Increasing cash positions

[foxfirev5]

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]

...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]

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]

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]

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.

 

[PatrickA5]

Congratulations on your achievement. You've done great.

If I had mid 7 figures, I wouldn't have sold a thing.

 

[targatom2019]

Congratulations on your achievement. You've done great.

If I had mid 7 figures, I wouldn't have sold a thing.

I did not sell in 2000, 2008 recession with 50% hair cut on 300K portfolio. Your investment strategy is wrong because emotion took over. Asset allocation is personal, I recommend you pick an AA you are comfortable with and stay there and only rebalance in a down market. Trust me, I am down over 800K(OUCH !) but still buying.

Edit: "rebalance in up or down market back to original AA and take tax loss harvesting"

 

[PatrickA5]

I did not sell in 2000, 2008 recession with 50% hair cut on 300K portfolio. Your investment strategy is wrong because emotion took over. Asset allocation is personal, I recommend you pick an AA you are comfortable with and stay there and only rebalance in a down market. Trust me, I am down over 800K(OUCH !) but still buying.

Thank you. You've made your point. We made a mistake. You win.

 

[brokrken]

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.

Maybe there is something I'm missing. So, help me out with the math. If we assume you saved 50% of the $87k every year and assume your mid 7 figures is $5Mish. You'd have to average 13% over those 23 years to get there, which I guess is possible if you lucky on some specific investments. Just seems like I'm missing something.

 

[targatom2019]

Maybe there is something I'm missing. So, help me out with the math. If we assume you saved 50% of the $87k every year and assume your mid 7 figures is $5Mish. You'd have to average 13% over those 23 years to get there, which I guess is possible if you lucky on some specific investments. Just seems like I'm missing something.

Sorry, 3.2M in equities and 3.5M in real estate, saving rate was 69% and when there were blood on the streets in 2008 I scored big in Wells Fargo, Walmart and Microsoft but now I just stick with index funds plus Microsoft. English is not my first language so please excuse me with some grammar.

It's not hard to build a 1M portfolio in the USA. Time, patient, calculated risk and faith is what you need and I am teaching my 24yo daughter to do the same.

 

[sheehs1]

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."

Agree with both of you and Jerry1 and could not have said it better!
Preserving capital or wealth IS part of Investing and I too was/am more concerned with "Do I have enough".

Investing at 65 is way different than when one is younger. IMHO.

 

[Jerry1]

when there were blood on the streets in 2008

Don’t get me wrong, I do believe there will be blood on the streets this time too, and while not aggressively as I would have years ago, I expect to pick up some bargains during this episode.

In 2008, I bought a house for my daughter. I wish I’d had bought another one for me to rent out. I might start looking again if this impacts real estate like it did in 2008, which I suspect it could.

 

[targatom2019]

Thank you. You've made your point. We made a mistake. You win.

Sorry, here to help and not to shame anyone and I am sorry if you or anyone else felt that way.

Wash your hands, stay safe and pray God to heal our land, I am out.

 

[Sunset]

Sorry, here to help and not to shame anyone and I am sorry if you or anyone else felt that way.

Wash your hands, stay safe and pray God to heal our land, I am out.

I like hearing different views, I might learn, or disagree, but no matter what I think, only in the end will we all know what was correct or not.

 

[Steeler75]

I must be missing something too....

... Asset allocation is personal, I recommend you pick an AA you are comfortable with and stay there and only rebalance in a down market. Trust me, I am down over 800K(OUCH !) but still buying.

^

This is what I thought picking an AA was about, the amount of risk one is willing to accept, understanding that you may lose 50% at any given time, but over the long haul, keeps skin in the game while allowing one to sleep well at night. If you can’t sleep well at night, your AA needs to be adjusted.

Are these only words? Seems like when the risk is realized, some folks cut losses and run. Maybe having an AA is only good when markets move up, not when “this time is different” comes into play.

I recall the same sentiments in 2008 and 2001, yet the market still came back.
Not criticizing any choices, just trying to understand. Stay well.

 

[WyomingLife]

^

This is what I thought picking an AA was about, the amount of risk one is willing to accept, understanding that you may lose 50% at any given time, but over the long haul, keeps skin in the game while allowing one to sleep well at night. If you can’t sleep well at night, your AA needs to be adjusted.

Are these only words? Seems like when the risk is realized, some folks cut losses and run. Maybe having an AA is only good when markets move up, not when “this time is different” comes into play.

I recall the same sentiments in 2008 and 2001, yet the market still came back.
Not criticizing any choices, just trying to understand. Stay well.

I am confused, too.

Rebalancing "only in a down market" isn't re-balancing as I understand it. To me, rebalancing "only in a down market" might be described instead as "not rebalancing regularly on some plan regardless of market conditions -- say, annually on one's birthday -- to maintain one's risk-appropriate AA, but instead allowing one's AA to deviate wildly from said plan until the market is in the dumpster, then selling."

 

[atmsmshr]

Sorry, 3.2M in equities and 3.5M in real estate, saving rate was 69% and when there were blood on the streets in 2008 I scored big in Wells Fargo, Walmart and Microsoft but now I just stick with index funds plus Microsoft. English is not my first language so please excuse me with some grammar.

It's not hard to build a 1M portfolio in the USA. Time, patient, calculated risk and faith is what you need and I am teaching my 24yo daughter to do the same.

Good for you Viper.

However, the context of your advice is not something that most of us will follow because most people do not have such an eye watering portfolio figures. Saving 15% for bonds is one thing when NW is $7M, quite another when one's portfolio is only $1M.

I do agree with the near universal truth of not selling equities in a down market - that's why an age appropriate AA is important.

 

[Animorph]

Do you mean you moved from bonds to stock? If not, I don't understand the last sentence.

Oops, yes! I've been moving from bonds to stocks. Said the exact opposite instead.

 

[Jerry1]

^

This is what I thought picking an AA was about, the amount of risk one is willing to accept, understanding that you may lose 50% at any given time, but over the long haul, keeps skin in the game while allowing one to sleep well at night. If you can’t sleep well at night, your AA needs to be adjusted.

Are these only words? Seems like when the risk is realized, some folks cut losses and run. Maybe having an AA is only good when markets move up, not when “this time is different” comes into play.

I recall the same sentiments in 2008 and 2001, yet the market still came back.
Not criticizing any choices, just trying to understand. Stay well.

I guess since this is my first go round with this drastic of an event, I'd have to admit that I never really believed 50% would actually happen. 2008 was 12 years ago and I had less money and I bailed early and I was working making the best money of my life. As I've said, this event has caused me to re-evaluate. I'm not ashamed to say that this has been a lesson to me on what AA allocation really means and what my real risk tolerance is. It's not so much that I can't take the current drop, but I did not consider what staring into the abyss would feel like. In my defense, sitting at a desk thinking about it in an abstract manner isn't near as compelling as the real thing. Living and learning.

 

[REWahoo]

As I've said, this event has caused me to re-evaluate. I'm not ashamed to say that this has been a lesson to me on what AA allocation really means and what my real risk tolerance is.

... sitting at a desk thinking about it in an abstract manner isn't near as compelling as the real thing.

Don't feel too bad Jerry. You are experiencing is what almost everyone (note the qualifier to make room for the steely-eyed, fearless 100% equity folks out there ) realizes the first time they step into an open elevator shaft after they retire.

Big difference in theory ("I have a high tolerance for pain") and practice ("OMG, THIS HURTS LIKE HELL!!!...").

 

[street]

We have 40X in yearly expenses in liquid funds for living. I do know it is more then one would need but that was my plan to have enough to live on in CD's that I wouldn't have to sell equities/bonds in any bad times. So, to increase cash for any reason for us wouldn't be necessary most likely in my life time.
It gives me many options in reinvest that cash or just live from them and let my investment grow without selling ever.

 

[Mountain skier]

I guess since this is my first go round with this drastic of an event, I'd have to admit that I never really believed 50% would actually happen. 2008 was 12 years ago and I had less money and I bailed early and I was working making the best money of my life. As I've said, this event has caused me to re-evaluate. I'm not ashamed to say that this has been a lesson to me on what AA allocation really means and what my real risk tolerance is. It's not so much that I can't take the current drop, but I did not consider what staring into the abyss would feel like. In my defense, sitting at a desk thinking about it in an abstract manner isn't near as compelling as the real thing. Living and learning.

I know exactly how you feel. I have gone mostly to CD's and other cash vehicles. Retiring next month. Who knows how long this health and financial nightmare is going to last.

 

[OldShooter]

I guess since this is my first go round with this drastic of an event, I'd have to admit that I never really believed 50% would actually happen. 2008 was 12 years ago and I had less money and I bailed early and I was working making the best money of my life. As I've said, this event has caused me to re-evaluate. I'm not ashamed to say that this has been a lesson to me on what AA allocation really means and what my real risk tolerance is. It's not so much that I can't take the current drop, but I did not consider what staring into the abyss would feel like. In my defense, sitting at a desk thinking about it in an abstract manner isn't near as compelling as the real thing. Living and learning.

Actually there is quite a good quotation on this subject from Fred Schwed in "Where are the customers' yachts?"

"Like all of life's rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature. Art cannot convey to an inexperienced girl what it is like to be a wife and mother. There are certain things that cannot be explained to a virgin either by words or pictures. Nor can any description I might offer here even approximate what it feels like to lose a real chunk of money that you used to own."

​

Two observations from personal experience: First, each one of these that you go through is easier than the last one. Your confidence will build. Second, all the yammering about "losing" money is correct from a bookkeeping point of view. I prefer, however, to think of it as some of my money being temporarily unavailable. If history is a guide, you and I will both have our money back within a few years.

Be Well.

 

[48Fire]

I went the other direction from 60/40 to 96/4 last two weeks. Good luck to you.

Is this James the Jeopardy King? Good luck! Just curious what your age is? I was 100/0 when I was a youngster, until around age 40 or so

 

[targatom2019]

Is this James the Jeopardy King? Good luck! Just curious what your age is? I was 100/0 when I was a youngster, until around age 40 or so

LOL, No

age 50, retired and withdraw rate is around 1.5% and flexible.