Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-20-2021, 06:31 PM   #41
Full time employment: Posting here.
 
Join Date: May 2008
Location: Lexington
Posts: 694
This is my general investing philosophy:

I remember looking at some numbers and articles, and developed a general rule of thumb, if you are predicting a downturn, you have to be correct within 2 years, or you will lose money, often a LOT of money.

This makes it much riskier and more difficult to time the market, especially when selling, as downturns are shorter (except in Japan). While it is easy to hold aside 10-30% in something fairly safe because you need to avoid drawing down highly volatile assets in a downturn, any money you sell still faces that cliff.

Personally I think it is much easier to tell when to buy, as there is on average a much faster/stronger drive to return to the positive territory, so I do tend buy in heavily after a 1+ year downturn (which means I did basically nothing in the last downturn, I'm also at the most conservative period of my life, the year right before/of retirement). But selling? I generally only do that when I have been into the volatile side for 2-3 years in a positive market to just re-balance my numbers to the generally safe allocation that lets me ride out future downturns.
plex is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-20-2021, 07:30 PM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
street's Avatar
 
Join Date: Nov 2016
Posts: 6,952
I do nothing but buy and hold and never have rebalanced in 40 years. It seemed to work just fine for me. One thing about not doing anything is you don't have to worry about if you did the right thing at the right time. Just go with the good and bad and hope for the best. All the accounts are in that AA of 78% to 75% equity and never rebalanced.
street is online now   Reply With Quote
Old 01-20-2021, 08:27 PM   #43
Recycles dryer sheets
 
Join Date: Dec 2016
Posts: 244
Quote:
Originally Posted by street View Post
I do nothing but buy and hold and never have rebalanced in 40 years. It seemed to work just fine for me. One thing about not doing anything is you don't have to worry about if you did the right thing at the right time. Just go with the good and bad and hope for the best. All the accounts are in that AA of 78% to 75% equity and never rebalanced.
That’s always been my basic philosophy; buy and hold. Save save save. But the special circumstances of the last 4 years, the insanity and uncertainty plus the pandemic, made me re-evaluate. After making everything back plus a nice big chunk from the 2020 correction, I made the decision to move my 401k to cash. I look at it as my let me sleep well hedge against the current insane times we live in. I do have other $$$ in the market including my DW’s 401k, so all is not lost.
Tetto is offline   Reply With Quote
Old 01-20-2021, 09:37 PM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: No fixed abode
Posts: 8,426
Quote:
Originally Posted by Montecfo View Post
Massive earnings and jobs growth?
Is this part accurate? I haven't been following the numbers, so I don't really know. But I keep hearing talking heads on the news saying we're in the midst of a recession. That doesn't seem accurate with the market setting new highs, but the jobs growth claim doesn't seem right either. And I the earnings numbers only seem like they apply to the FAANG type stocks. Don't we have small businesses shutting down right and left?

I really don't understand either set of claims, doing great or deep in a recession. But the market keeps going up. So that is what it is.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
harley is offline   Reply With Quote
Old 01-20-2021, 09:47 PM   #45
Full time employment: Posting here.
 
Join Date: Oct 2020
Posts: 564
I'll bet things stay buoyant for a while but obviously we can't keep getting multiple years worth of returns each year. To make sure I don't miss the run up but also don't have deep regrets when the inevitable bear finally comes, I've been very conscientious about rebalancing to keep my asset allocation right at my target. The folks making major moves one way or the other could be very right or very, very wrong.
Exchme is offline   Reply With Quote
Old 01-20-2021, 09:52 PM   #46
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,250
Quote:
Originally Posted by Tetto View Post
What in gods name is driving this market? I really don’t get these stratospheric heights we are seeing. I’m 7 years away from “needing” my money and 4 month ago I moved a huge (to me) to cash. I’m just not getting what’s happening; is there another massive crash lurking around the corner? It’s pretty well documented that businesses are not making any money!
You're not the only one:

Quote:
The world’s top investor Warren Buffett has been waiting for a big market crash for over a year now. In many of his recent interviews, the 90-year-old investing legend has highlighted how he finds most stocks from various industries and sectors to be overvalued at the moment. ...

Source: https://ca.finance.yahoo.com/news/wa...182831643.html
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Old 01-21-2021, 01:38 AM   #47
Thinks s/he gets paid by the post
 
Join Date: Aug 2007
Posts: 2,303
Quote:
Originally Posted by pb4uski View Post
You're not the only one:

The Buffett article looks like some serious clickbait. It never says where Buffett said the market is going to have a serious crash. Just that he sold off in some sectors. Lots of innuendo.
__________________
Eat, Drink and Be Merry.
tulak is offline   Reply With Quote
Old 01-21-2021, 03:19 AM   #48
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 11,017
While I agree it makes no sense to sell out just because the market is high, I do think it's wise to trim your equities as you age. You have less time to make up a big loss AND, hopefully, you have already increased your stash to the point you have "enough" as I've tried to allude to many times - without much success to this bunch, heh, heh. As always, YMMV.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 01-21-2021, 06:02 AM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
target2019's Avatar
 
Join Date: Dec 2008
Location: Stuck in the mud somewhere in the NJ swamp
Posts: 8,380
Quote:
Originally Posted by jldavid47 View Post
The runup in the stock market from election day to inauguration day (today) was the largest for any incoming president since... Herbert Hoover! Didn't seem to help him much.

(not trying to e political, I just thought that was funny)
Here is a link to similar results. Maybe it's the article you read? In any event it shows results for all presidents going back to 1928.

https://www.marketwatch.com/story/bi...on-11611097621

Around this time of year there are enough articles comparing presidents and stock market returns. I view these data bursts as interesting to look at, but no reason to change my asset allocation.
target2019 is offline   Reply With Quote
Old 01-21-2021, 06:02 AM   #50
Recycles dryer sheets
 
Join Date: Mar 2012
Posts: 386
Quote:
Originally Posted by Tetto View Post
What in gods name is driving this market.
Nobody knows.....many claim to know with theories and analysis....don't believe them. But then again you shouldn't be concerned if you have an AA consistent with your risk tolerance level and time horizon. History has shown us that you are just as likely to be wrong than right about predicting the short term direction of the market. I told this story in another thread when the market was declining in the spring of 2020 but I will repeat it here.

I have a friend who moved away from my area but I still keep in touch. He had a problem letting his emotions and predictions rule his investment decisions and he knew it, he would watch the business news, listen to the sensationalist talking heads and churn his portfolio as a result. He was doing terrible and he knew it. Several years back he decided it was worth it to have Fidelity manage the account and suck it up and pay the management fee. IMHO based on his history, I couldn't disagree with him. Along comes the recent turmoil and what does he do.....he calls Fidelity and demands that they sell everything....they tell him he can't since he has a managed account so he has them change it back to un-managed and unloads his entire portfolio to cash.
__________________
FIRE'd---4/27/2018 @ 54. DW--RE date 03/01/19.
tdv2 is offline   Reply With Quote
Old 01-21-2021, 07:44 AM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
street's Avatar
 
Join Date: Nov 2016
Posts: 6,952
Quote:
Originally Posted by tdv2 View Post
Nobody knows.....many claim to know with theories and analysis....don't believe them. But then again you shouldn't be concerned if you have an AA consistent with your risk tolerance level and time horizon. History has shown us that you are just as likely to be wrong than right about predicting the short term direction of the market. I told this story in another thread when the market was declining in the spring of 2020 but I will repeat it here.

I have a friend who moved away from my area but I still keep in touch. He had a problem letting his emotions and predictions rule his investment decisions and he knew it, he would watch the business news, listen to the sensationalist talking heads and churn his portfolio as a result. He was doing terrible and he knew it. Several years back he decided it was worth it to have Fidelity manage the account and suck it up and pay the management fee. IMHO based on his history, I couldn't disagree with him. Along comes the recent turmoil and what does he do.....he calls Fidelity and demands that they sell everything....they tell him he can't since he has a managed account so he has them change it back to un-managed and unloads his entire portfolio to cash.


A rookie mistake and a cardinal sin. I did something similar about 35 years ago with not a lot of money in the market but still got nervous and sold. Lol

It has been drilled into every market investor since God was a boy, to never make that mistake. A very hard thing to do but need to stick in there during hard times.
street is online now   Reply With Quote
Old 01-21-2021, 07:54 AM   #52
Thinks s/he gets paid by the post
 
Join Date: Aug 2016
Location: Northern Virginia
Posts: 4,839
Quote:
Originally Posted by harley View Post
Is this part accurate? I haven't been following the numbers, so I don't really know. But I keep hearing talking heads on the news saying we're in the midst of a recession. That doesn't seem accurate with the market setting new highs, but the jobs growth claim doesn't seem right either. And I the earnings numbers only seem like they apply to the FAANG type stocks. Don't we have small businesses shutting down right and left?

I really don't understand either set of claims, doing great or deep in a recession. But the market keeps going up. So that is what it is.
With the vaccines, the market is expecting economies to open up during 2021 and massive earnings and job growth are expected. So I think that is an accurate statement of market expectations. What actually happens? Time will tell.
Montecfo is offline   Reply With Quote
Old 01-21-2021, 07:59 AM   #53
Thinks s/he gets paid by the post
 
Join Date: Jan 2017
Posts: 2,051
It's tough not to listen to those little voices in my head which tell me this run-up simply can't go on much longer.

It's even harder when I talk to a friend who is a real estate broker. When he starts citing statistics about how many foreclosures and evictions they're expecting once the Covid-based moratoriums (moratoria?) expire, and then goes off about the national debt, I get nervous. I can't argue with his logic, and see visions of 2008 all over again. But he's actually been saying this since long before Covid, so I'm trying to hold off taking any action. Look at what I'd have missed out on if I'd listened to him a year or two ago.
CaptTom is offline   Reply With Quote
Old 01-21-2021, 08:02 AM   #54
Thinks s/he gets paid by the post
Markola's Avatar
 
Join Date: Nov 2013
Location: Twin Cities
Posts: 3,282
Quote:
Originally Posted by Montecfo View Post
With the vaccines, the market is expecting economies to open up during 2021 and massive earnings and job growth are expected. So I think that is an accurate statement of market expectations. What actually happens? Time will tell.

+1. The economists team at Goldman Sachs is forecasting 6%+ GDP growth in 2021 because of the Covid recovery. I have no idea and won’t change anything but I enjoy hearing smart people discuss their predictions.

https://www.goldmansachs.com/insight...n-hatzius.html
Markola is offline   Reply With Quote
Old 01-21-2021, 08:11 AM   #55
Recycles dryer sheets
BrianB's Avatar
 
Join Date: Jul 2011
Location: Minneapolis
Posts: 316
When I start getting nervous I re-read J. L. Collins' essay "There's a major market crash coming!"

https://jlcollinsnh.com/2012/04/15/s...cant-save-you/

The other essays in his series are worthwhile, too!

BrianB
BrianB is offline   Reply With Quote
Old 01-21-2021, 08:18 AM   #56
Full time employment: Posting here.
 
Join Date: Jun 2012
Posts: 664
Quote:
Originally Posted by CaptTom View Post
It's even harder when I talk to a friend who is a real estate broker. When he starts citing statistics about how many foreclosures and evictions they're expecting once the Covid-based moratoriums (moratoria?) expire
It's not just the moratorium on evictions and foreclosures, there's the forbearance of rent/mortgage payments. Can anyone cite actual data on how many loans/rents (and how many $) are behind/in forbearance? Anecdotally, it seems most landlords here aren't having widespread issues and any landlords I know IRL aren't having major issues, either.
someguy is offline   Reply With Quote
Old 01-21-2021, 08:43 AM   #57
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: NC
Posts: 18,644
Quote:
Originally Posted by CaptTom View Post
It's tough not to listen to those little voices in my head which tell me this run-up simply can't go on much longer.

It's even harder when I talk to a friend who is a real estate broker. When he starts citing statistics about how many foreclosures and evictions they're expecting once the Covid-based moratoriums (moratoria?) expire, and then goes off about the national debt, I get nervous. I can't argue with his logic, and see visions of 2008 all over again. But he's actually been saying this since long before Covid, so I'm trying to hold off taking any action. Look at what I'd have missed out on if I'd listened to him a year or two ago.
Quote:
Originally Posted by BrianB View Post
When I start getting nervous I re-read J. L. Collins' essay "There's a major market crash coming!"

https://jlcollinsnh.com/2012/04/15/s...cant-save-you/

The other essays in his series are worthwhile, too!

BrianB
It can be difficult to tune out the “little voices” of doubt, but remember the “carnage” of 1987, 2000, 2008, 2020 (Covid) - and take the long look at them below, they look relatively small in hindsight. Yes it’s not fun when the market tanks for (many) months - but patience is handsomely rewarded. If you look at the LONG view DJIA, it’s even more convincing. Trying to time in and out is virtually impossible to get right, tons of people got financially creamed panic/selling in 2008-09 while those who stayed the course did very well (as always)...

Having the first hand experience of not selling in past downturns, or even buying in, makes the “next downturn” much easier to wade through. Happily I did not sell in 87, 00, 09 or 20 - so it’s easier to sleep at night even when the P/Es or other Econ indicators get frothy. That’s always been a part of market (human) behavior. And if/when we have a permanent downturn, we’re all going to get $ hurt no matter how we react.
Attached Images
File Type: jpg 2896272B-4C69-4F8B-B5E7-BD7F8CDCD9FE.jpg (175.9 KB, 51 views)
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 50% equity funds / 30% bonds / 20% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
The stock market highs
Old 01-21-2021, 08:49 AM   #58
Thinks s/he gets paid by the post
Markola's Avatar
 
Join Date: Nov 2013
Location: Twin Cities
Posts: 3,282
The stock market highs

Quote:
Originally Posted by BrianB View Post
When I start getting nervous I re-read J. L. Collins' essay "There's a major market crash coming!"



https://jlcollinsnh.com/2012/04/15/s...cant-save-you/



The other essays in his series are worthwhile, too!



BrianB


+1. JL Collins has been important to my growth toward FIRE. It might help others who read that link to know that he has a strong bias toward a two fund AA consisting of just the total domestic stock index and bond funds vs. international or other kinds of diversification. I have different diversification preferences but I highly recommend all of his writing.
Markola is offline   Reply With Quote
Old 01-21-2021, 08:57 AM   #59
Thinks s/he gets paid by the post
 
Join Date: Aug 2016
Location: Northern Virginia
Posts: 4,839
Quote:
Originally Posted by BrianB View Post
When I start getting nervous I re-read J. L. Collins' essay "There's a major market crash coming!"

https://jlcollinsnh.com/2012/04/15/s...cant-save-you/

The other essays in his series are worthwhile, too!

BrianB
I could summarize Collins' views by reiterating what I think are the three most important words for the investor to keep in mind: Stay Fully Invested.
Montecfo is offline   Reply With Quote
Old 01-21-2021, 09:07 AM   #60
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 8,997
Quote:
Originally Posted by Midpack View Post
It can be difficult to tune out the “little voices” of doubt, but remember the “carnage” of 1987, 2000, 2008, 2020 (Covid) - and take the long look at them below, they look relatively small in hindsight. Yes it’s not fun when the market tanks for (many) months - but patience is handsomely rewarded. If you look at the LONG view DJIA, it’s even more convincing. Trying to time in and out is virtually impossible to get right, tons of people got financially creamed panic/selling in 2008-09 while those who stayed the course did very well (as always)...

Having the first hand experience of not selling in past downturns, or even buying in, makes the “next downturn” much easier to wade through. Happily I did not sell in 87, 00, 09 or 20 - so it’s easier to sleep at night even when the P/Es or other Econ indicators get frothy. That’s always been a part of market (human) behavior. And if/when we have a permanent downturn, we’re all going to get $ hurt no matter how we react.
Let's go back to the 70s.

Now that was tough.
__________________
Retired Class of 2018


JoeWras is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Where to invest with the market at all time highs? JohnnyBGoode Active Investing, Market Strategies & Alternative Assets 42 02-17-2017 12:51 PM
Times when I have large sums to invest are when markets are at all-time highs :/ RioIndy FIRE and Money 5 02-28-2014 07:19 PM
Record Highs on Wall St. ...in pot kgtest Active Investing, Market Strategies & Alternative Assets 8 02-25-2014 08:45 PM
bubble in the stock market? Or more highs yet to come? dtbach FIRE and Money 28 03-05-2013 11:01 PM
Poll: how has your net worth changed since market highs? free4now FIRE and Money 115 03-23-2008 08:46 PM

» Quick Links

 
All times are GMT -6. The time now is 02:56 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.