. Then Tesla gets in the mix. Do fund managers rearrange the companies best suited for that fund? Since I don't follow the specific companies in funds, I hope fund managers do.

For funds that track an index, no, fund managers do not choose the stocks. An example is VTI - total stock market. The Vanguard computer systems keeps the relative values of its holdings in line with the pertinent index. More info here: https://investor.vanguard.com/etf/profile/VTI

Similar strategies are followed for other funds and ETFs that are based in stock indices (VOO = S&P 500, for example). It’s my understanding that means that even if known stressors are approaching, the fund holds the stock as long as the index does.

This is one of the reasons that I divested about 75% of my equities from index ETFs in March, before the worst of the drops. Since then, I’ve built my own portfolio up, buying on dips, for stocks I like. It’s a lot of work. Thank goodness for Vanguard’s free trades, or I couldn’t do this. We are almost back up to our all-time high. I have just over 50% in cash, with limit orders set to execute on any upcoming hard dips. I’m really happy to have such a high percentage of cash at the moment, and I will welcome the addition of high quality stocks to my portfolio on any upcoming dips.

 

[street]

Wasn't March the lowest drop for YTD? Why would anyone sell in March with having the largest drop so far this year??

I didn't do a thing this time just like 3 bad times I went through in the last 40 years being in the market.

 

[MRG]

Fine. Moved 100k in equities to a 2% 3yr fixed annuity and then had a couple of cds mature. I splurged with some and have some in reserve. According to my attorney I'm going to get some settlement money this year, that's going to pay taxes. I am cautiously building a new niche equity with some play money.

Longer term I am fearful of pandemics. My great grandparents died off in the 1890s during a 5 year pandemic. What do I know?

 

[TechLead]

Wasn't March the lowest drop for YTD? Why would anyone sell in March with having the largest drop so far this year??

I didn't do a thing this time just like 3 bad times I went through in the last 40 years being in the market.

I suspect people who sold in March expect even larger decline to come. Maybe it was panic selling. From past posts there is fair number of them.

Maybe they are right, maybe not.

 

[CardsFan]

It's the end of world as we know it, and I feel fine

No changes, beside the usual sells to raise cash for the next few years.

Realistically, our stocks are for long term use (legacy). Our bonds/FI/cash are likely more than we need. Slowly reducing equities by taking int/div and distributions as cash, and putting those in to Cd's/bonds.

 

[Badger]

Last time I sold shares to put into cash was when my investments were at their peak. I am now about 50% cash (CDs and MM), 35% stock, 15% bonds. Now that may sound a little high for cash to some of you but we are in RMD phase and don't need to rely on accumulation since SS and a few small pensions take care of our needs. House and cars are paid for and medical will never be an issue with Medicare and Tricare for Life. I am not planning on timing the market to buy more shares and selling anymore shares would result in higher taxes for no reason. The money will be a great start to early retirement with a new basis for those inheriting.


Cheers!

 

[SpinDoctorTX]

I sold a bond fund I'd not been happy with in late January. During the market swings, I was able to unload some loser small & midcap funds that had floundered along for some time. Ended up w/ a decent return (miraculously). I'm 45/55 now in my ira with 5+ yrs living expenses liquid in banks. My last CD ladder matures in Oct., so that'll go in the bank also.

Although heavy in cash, I am leery of buying into bonds just now. I'm not sure what the next move will be, but I do not see an economic recovery anytime soon & wouldn't be surprised by a prolonged and deep recession.. I sure do hope I'm wrong about that.

I do have some buy/ sell triggers set up and am watching some funds very closely. If they fall enough, I'll buy into one or more of them.

 

[pb4uski]

Hey, I'm doing my best here. Don't go fact checking me and screwing things up!

Someone posted that since W2R posted a graphic and didn't actually type the W word that is didn't count.... I'm not so sure... maybe we'll just get a correction instead of a crash.

 

[pb4uski]

I suspect people who sold in March expect even larger decline to come. Maybe it was panic selling. From past posts there is fair number of them.

Maybe they are right, maybe not.

While I was willing to do it myself, I wasn't necessarily encouraging others to sell as I recognized that it was possible that I was wrong. I still expect an economic malaise worse than the Great Recession but not as bad as the Great Depression. I'm pretty confident of that. What I'm not so confident of is how significantly that economic malaise will impact the stock market.

 

[COcheesehead]

Yep. The biggest flaw in using so-called "buckets" is believing you're actually doing something different than if you held exactly the same mix of investments but simply tracked your total AA. The fact you understand you're organizing (in your mind) your assets in a way that propped you up in times of decision induced stress, but you haven't actually done anything different with your investments, marks you as "getting it."

I do a tiny amount of so-called bucketing, but mostly for DW's benefit. We have enough cash equivalent funds at our local B and M bank that, when coupled with pension + SS, would carry us for 2 - 3 years. DW manages that and only looks occasionally at the bottom line of our brokerage accounts which I manage with an AA outlook. Keeps her from fretting about market variation. Keeps me from wading into too many day to day budget details.

Probably shouldn't call it a "bucket" approach. More like a tub and a thimble.

Buckets and AA aren’t an either or, they are an “and”. They play very well together.

 

[WhenIsItTime]

Good topic for human psychology. So far everyone says, ‘did the right thing for me’.

 

[rk911]

we made zero changes in AA other than to do some modest buying of MF (equities). year-to-date net worth is up about 6% over the end of 2019. we're feeling fine but we'll see if it lasts. lots of doom and gloom predictions out there. one of these days one may come true.

 

[FANOFJESUS]

90/10 here so it was very scary. I am up a little bit more than the start of the virus. I have a safe bucket.

 

[tdv2]

I usually feel better when we don't have 10% swings, up and down, over the course of a few days....but that's just me. What strikes me now is the large number of predictions, with almost unreasonable certainty, that the economy will crater. If you are long equities, this should be somewhat comforting. From a historical perspective, when pessimism reigns, future returns tend to be greater. At the end of the day, predicting the short term direction of the stock market is impossible....too many moving parts with no regularity. I will continue to sit on my hands as a result.

 

[BigMoneyJim]

Wow, 4 pages of replies in one day. I haven't read many yet.

I did nothing. And I feel confused and befuddled about the world and perfectly satisfied with my investment strategy.


Ok I didn't quite do nothing. I was greatly tempted twice to do something active. In March, recently retired with a 2-year cash stash for expenses, I was tempted to "buy the dip" but talked myself out of market timing yet again.

More recently I was greatly tempted to increase my cash cushion to 3 years as I can't understand why the market keeps going up, and I think the market must go down soon and for a long while. I again resisted and stayed the course, but what swayed me this time was realizing that the market could remain nominally good while inflation rises rapidly, in which case more cash is counterproductive. Otherwise I might have given into embiggenning my cash cushion in the guise of safety.

I also sold and bought almost every position I hold, but in an asset-allocation neutral way as I just moved the bulk of my holdings out of open-ended funds and into equivalent ETFs. The primary motivation for this is an upcoming consolidation of assets at one firm and the ability to transfer in-kind.

The only actual change to my strategy was really a realization at a lack of a strategy for a new thing: withdrawals. I had been re-upping my cash cushion to 2 years every month or two while everything went up, but when it went down I realized I had never really thought through the mechanics of when to spend down the cash cushion and when to top it off. I've rather arbitrarily decided that a market level higher than my retirement date (October 2019) I'd top off every month or two, else I'll spend the cushion down. Clearly I'll need to consider this more going forward.

 

[WyomingLife]

I'm looking forward to the return of hockey. I really miss hockey.

Oh, my holdings, you meant? We're up for the year (AA: 65/30/5, give or take). We aren't market timers. Just let it ride.

 

[Montecfo]

+1

Politics / elections would be the last thing influencing my investment decissions.

Generally I agree. But if a new administration brings an expected large corporate tax hike, stocks will take a large haircut.

 

[Montecfo]

We stayed the course. Had raised some cash heading into new year, bought when stocks headed down. Have raised some cash again, expect to redeploy soon.

And it has worked out.

 

[Rianne]

For funds that track an index, no, fund managers do not choose the stocks. An example is VTI - total stock market. The Vanguard computer systems keeps the relative values of its holdings in line with the pertinent index. More info here: https://investor.vanguard.com/etf/profile/VTI

Similar strategies are followed for other funds and ETFs that are based in stock indices (VOO = S&P 500, for example). It’s my understanding that means that even if known stressors are approaching, the fund holds the stock as long as the index does.

This is one of the reasons that I divested about 75% of my equities from index ETFs in March, before the worst of the drops. Since then, I’ve built my own portfolio up, buying on dips, for stocks I like. It’s a lot of work. Thank goodness for Vanguard’s free trades, or I couldn’t do this. We are almost back up to our all-time high. I have just over 50% in cash, with limit orders set to execute on any upcoming hard dips. I’m really happy to have such a high percentage of cash at the moment, and I will welcome the addition of high quality stocks to my portfolio on any upcoming dips.

Thanks. Your remedy seems complicated. I have no idea how to build my own portfolio with confidence. Best of luck, looks like it's working for you.

 

[pb4uski]

Generally I agree. But if a new administration brings an expected large corporate tax hike, stocks will take a large haircut.

I think it is likely that US corporate tax rates will increase some as the recent decrease from 35% to 21% was a bit too much of a drop IMO... but I don't see it going back to 35%.... probably mid-to-high 20s but not more than 29%. But I concede, I know nuttin'.