Increasing cash positions

[sheehs1]

Quote:

Originally Posted by donheff I think the outsize numbers in the post #25 graphic are probably accurate. They (the Task Force) also referenced the IHME model (shown below). This model is being shown to be pretty accurate as the day by day real data come in and replace the previous days' projections. We are doing a lot to limit the curve - it would undoubtedly skyrocket if we were still open for regular business.

I agree 100%, especially after reading the 20 page Imperial College Study that projected the 1.6 to 2.2 million US deaths without any mitigation. It also had charts for each non-pharmaceutical mitigation type and it's affect on decreasing the the 1.6 to 2.2 million curve. It's been referenced on these threads a couple of times.
I don't believe the numbers put out in the IHME model are at all inflated or are being used "to say we won". The curves were done with actual U.S. data.
If we do win or the numbers are lower consider the massive 360 degree effort it will have taken to get to that.

[Dtail]

Quote:

Originally Posted by sheehs1 I agree 100%, especially after reading the 20 page Imperial College Study that projected the 1.6 to 2.2 million US deaths without any mitigation. It's been referenced on these threads a couple of times. I don't believe the numbers put out in the IHME model were at all inflated or are being used "to say we won". The curves were done with actually U.S. data. If we do win or the numbers are lower consider the massive 360 degree effort it will have taken to get to that.

Agree too with the mitigation efforts.
However how many folks really were ever saying just let it ride type of comments.
It would be like saying that if one (who has doctor options) gets a broken leg and stated if he didn't go to the doctor, he would get gangrene and cut off the leg, but who would actually not do anything?

[dvalley]

I haven't sold and hope to not have to sell in this low market to generate cash.
I did think about stopping my 401k contributions and also taking dividends+CGs in cash as opposed to reinvesting. However, they're my DCA strategy right now while I'm holding on to my other cash should I become unemployed and the recovery takes a long time.

[LRDave]

Quote:

Originally Posted by vipertom1970 You will be buying higher then today if you wait for the market to calm down.

A post that did not age well.

[targatom2019]

I did not know today was CALM day.

[11522914]

Quote:

Originally Posted by brokrken There have been plenty of articles written about the global financial crisis and how much money you would have lost if you only missed the best 5 or 10 days of the recovery.

How much would you gain if you only missed the worst 5 or 10 days of the losses?

[razztazz]

Quote:

Originally Posted by 11522914 How much would you gain if you only missed the worst 5 or 10 days of the losses?

My guess is those biggest "up" days happened as counter rallies on the way down, or as it was coming off the bottom. IOW, you could have easily lived without them and made more money. They were just part of the losing.

[brokrken]

https://www.thesimpledollar.com/inve...-your-returns/

One article that tries to make the point

[Mountain skier]

Quote:

Originally Posted by 11522914 How much would you gain if you only missed the worst 5 or 10 days of the losses?

Excellent point

[razztazz]

Quote:

Originally Posted by brokrken https://www.thesimpledollar.com/inve...-your-returns/ One article that tries to make the point

No. He talks about misstiming the market. Not timing the market. Yeah, if you do anything wrong it's usually bad. (Unless you get a government bailout.)

The above chart tracks a 38-year period, or roughly 10,000 days of stock trading. So, if you think you can time the market, you’re betting that you can get in and out without missing just five of those 10,000 days

Who says? He says. Straw man.

— which could happen at anytime. Not only a mere assertion it is a wrong assertion. No, they cannot simply "happen at any time."

To an average Joe like me, it seems far simpler to just stay invested rather than take on those odds.

Hopefully Joe knows himself better than the data he has presented

If you miss these biggest up days, by definition you have missed the biggest and/or most of the down days. You cannot help but win. If you're not interested in any of this, then yes, 40 years in the stock market thus far has shown to be a winner. But the often smarmy lecturing tone and false certitude of these bloggers grates.

[Jerry1]

Quote:

Originally Posted by brokrken https://www.thesimpledollar.com/inve...-your-returns/ One article that tries to make the point

The point is taken and acknowledged. However, the point assumes that your goal is to maximize your investment return. A reasonable goal for sure. However, my goal is to secure my retirement and in that respect, I’m more concerned about losses than I am gains. If inflation doesn’t go crazy, I can live out my days on what I have now. So principle protection and inflation protection are very high on the concern list right now.

I plan on getting back in the marked soon, but after I’ve reassessed the situation. When I originally sat down and contemplated my AA, I never imagined something like this would happen. I’m not in anyway saying that the world’s going to end, but it “feels” (to me) like we’re entering something worse than the Great Depression. I don’t think there’s anything wrong with stepping back for awhile and re-evaluating how best to go forward given that I feel that way. Others may feel different and I respect that. If I was younger and had more time to recover or if I was older and had less time to worry about, I might act different. But I’m almost 60 and I don’t have time to recover too great of a loss and I most certainly do not want to go back to work and I feel like planning to live into my 90’s is still necessary.

So, in summary, feeling like I’m between a rock and a hard place trumps worrying about the five best days of the next bull market at this moment in time.

[razztazz]

Excellent summation. My benchmark has never been the S&P500 or some AA 60/40, 75/25 etc on a by-and-hold basis. My benchmark is simply "Do I have enough money."

Quote:

Originally Posted by Jerry1 The point is taken and acknowledged. However, the point assumes that your goal is to maximize your investment return. A reasonable goal for sure. However, my goal is to secure my retirement and in that respect, I’m more concerned about losses than I am gains. If inflation doesn’t go crazy, I can live out my days on what I have now. So principle protection and inflation protection are very high on the concern list right now. I plan on getting back in the marked soon, but after I’ve reassessed the situation. When I originally sat down and contemplated my AA, I never imagined something like this would happen. I’m not in anyway saying that the world’s going to end, but it “feels” (to me) like we’re entering something worse than the Great Depression. I don’t think there’s anything wrong with stepping back for awhile and re-evaluating how best to go forward given that I feel that way. Others may feel different and I respect that. If I was younger and had more time to recover or if I was older and had less time to worry about, I might act different. But I’m almost 60 and I don’t have time to recover too great of a loss and I most certainly do not want to go back to work and I feel like planning to live into my 90’s is still necessary. So, in summary, feeling like I’m between a rock and a hard place trumps worrying about the five best days of the next bull market at this moment in time.

[luckydude]

Cash is king, especially in times like these.

I remember back in the Dot Bomb days when DW and I were both laid off within a week of each other. Between what little emergency fund we had + 2-week severance pay I got (she got no severance because her company simply went belly up), we had just enough $ to last us a couple of months. Thankfully we both got jobs within a month, but it was a close call and we learned our lesson.

Ever since then we've made a point of maintaining a large cash pile just in case. Right now we have 5% of our NW in cash (MM and CDs) = 7 years of annual expenses. We don't care about maximizing the returns from these funds. We just want the peace of mind knowing that no matter what happens with the market, we have enough to see us through the market downturns without being forced to liquidate our assets at possibly fire sale prices.

[statsman]

Quote:

Originally Posted by luckydude Right now we have 5% of our NW in cash (MM and CDs) = 7 years of annual expenses.

That has to be one sizable net worth. 5% = 7 years of expenses?! Wow.

[luckydude]

Quote:

Originally Posted by statsman That has to be one sizable net worth. 5% = 7 years of expenses?! Wow.

Yep, we've been extremely lucky (hence my profile name) with a sizeable inheritance + good Megacorp careers (especially DW's). Not that we deserve it, but we won't complain

But even with a big pile, I am still getting a bit unnerved by the market downturn and uncertainties. We just sold an investment property that netted us another 3 years worth of living expenses. DW wants to do a 1031 exchange but I am trying to convince her to wait and see how this pandemic thing plays out in case we need that extra cushion.

[foxfirev5]

Quote:

Originally Posted by razztazz Excellent summation. My benchmark has never been the S&P500 or some AA 60/40, 75/25 etc on a by-and-hold basis. My benchmark is simply "Do I have enough money."

Mine too. 25x expenses in CD's and the rest in equities. It was a 40/60 AA which has turned closer to a 30/70.

[racy]

Quote:

Originally Posted by Mountain skier ...Have any of you increased your cash position? What is your new AA? Are you close to retirement?

We began increasing cash late in 2018 into early 2019. And, achieved our goal of 2 yrs living expenses.
My AA has been 40-45% equities since retiring 7 years ago, with no plan to change now. I do not sell low.

[atmsmshr]

Quote:

Originally Posted by bigcmagor That Viper must be a twin turbo with all the goodies. You sir, have guts.

Or else Viper is 10 years or more from FIRE and has a stable job. Different age groups have different risk tolerance.

[PatrickA5]

Quote:

Originally Posted by atmsmshr Or else Viper is 10 years or more from FIRE and has a stable job. Different age groups have different risk tolerance.

Or, has a stash big enough to not worry about sequence of return risk. Or, has a good pension.

If I was 40 or had so much money I couldn't fail at retirement, I would ride it out fully like I did in 2001 and 2009. I'm not and I don't.

At some point, I'll get back into equities in some fashion (maybe 30%). I'll wait until things are more "normal". Don't really care if I hit the low. That's not the point. Risk mitigation is what I'm after during this chapter of my life.

[targatom2019]

Quote:

Originally Posted by atmsmshr Or else Viper is 10 years or more from FIRE and has a stable job. Different age groups have different risk tolerance.

I am 50, no pension and retired. I was able to build a mid 7 figure portfolio making average 87K per year last 25 years and my risk tolerance is high so the reward is much higher. There are ways to prepare to weather the downturn without selling equities in a down market. Sorry to say but selling equities in a down market and thinking to come back in is a big mistake.