I'm not a market timer, but...

[Spanky]

All in all, it's really nothing major, it's hardly even minor. I just thought it was a chance to see what others might do/ have done in similar situations.

I would have a lots of second thoughts about paying DD's wedding since she and her potential husband have been making big bucks as software developers for Amazon and Google for a few years.

 

[RISP]

Since stocks go up on average, the percentage play is to sell "at the last minute". Personally, I would sell earlier if I felt that the market was "high". Yes, I am aware that this is not a very logical position, and my market timing record is very poor. I still voted option 3.

 

[ArkTinkerer]

I would put a stop loss order in for enough shares to cover the bills. I would also put in an order to sell at some value above the current price. Or, if there was enough time, I might do a covered call for the shares that was currently out of the money.

That should hem it all in with some chance of selling for less than todays price but a good chance for upside gain. Timing really doesn't have much to do with it.

 

[ERD50]

I would put a stop loss order in for enough shares to cover the bills. ...

I try to avoid categorically saying "do this" or "don't do that" (though I do think people should understand why they are doing something).

But in the case of stop loss orders, I say "don't do that". Period.

It's been discussed here before, but a minor dip and return has you locking in that dip. We could get another 'flash crash'. And the more conspiracy theory leaning types (and I am not saying they are wrong!) fear that the market makers will target you and take you out.

Just don't do it. Really. And here I go, ready for this... "Never use stop orders". There, I said it.

That's my story and I'm sticking to it.

-ERD50

 

[eta2020]

None of the above.
We keep a large cash cushion so we don't have to sell equities, except for rebalancing.

That would be my choice as well... and I would replenish that large cushion in big blocks if needed.

 

[FUEGO]

I put "watch and wait". By that I mean I'd set a limit order or two to raise the cash. Put it a percent or two above today's spot prices and see what happens. Just did this a couple months back. It took a few months to execute but eventually it did and I got the cash I needed at a decent premium to what prices were when I first thought about raising cash.

That reminds me, I need to set some more limit orders and see what happens.

 

[bclover]

Yep, I would sell. The way I see it, I'm happy that I have the where withall to do do so. there was a time in my life where I would have had to grab the credit cards in order to do so.

this actually happened to me once.

We had a huge tax bill (10K) that wiped out our emergency fund, then of course the a/c broke along with the washer, dryer and refrigerator. lol talk about murphy's law.

the reality is that how often does this happen? once in 10 years maybe. so if I take a small hit on selling, it's not the end of the world.

 

[bclover]

I'm more interested in where people find AC, etc. contractors who will take CC's for stuff that costs over $2-$3K. Every one I've dealt with has been like, pay by check, or we add 3% to the bill.

Amethyst

Really? I just had my a/c heater replaced last year. to the tune of 9K. lol, not only did my contractor take cc's, they gave me 6 months interest free, no payment due.

truthfully I try hard not to deal with contractors that only take cash. I had my basement finished (18K), the only check I gave him was the remaining 1/3 at the completion of the job.

 

[ERD50]

...

We had a huge tax bill (10K) that wiped out our emergency fund, then of course the a/c broke along with the washer, dryer and refrigerator. lol talk about murphy's law.

the reality is that how often does this happen? once in 10 years maybe. so if I take a small hit on selling, it's not the end of the world.

Agreed. Some people here really feel they need to keep a cash cushion for these once-in-a-blue-moon occurrences. I honestly don't think I've ever had one (knock on wood). And that cash is just a drag, rather than making money for you.

I have no idea what my CC interest rate is, but use 12% for example - so 2% for a couple months to figure out what to sell (maybe evaluating tax consequences)? Not a heavy cost.

-ERD50

 

[audreyh1]

I agree on using stop loss orders. So glad I have never used them, as I have seen quite a few folks really burned by sudden drops which recovered quickly.

 

[haha]

"I'm not a market timer, but could someone please help me time the market?"

 

[ArkTinkerer]

I try to avoid categorically saying "do this" or "don't do that" (though I do think people should understand why they are doing something).

But in the case of stop loss orders, I say "don't do that". Period.

It's been discussed here before, but a minor dip and return has you locking in that dip. We could get another 'flash crash'. And the more conspiracy theory leaning types (and I am not saying they are wrong!) fear that the market makers will target you and take you out.

Just don't do it. Really. And here I go, ready for this... "Never use stop orders". There, I said it.

That's my story and I'm sticking to it.

-ERD50

So back to the OPs case, you would have them lock in by selling at today's price or would you have them take the risk that a 2008 type event might happen before they sell?

I agree with those that talked about having sufficient cash for most emergencies but I think this was a case about a large unexpected need. For me, my plan is to balance, transfer and cash in stocks in December/January. The reason is our income will be variable due to consulting/other investments/rental income and in December we should know what we can do to minimize taxes for the year and what we need to push into January.

 

[ERD50]

So back to the OPs case, you would have them lock in by selling at today's price or would you have them take the risk that a 2008 type event might happen before they sell?

I agree with those that talked about having sufficient cash for most emergencies but I think this was a case about a large unexpected need. For me, my plan is to balance, transfer and cash in stocks in December/January. The reason is our income will be variable due to consulting/other investments/rental income and in December we should know what we can do to minimize taxes for the year and what we need to push into January.

Well, I would first try to avoid the situation, but sometimes plans do fail.

But I would not use a stop-loss order, for the reasons I mentioned. That would be the last thing I would do (hmmm... no, not even then, I did say "never", and I meant it!). Set them too close, and you really risk normal variation taking you out at a low. Set them too deep, and you don't have that much protection and you still run the risk of selling low on a dip.

This is a kind of forced market timing question, so I might just take a 'gut feel' of how I felt. I don't think OP mentioned a $ figure, but it sounds like a few tens of thousands, it's not like their entire portfolio is at short term risk, just this amount. So it's not life/death. If the market tanked, you'd have to sell a few more shares, maybe more than a few. If I was worried about the market being peaky, I'd either sell now and keep it in cash, or buy puts if they were cheap enough.

You know what, since this type of 'forced sale' is expected to be a very rare occurrence in this scenario (unplanned and all), I think that there would be too few 'spins of the wheel' to consider what a market does on average. So I probably would sell now, or buy puts, just to avoid whatever emotional stress might occur if the market went against me. The difference when you do this each year for normal withdraws, you have many 'spins', so it should average out.

But, just in case I wasn't clear.... .... I would not place a stop-loss order.


-ERD50

PS: no stop-loss orders

 

[CCdaCE]

With the past weeks' choppy seas, and the market slightly up or back to where it was, I voted for sell now.

I feel the long term trend is down. But, it's just a gut feeling. One I've had for over a year, and have been basically wrong about, apparently.

-CC

 

[Car-Guy]

"I'm not a market timer, but could someone please help me time the market?"

I'm a market timer, but could someone please help me time the market, a lot better?

 

[ERD50]

...

I feel the long term trend is down. But, it's just a gut feeling. One I've had for over a year, and have been basically wrong about, apparently.

-CC

That's how my gut feeling go. But I'm always right... eventually!

-ERD50

 

[NW-Bound]

I'm a market timer, but could someone please help me time the market, a lot better?

Sure, we can help you time the market.

You only need to give 20% of the gain to show your appreciation.

If it doesn't, well, we'll just have to do better next time, OK?

 

[razztazz]

I feel the long term trend is down. But, it's just a gut feeling. One I've had for over a year, and have been basically wrong about, apparently.

-CC

Not necessarily. What do you mean by "long term"? Anybody really think the "long term" trend is down? We are already 16 yrs into a generational down/flat market. The second and third largest crashes ever, and back-to-back. Does anybody think we have another 50-60% flush coming up followed by 15-20 more years of essentially no gains?

If you want to talk "gut feelings", and things like "is it different this time"/"It's never different this time", the trajectory of history is actually indicating good times and good returns. Which never announce themselves.

Will they be as good as 1982-1999? That no one can say. But after 16 years of bad stuff, unless it's different this time, beyond the blue horizon lies the rising sun.

 

[ArkTinkerer]

Well, I would first try to avoid the situation, but sometimes plans do fail.

But I would not use a stop-loss order, for the reasons I mentioned. That would be the last thing I would do (hmmm... no, not even then, I did say "never", and I meant it!). Set them too close, and you really risk normal variation taking you out at a low. Set them too deep, and you don't have that much protection and you still run the risk of selling low on a dip.

This is a kind of forced market timing question, so I might just take a 'gut feel' of how I felt. I don't think OP mentioned a $ figure, but it sounds like a few tens of thousands, it's not like their entire portfolio is at short term risk, just this amount. So it's not life/death. If the market tanked, you'd have to sell a few more shares, maybe more than a few. If I was worried about the market being peaky, I'd either sell now and keep it in cash, or buy puts if they were cheap enough.

You know what, since this type of 'forced sale' is expected to be a very rare occurrence in this scenario (unplanned and all), I think that there would be too few 'spins of the wheel' to consider what a market does on average. So I probably would sell now, or buy puts, just to avoid whatever emotional stress might occur if the market went against me. The difference when you do this each year for normal withdraws, you have many 'spins', so it should average out.

But, just in case I wasn't clear.... .... I would not place a stop-loss order.


-ERD50

PS: no stop-loss orders

So... I think you're saying you wouldn't use a stop-loss order?

Curious about when you normally sell a stock. Do you specify a sale price or do you just sell at market the moment you decide to sell? Depending on how volatile a stock is, and if it has consistent daily or weekly patterns, I may specify a higher than market price. Often this can result in significant additional gain. A stop loss can protect me from a major decline in that case. Selling covered calls out of the money is similar but longer term. So in a small way I guess I am market timing. I've only been caught at the stop loss twice. Maybe I'm just lucky? Come to think of it, I've only done such things with stocks that were on the upswing. If I thought things were headed down I obviously sold at market right as fast as I could. That said I haven't been an "active" trader for anything but unloading Megacorp shares in about 5 years.

 

[audreyh1]

Limit orders are fine for setting the price you are willing to sell at and waiting.

The stop loss order to protect a position is a problem, as there are enough market events, whether flash crashes or otherwise, that cause quick drops and recoveries but can trigger stop losses in the meantime.

 

[RonBoyd]

Just don't do it. Really. And here I go, ready for this... "Never use stop orders". There, I said it.

That is my "go to" theory, also. I don't have any reason for believing it but when periodically tempted, I apply it without question.

 

[dallas27]

Stop loss orders are the antithesis of what a market maker aims to gain buy maintaining a spread.


Sent from my iPhone using Early Retirement Forum

 

[ETFs_Rule]

The stock market has held up VERY well considering Greece and China. Stocks are about to break out to new highs.

 

[Spanky]

The stock market has held up VERY well considering Greece and China. Stocks are about to break out to new highs.

Which stocks?

 

[target2019]

Which stocks?

I have them highlited in green in my portfolio.
;>)