Where would you go if you left stocks?

[jarts98]

I'm not planning any moves right now, but the thought of "where would you go?" if you left the stock market is on my mind. So....where would you invest if you left the market due the recent run up and were anticipating a pull back?

Or maybe a better way to ask this is: What do you think would do well if the economy slipped into a recession and things turn ugly? Historically the advice seems to be to bounce between bonds and stocks depending on which way things were turning. But the thought of investing in bonds (with rates already being so low) just doesn't sound like a profitable venture to me.

Thanks.

 

[foxfirev5]

Yesterday and today I pulled a small <2% out of domestic equities and moved to a cash postion. - Note this was done because my stock allocation was above my target - not enough to hit rebalance bands but I'm not feeling greedy.

 

[Fermion]

You can't leave stocks. There is just nowhere else to run that has the potential for decent returns at not a super high risk.

Where are you going to run? Spanish bonds? Greek bonds?

The only reason I have any bonds right now is so I can sort of limp alongside inflation and have rebalancing opportunities in the stock market if it drops.

 

[Gone4Good]

Rental properties.

 

[MichaelB]

Venezuelan Beaver Cheese.

 

[brewer12345]

Venezuelan Beaver Cheese.

Preferably leveraged futures thereon.

 

[GrayHare]

real estate and commodities

 

[mathjak107]

There are a few funds that are bond funds but they act like stocks but wth less volatility.

Fidelity capital and income buys high yield bonds and small amounts of stock of distressed companies.

Fidelity new market income and fidelity high yield floating rate are two more that come to mind.

 

[plex]

If you throw out all alternatives that will fail to beat inflation in the near future, you are only with stocks and rental properties, as far as I can see. Not a fun time to be seeking safety.

 

[Closet_Gamer]

Rental properties.

+1

 

[target2019]

real estate and commodities

My thoughts also. I have 4.5% in REIT, and 1.5% in commodities basket fund.

 

[mathjak107]

After 25 years as a landlord in nyc i will say this.

Buying stocks is passive,dealing wiith tenants is not.

The last thing i want to do through retirement is deal with tenants.

We have been liquidating our holdings the last decade in preperation for retirement.

We had 9 co-op apartments overlooking central park in nyc and are finally down to just 2 as we bought out our rent stabilized tenants leases at 50-100k each.

No matter how carefully you screen tenants eventually divorce,illness,or job loss gets them.

One thing about rentals is they are nice until they are not.

Couple leverage with rental income loss and the preassure can be horrible..

 

[BruceinGa]

Buying stocks is passive,dealing wiith tenants is not.

The last thing i want to do through retirement is deal with tenants.

+1

I bought a rental about a year ago and am renting it to my daughter and her family. I realize the problems that might arise but I feel this would fit me and my situation.
The best part about this rental is that I am able to grow a 75'x75' garden in the back yard.

 

[ejman]

Venezuelan Beaver Cheese.

I lived for quite a few years in Venezuela and it never occurred to me that Venezuelan Beaver Cheese was the answer. Talk about not seeing whats right in front of your nose! Jeez!

 

[W2R]

Hi Jarts98, and welcome to the Early Retirement Forum. Please introduce yourself in the "Hi, I am..." section when you have time to do so, so that we can get to know you. Thanks.

In 2008-2009, I'm told we experienced the greatest market crash since the Great Depression. Most of us who had a diversified* portfolio based on a written financial plan, who did not sell low, and who simply rebalanced according to established criteria, in order to retain our planned asset allocation, came out of it beautifully.

Some excellent books on investing, some of which cover what to do in a plummeting market, can be found here:
Investment Books

* (this is where real estate, commodities, Venezuelan beaver cheese and their leveraged futures, and so on, come into the picture.)

 

[mathjak107]

Some of us were even up those years.

The long term treasuries and gold i had overcame the drop in equities and i ended the year up 4%

 

[Animorph]

I wouldn't go to REITs. VNQ was one of the most volatile funds I held through 2007-2010. Nice to trade though. Maybe a different style of REIT?

I am selling some of my higher priced shares that are now finally above water. I'm expecting to buy them back cheaper in the future. If not, I'll just spend it in a few years anyway since I'm retired and DW is within a year of retiring. I have a lot in cash, ready to reinvest. I have some in TLT, long-term treasuries, which look much better now than they have for a while. They move nicely opposite equities, so far. And I have some in FGMNX, GNMA bonds, which have been nicely stable and have a decent yield compared to cash. With the Fed ready to buy mortage bonds, FGMNX hasn't gone down as much as I would have expected, so not quite at my buy price yet. Of course I'm a 100% equities guy, so my bond recomendations are highly suspect!

 

[traineeinvestor]

I would have to see a massive over valuation before I would consider exiting stocks completely (as opposed to simply taking a bit of money off the table).

In terms of alternatives, it depend on what I expected to occur. If I was expecting inflation, I would want to hold real assets - real estate, timber, farm land, bullion, commodities and possibly some collectables ( if my knowledge was good enough). If I expected deflation, I'd want to go the other way and weight towards cash, fixed interest securities etc. I'd also pay off my mortgages as quickly as possible.

I am firmly in the inflation camp, so I am sticking with real estate as my main alternative to stocks (which I am also keeping) with a modest investment in commodities. I largely view cash and fixed income as places to park the (about) 2-3 years in expenses that I want to keep on hand to make sure I do not have to sell other assets at depressed prices.

 

[mathjak107]

the problem is we never know what to expect..

folks are talking inflation ,inflation ,inflation.

that may happen but its so far down the road if i had to pick the one investment i thought in the near term would be a winner i would say zero coupon 30 year treasuries or the 30 year long bond.

deflation and slowing down is happening world wide very quietly behind the scenes.
if leveraging is inflationary then deleveraging is deflationary and the world and consumers are deleveraging.

the way i see it your floor is 2-1/2% and if we fall 1% on the long end you can see a 30-40% capital gain.

sounds like great odds to me.

 

[WestLake]

I'm about. 2/3 real estate (12 rentals) 1/3 stocks. Negligible amounts in bonds and cash. Real estate has appreciated so much in Dallas that I don't see much opportunity there. Been piling into stocks since 2008 and the new highs make me a little nervous. Not retired yet (target 18 months - just shy of 56) so I guess I will cross my fingers and keep maxing 401K and Roth, putting the rest in cash.

 

[photoguy]

So....where would you invest if you left the market due the recent run up and were anticipating a pull back?

Why would you go into anything but cash or government treasuries? If you really believe there's going to be a pull back (and your confident about your timing) switch to cash, wait for the crash and go all in.

I guess you could also do something similar with shorts/options too.

 

[ejman]

And so it goes - round up the usual suspects. One camp believes that the debt deleveraging process will result in a prolonged deflationary process to work its way through the system. The opposite camp believes that the only solution to to the same mountain of debt is massive inflation - it makes debt cheaper. I guess the answer we prefer is backed into our individual DNA and this question will join the pantheon of those other universal questions with easy answers. Should I take SS at 62 or 70? should I pay off my mortgage or not? Should I buy an annuity or not? (just kidding on the last one...)

 

[novaman]

There is no sure fire place to move your money to if things go south. I'm thinking the wisest thing to do is hold a broadly diversified portfolio with a proper asset allocation for your situation and hope for the best.

 

[rbmrtn]

The FED seems to be determined to support the mortgage market, buying mortgage paper. If you "Don't fight the FED", NLY, AGNC, DLTNX or TGMNX seem to be working. Also GNMS funds

 

[Cobra9777]

I recently added 20% real estate and reduced my exposure to stocks. Stocks appear to have run their course since the meltdown and will perform poorly in either economic scenario going forward (inflation/deflation). Real estate is still affordable, so it seemed like a good shift, especially in a possible inflationary environment. I don't know which direction we're headed, but I don't think it's a period of robust growth and normal pricing, so I'm under weighting stocks.

I still have 30% stock and 50% bonds/cash. I also went conservative on the stock, moving into mainly large-cap, high-dividend, value-oriented stuff. I'd like to reduce the bond exposure as well, but it seems less risky to me, given the deflationary possibility and the timeframe before rates are likely to turn up.