Would selling right now be such a poor decision?

[redduck]

I'll let you know in 10 years.

...are you a Dirty Market Timer?
-ERD50

No, but it's on my bucket list.

A sage once told me "You're never wrong to get out."

As Darth Vader said to Luke Skywalker, "Search your feelings."

But as ERD50 has often said, "Feelings, we don't need no stinkin' feelings. Just look at the graphs."

Where would you put the proceeds?

See the post right after yours. Maybe there's still hope. If no hope, I haven't thought about where I'd put the proceeds.

But what if my friend does it only once, and that gets him enough extra cash to sleep well? And he promises not to do it again?...

PS. Oh, if you really bought Boeing, then selling after such a run up would be called "rebalancing". Absolutely nothing wrong with that...

Glad you mentioned that about the stock as I was lumping it in with the market rout. Yes, I did buy it, and according to Morningstar it's up 167% since I bought it. The dividend is down to something like 1.87%. [/QUOTE]

 

[RunningBum]

It doesn't matter if you have been in the market for many years, or got in yesterday (other than LTCGs vs STCGs). It doesn't matter if you've quadrupled your money, or lost (again, other than tax implications). Look at your situation now, and decide what you want to do.

Your history doesn't matter, except for what you may have learned. What matters is what you need the money for, your financial situation, and where the market is going from here.

If you need money, that's always a reason to liquidate some.

If you're now sitting very securely (probably due to past gains, but not necessarily), you can reduce stock market risk if you want to, though you may be exposing yourself to inflationary risk.

Where the market is going? Who knows? My take is to stay invested and ride out the drops.

There's also the intangibles of sleeping better if you cash in on profits. If you'd feel worse staying invested and watching the market drop another 20%, than you would getting out of the market and watching it bounce right back, maybe you should get out. Personally, I try to avoid such emotions in investing.

For individual stocks like your Boeing, you'd have to look at whether it is still a good value worth holding. If it's not, sell it. Maybe you need to diversify anyway.

 

[97guns]

There comes a point in time where your assets are enough and preservation of capital is more important than gains on capital, for me that point in time was the day after the markets reopened after the 911 halt.

 

[ShokWaveRider]

There comes a point in time where your assets are enough and preservation of capital is more important than gains on capital.

+100 My sentiments entirely. That way one does not care what the markets do. Sleeping is easy, life is easier.

 

[redduck]

But remember, you don't need validation from folks here to make your decision. Go with whatever is right for you, not what pleases a bunch of unknown people on a website.

To get off topic for a moment, I do need some sort of validation or non-validation (?) (or at least suggestions or ideas) regarding my thoughts of things financial and maybe even in matters of personal hygiene (whoops, wrong forum regarding the latter). And, after being on this website for awhile now, some of the people are not completely unknown to me. I think a bunch of people here do have my best interests in mind, as they probably do for one or two others members of this forum. I do appreciate your suggestion about "going with whatever is right for you" but regarding finances, I've never been able to figure that out. I appreciate the guidance I receive here.

 

[Hamlet]

I don’t think it is crazy to sell some here. I sold some here on the way up.

By any measure normally used, the market is not cheap. It could shoot back up and next month you’ll regret selling. It could also drop 20-30% from here pretty easily.

People talking about buying “on sale” here are a little goofy, IMO. It’s only “on sale” because we had a pretty crazy irrational runnup recently. This sale price is getting us back to those bargain days of 2-3 months ago, when we were at an all time high. If it drops 15% from here, we’ll be back to a year ago when we were also at an all time high

Why do you want to sell? Is it that you’ve found out your risk tolerance doesn’t match your asset allocation? That’s probably a good reason to sell.

One question I would have is what asset allocation do you currently have? If it is 100%, you should probably sell some. If it is 30%, not so much. You don’t want to get so low that you get FOMO and jump back in when the market shoots up 30%.

Get your asset allocation right and stick to it. If that means selling some now then so be it.

 

[Dawg52]

OK, on another thread people are talking about the kinds of cars they "lost" in this market downturn. This is what I lost. The only saving grace is that she never treated me all that well.

She's probably a love them and leave them type. Having said that.....I wouldn't mind giving her a massive liplock.

 

[audreyh1]

I don’t think it is crazy to sell some here. I sold some here on the way up.

Exactly!

Many folks were taking profits most of last year, some rebalancing and some switching to lower equity exposure, and for much of the year we were below current levels.

I think we’ve just returned to late Nov 2017 levels?

 

[daylatedollarshort]

+100 My sentiments entirely. That way one does not care what the markets do. Sleeping is easy, life is easier.

+3. We still have a small percent in stocks and DH was ready to dump that today. As far as inflation, we use a matching strategy which takes inflation into account (TIPS ladders, fixed rate mortgage offset by mostly non-COLA pensions, I-bonds, etc.). If we invest for capital preservation, our safe withdrawal rate can be up to 3.33% at our ages, more with a bit of a real return, which combined with SS, pensions and some side income is more than we plan to spend anyway with no white knuckling it or sleepless nights.

 

[redduck]

I think getting out after a long, significant run up and quick downturn could be very wise if you either have a hard and fast rule for when you'll get back in or plan to stay allocated like that "forever".

I have been thinking about the absolute need for "a hard and fast rule" about getting back into the market. The only thing I could come up with is to go back into the market on a pre-determined date no matter what was going on at the time (e.g. putting whatever money I pulled out of the market and then putting it back April 24, 2018). That, and having a 50/40/10 allocation.

Any other ideas about actionable hard and fast rules that are easy to follow through on?

 

[REWahoo]

I have been thinking about the absolute need for "a hard and fast rule" about getting back into the market. The only thing I could come up with is to go back into the market on a pre-determined date no matter what was going on at the time (e.g. putting whatever money I pulled out of the market and then putting it back April 24, 2018). That, and having a 50/40/10 allocation.

Any other ideas about actionable hard and fast rules that are easy to follow through on?

So now you want us to help you come up with a market timing strategy?

 

[Moemg]

The mistake I made in 2008-2009 was not having several years of expenses in cash like vehicles so I did end up selling a small amount really really low . Actually that small amount appeased my need to do something so even though it was a loss it was not a huge one .Do what is right for you .

 

[Bir48die]

When I get to feeling like the OP, I run FIREcalc and put my fears to rest. What a historic event it would be if now, after all these years, investments didn't follow the model?
Keep a paper loss from becoming a real loss by staying invested. No one's lost a dime until they actually call for a check to be mailed to 'em.

Just went through our financial condition with my wife (in Mexico drinking a margarita. Showed her our "losses" in last ten days but also withdrawal rates. Projected for the next twelve months when I take a year's worth of money out in May. Good exercise and tends to calm any fears

 

[Moemg]

So now you want us to help you come up with a market timing strategy?

Be a sport Rewahoo ! Nords cane up with a market strategy for me in 2009 and it was brilliant.

 

[REWahoo]

Be a sport Rewahoo ! Nords cane up with a market strategy for me in 2009 and it was brilliant.

Maybe you can share it with redduck. If it worked once it might work again.

Wait, wasn't the strategy "don't sell"?

 

[mamadogmamacat]

Well if you need the money, or if it will just help you feel better by doing "something", sell enough BA (I own it too and do expect it, after this current silliness plays out, to continue to rise for at least another 3 yrs based on the continued need for airlines to replace aging craft) to get back your investment in it, and let the rest ride. this may just be enough to assuage anxiety for you, which i completely understand. i may be doing the same late in 2018 if i think I need the cash by then.

 

[aja8888]

Duck, you could always justify a sale by stating you are "rebalancing" into cash.

 

[Moemg]

Maybe you can share it with redduck. If it worked once it might work again.

Wait, wasn't the strategy "don't sell"?

Yep !It was you were aggressive in your loss you will gain it back aggressively.

 

[redduck]

So now you want us to help you come up with a market timing strategy?

Weren't you the guy who said "talkies" would never catch on?

 

[copyright1997reloaded]

Duck, no one knows what tomorrow brings. Some of us make guesses based on a variety of information: Technical analysis, market sentiment, psychology, economic fundamentals. But in the end, it is still a guess. Some make no guess (e.g. let the Vanguard computers re-balance over time automatically).

One thing your friend can do to calm themselves is to look at historical data. Over 1 year, the SP 500 historically has been up 151% (best) to down 58.1% (worst). Over 5 years 33.3% (per year best) to -13.2%. Over 10 years +19.6% to -5.9%, over 20 years +13.6 to -0.2%, 30 years + 11.2% to +1.9%, and over 40 years +10.3% to +3.2%. So, the longer the time period the more likely the market (as measured by the SP 500 index) will be higher. Even with this, it is not predicting the future, but rather measuring the past, and there is nothing to say that the US equity market in the future will be like the US equity market in the past.

In another thread I posted a link to this post in Boggleheads: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&newpost=3771802

The point of it is that it is only in times of stress that one gets a real feeling for their true risk tolerance. If your friend is being impacted (mentally, emotionally, physically) by the market turbulence an drop, then there *is* a message here to them about needing to adjust their risk profile.

At the low today, I was down somewhere in the range of 250-275K from the peak. And yet, I can guarantee you that tonight I would have slept just fine even if the market closed on the low. Why? Because I have some cash, savings bonds, CD's, and other fixed instruments (plus income from a pension) to help keep my emotions in check. I also have a philosophy that if I have a roof over my head, food to eat, and decent health then everything else is a bonus.

One other thing. I do think it is sometimes important to just "do something". So if your friend is nervous, sell something. Just don't sell everything. There is nothing wrong with hedging a bet. (I call this making a sacrifice to the market gods.)

 

[redduck]

In another thread I posted a link to this post in Boggleheads: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&newpost=3771802

Thanks for the link, copyright...
I followed the link when you posted it. Excellent understandable Bogglehead post.

 

[NW-Bound]

Yep !It was you were aggressive in your loss you will gain it back aggressively.

In other words, "the more you lose now, the more you gain later"? Hmmm...

Maybe with the broad market, but not true with individual stocks.

 

[redduck]

Can I try to clear something up? I'm not talking about a friend, I'm talking about me. I apologize if I was not clear about this.

 

[Moemg]

In other words, "the more you lose now, the more you gain later"? Hmmm...

Maybe with the broad market, but not true with individual stocks.

He was referring to my asset allocation which was super aggressive in 2008 .I learned my tolerance is less aggressive but not boring .

 

[NW-Bound]

Can I try to clear something up? I'm not talking about a friend, I'm talking about me. I apologize if I was not clear about this.

I think they were teasing you. In your original post, you referred to a 3rd person.