Poll: Stay the course or Sell it All. May 2020

[GravitySucks]

Staying the course. For the most part.

 

[Tiger8693]

The only thing I have changed, is as I am still in accumulation, I changed contributions to 100% equities for now. Will rebalance sometime later when out of whack.

 

[greengo523]

I was already conservative, but sold a lot of it. It may not happen, but I'm expecting another 15% to 20% decline in the markets by the end of the year.

Much of what I sold was in early February before the markets started falling.

 

[atmsmshr]

Cherry Pie

Until 2 years ago, was 100% in stocks for the 401k. Of course there were some stomach flips during the Great Recession and Dot Com bust, but held fast during those times because I was blessed with pretty secure employment.

Upon realizing that Sequence of Returns Risk is devastating to early retirees, began to throttle back to a rising equity glidepath (ala Kitces and Pfau) the year before retirement (too late statistically, but I got lucky). In January 2020 rolled 401k to an IRA and took a single lump sum distribution on the most appreciated company match stock accounts and placed that into a brokerage account before turning 59.5 yo. Bulk of the IRA rolled into FUAMX Intermediate Treasury Bond Fund - which has appreciated 7.5% to date since purchase. (Sheer Luck). Immediately after rollover, did our annual expense to cash using Net Unrealized Appreciation from brokerage in January and February in order to capture Long Term Capital Gains. Caught the highs of company Mega. Sheer luck again to catch the highs - but then again the annual bonus structure at Mega was tied to stock price during Valentines week.

For those retiring early - the NUA and LTCG strategy during an IRA rollover is an awesome tax strategy. Just ensure you do not take any 401k with drawls before the rollover to IRA or you will have to wait for another triggering event to avoid tax consequence (reach age 59.5, disability, and my favorite out - death).

Originally at 40% equity per plan in January, Declining balance in brokerage for mega corp stock coupled with selling some S&P 500 index fund during rebound now has us down to 33% equity. Which allows me to sleep soundly. When stocks become less expensive, I will dollar cost average back into MSCI ex USA index, Russel 2000 index, and S&P 500 index. Particularly with the tiny Roth and go from all cash to all equity in that account.

Its amazing how much risk tolerance changes between accumulation with a steady paycheck and retirement before SS/Pension with drawl phases of investment. The impact is immense.

 

[pb4uski]

..... Its amazing how much risk tolerance changes between accumulation and with drawl phases of investment. The impact is immense.

Interesting observation. I didn't retire until 2012 and have stable employment so I stayed the course through the Great Recession, 2000 decline, etc.

Even for the declines from 2012 up until now, I was totally unnerved. In retrospect, I think in part because I was still playing with "house money" as my portfolio was still higher than when I retired.

The fall in March as so severe and so fast (worst in history) and caused my portfolio to approach what it was when I retired so I was no longer playing with house money. Given the unknowns and the likelihood of a bad recession or even a depression, I decided to bail and wait until the smoke cleared. Still waiting.

 

[Tiger8693]

The fall in March as so severe and so fast (worst in history) and caused my portfolio to approach what it was when I retired so I was no longer playing with house money. Given the unknowns and the likelihood of a bad recession or even a depression, I decided to bail and wait until the smoke cleared. Still waiting.

So does that mean you sold in March, locking in the paper losses?

 

[atmsmshr]

Interesting observation. I didn't retire until 2012 and have stable employment so I stayed the course through the Great Recession, 2000 decline, etc.

Even for the declines from 2012 up until now, I was totally unnerved. In retrospect, I think in part because I was still playing with "house money" as my portfolio was still higher than when I retired.

The fall in March as so severe and so fast (worst in history) and caused my portfolio to approach what it was when I retired so I was no longer playing with house money. Given the unknowns and the likelihood of a bad recession or even a depression, I decided to bail and wait until the smoke cleared. Still waiting.

Similar sentiment.

IMO some of those posting to BUY, BUY, BUY have either stable employment and not withdrawling from portfolio, or a portfolio greater than 30 times expenses for remaining lifetime, or passive income that more than covers essential expenses.

Its a whole other kettle of fish for the early retiree before SS and pensions kick in and not having a massive portfolio.

 

[pb4uski]

So does that mean you sold in March, locking in the paper losses?

I did sell in March, above the trough and at substantial gains compared to my cost basis but at losses compared to the all-time high. I'm not too worried though as I think it is very likely that equity prices will decline to be lower than the level that I sold at before all is said and done.

 

[pb4uski]

Similar sentiment.

IMO some of those posting to BUY, BUY, BUY have either stable employment and not withdrawling from portfolio, or a portfolio greater than 30 times expenses for remaining lifetime, or passive income that more than covers essential expenses.

Its a whole other kettle of fish for the early retiree before SS and pensions kick in and not having a massive portfolio.

I'm sort of in between those. We haven't yet started SS but I do have a small pension that provides about 18% of our spending that is our only income. Currently the remaining 82% is from portfolio withdrawals.

OTOH, we are well funded... WR will be about 1-2% once SS starts... I could have easily rode it out but didn't really want to.

 

[Car-Guy]

I voted other since I was almost 100% cash when all this started. I have bought and sold more shares of stock in the past few months than I have in the past few years.

 

[Tiger8693]

I did sell in March, above the trough and at substantial gains compared to my cost basis but at losses compared to the all-time high. I'm not too worried though as I think it is very likely that equity prices will decline to be lower than the level that I sold at before all is said and done.

Yes, I agree it depends on what lens is used to look at the sale: from cost basis or from "paper value" high. Not sure which one I think of, but since calculations for WDR in the planning goes with value of portfolio, I guess I mostly think of the paper high value.

Oh, and I am certainly hoping you are wrong on the lower level prediction!

 

[big-papa]

Still employed. Staying the course. Maxed out 401K early in the year, as always, to layoff-proof my 401K contributions. Still making monthly deposits into my taxable account, as always. Still participating in my company's ESPP and selling as soon as it appears in my account (Free money). Likewise with my company's RSU's. Rebalance bands triggered in only one account and happened back in April. Did some Tax Loss Harvesting in April. This will end up being a lot like after 2008 where it seemed I had a $3K loss carryover for years...

 

[Gumby]

Apple pie, along with motherhood and baseball.

My only market timing this year was totally accidental. I sold all the stock in my taxable account to capture capital gains in January and did not get around to reinvesting all of it it before the market crashed. So now we sitting at 10% cash, 30% bonds and 60% stocks. I normally only ever had 1-2% in cash. We are in the enviable position of having all our regular spending covered by pensions and social security, so our required portfolio withdrawal rate is zero. We only need to take from the portfolio if we want a fancy vacation, and I don't see that occurring anytime soon. And when the travel picture does clear up, the cash should hold us for 4-5 years' worth of vacations.

Under the circumstances, I think we'll just stay the course. I would be a lot more agitated if we required portfolio draws to live our daily life.

 

[pb4uski]

Yes, I agree it depends on what lens is used to look at the sale: from cost basis or from "paper value" high. Not sure which one I think of, but since calculations for WDR in the planning goes with value of portfolio, I guess I mostly think of the paper high value.

Oh, and I am certainly hoping you are wrong on the lower level prediction!

WADR, to think that we won't test the March low sometime before this is all said and done is IMO wishful thinking.

 

[btdt22]

As a longtime LBYM person I have pretty much stayed the course. However..... when the DOW dropped below 19k I was a bad Boglehead and spent my fun money on some well known stocks. Have done very well with the purchase, but who knows, I may soon be buying more when the DOW falls through 16k, especially since COVID has decimated my 'funtime' spending habits. At 73 I see maybe ten more years of 'excessive-fun' spending, but then again when I was flying combat in Vietnam I asked God to let me live until 50 as I considered that ancient.

 

[Maenad]

Stay the course....thousand points of light...
Stay the course

I can't believe no one responded to this. I need to look up some old Dana Carvey stuff.

And yeah, staying the course. If I didn't sell in 2008-9, I'm not going to now. My AA is where it needs to be for long-term growth and where I can stomach it for times like this.

 

[WyomingLife]

WADR, to think that we won't test the March low sometime before this is all said and done is IMO wishful thinking.

Why do you think those of us that are staying in the market are calling a bottom? Here, the March low.

Markets go up and down.

I actually don't care if the "March low" was the bottom. It could be. May not be. Who knows? And I don't care.

What I trust is how markets work.

I'm still "in" not because I have a view on the bottom. I'm in because I trust markets. And I'm quite certain 2025 and 2030, if I live that long, will be great times in which to live. I don't think the current pandemic -- which is horrific in its own right but by historic standards is nothing new, and was actually expected -- is going to end human progress.

 

[pb4uski]

What makes you think that I don't think that 2025 and 2030, if we live that long, will be great times in which to live? I think equities will be fine in the long run but for the next couple years it is likely to be a roller-coaster with an overall downhill trend.

I had just opined that I thought it was likely that the market will retest the March lows.

I didn't say anything about those staying in the market were calling a bottom. Not sure where you are getting that from.

 

[RobLJ]

After posting on this and a similar thread, I thought Thursday night and Friday, that I should add that I'm in the run-up to SS (4 years from now) and the part time online gig will end in a week or two, hence the dialing down of equities (and further dialing down in March). SORR risk multiplied (in my mind at least) by COVID risk.

In '08, after reducing the equity allocation, I dialed up my monthly 403b purchases of stocks to increase my stock allocation 5-8%. If I were younger than 50-55 and still working I probably would do the same as I did in '08-'11.
Just a recognition that one's strategy/decisions are highly reflective of where one is on the quest to FIRE; "staying the course" is not a Procrustean bed and I often think (but don't recognize) that poster's circumstances are often WAY different from mine.

While I kept pretty strictly to allocations, I "cheated" in '05-'07 when I got scared by the housing debt (and was getting close to 50) and in 2000 when I thought the S&P/tech valuations were crazy. In both of these conditions, I violated my allocation rules (lowering stock and increasing bonds from '05-'07 and selling large cap for small/mid cap value in 2000-2001 which I thought were screaming values in comparison to large cap tech). These worked out; allocating to foreign often has not, but luckily the other overallocations worked out more than the ones that failed.

And now I'm looking at the end of the marathon to SS, although the glidepath will have me going back up to 50-55% stocks in 4 years when I start drawing SS and 60-65% when DW draws in 8 years. I don't see my strategy as transferable to anyone on the blog, given that their circumstances and their risk profile is almost surely different than mine. 5 years ago I had not heard of a "glidepath."

You are all unique (Life of Bryan quote)!

 

[michelek]

Sold the 401k and HSA mostly all in January when we transferred a fund from an employers 401k to fidelity IRA mm fund. Also switched an HSA from Health Savings Administrators to Fidelity mm funds. We were too busy to reinvest it, so by default we are in cash. Thought about buying in at 18 but didn’t. So we’re still in cash. Don’t know what we will do. I suspect the market will tank once a few quarters of pitiful earnings post and the 2nd wave of pandemic hits. January could be especially rough once the stimulus quits and the Fed is in trouble. So I guess we are hanging out in cash and not worrying too much about it. Inflation isn’t bad and I’m not going backwards unless they start with negative interest rates .

 

[targatom2019]

it's easy, put $$$$ where your mouth is so those believe the markets are going to tank or reach new low then SHORT sell and those believe the markets will reach new high then add buy more. I believe the market will be up so I bought a lot more when the DOW was dropping between 24k-18K.

 

[Golden sunsets]

Interesting observation. I didn't retire until 2012 and have stable employment so I stayed the course through the Great Recession, 2000 decline, etc.

Even for the declines from 2012 up until now, I was totally unnerved. In retrospect, I think in part because I was still playing with "house money" as my portfolio was still higher than when I retired.

The fall in March as so severe and so fast (worst in history) and caused my portfolio to approach what it was when I retired so I was no longer playing with house money. Given the unknowns and the likelihood of a bad recession or even a depression, I decided to bail and wait until the smoke cleared. Still waiting.

PB; I think that's called capitulation -No?

The fact that you went to cash somewhat surprises me. Given your financial acumen, I would have bet that you would have been a stay the course and rebalance kind of guy.

PS: No offense intended. Just an observation.

 

[pb4uski]

I view it more as capital preservation than capitulation. But I was surprised as much as anyone, so no offense taken.

I was getting uncomfortable with stock valuations even in 2019. The market was very richly valued in part because there was no good alternative to stocks because of low interest rates artificially goosing demand. Also, you have stock buybacks reducing supply. If a company buysback its shares because it can no longer make investments that exceed its cost of capital, that should tell you something. Also, the market was very out of whack with fundamentals (high P/E, P/B ratios and the like). So I entered 2020 expecting a 10-20% correction.

The crash in Feb/Mar was unprecedented in its steepness... if you look at some of the graphs compared to even the Great Recession it is much steeper. It seemed to me that the possibility was that this time will be different after all, but at thleast it was going to be really, really bad.

The March crash, along with the COVID contagion and the prospect of 15-20% unemployment, created a lot of uncertainty in my mind as to the near-term future of the economy... I guess I'm one of those old-fashioned guys who thinks that the economy and stocks are connected in the long-run... and the next 2-3 years are not looking very good... I think it'll take that long for GDP to reciver to 2019 levels... so I decided to bail to avoid more capital depletion.

I'm still bullish on the U.S. economy long term, but less so on stocks. I will probably get back in at some point but will limit my risk by participating in stocks by buying long-dated index call options (LEAPS on the SPY or S&P 500).

But while I was personally getting out of stocks, I was hesitant to suggest it to others knowing that there was some possibility that I may be totally wrong. Time will tell... but at least for now I am a certified DMT!

 

[Golden sunsets]

I voted Other because, although I don't consider myself a market timer, I do think this time it's different and the slog back will be longer and more painful than anything since the Great Depression. So I haven't rebalanced. Also I did inherit a chunk of cash on 2-28, which sits as we speak in Ally No Penalty CD's at 1.75%, making my AA way more conservative. I am now waiting for my crystal ball to become clearer on a bottom. I do think this will be likely be a W and not a V recovery.

 

[targatom2019]

Why do you think those of us that are staying in the market are calling a bottom? Here, the March low.

Markets go up and down.

I actually don't care if the "March low" was the bottom. It could be. May not be. Who knows? And I don't care.

What I trust is how markets work.

I'm still "in" not because I have a view on the bottom. I'm in because I trust markets. And I'm quite certain 2025 and 2030, if I live that long, will be great times in which to live. I don't think the current pandemic -- which is horrific in its own right but by historic standards is nothing new, and was actually expected -- is going to end human progress.

Well said Sir !!!!