Would selling right now be such a poor decision?

[RenoJay]

Selling now would be roughly equivalent to selling in November 2017 on the way up. If you could have justified it then as taking some profits, it’s the same story now.

[limeyx]

Quote:

Originally Posted by redduck 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?

All you have to do is find the lowest point of the market and buy back in (after selling at the top, or nearly so) ....

[Meadbh]

I think this is good advice.

Andrew Coyne: Why are stock markets falling? No one knows. What should you do? Nothing | National Post

[DrRoy]

Quote:

Selling is not bad if it was part of your plan and not a market drop induced decision.

+1. Perhaps you do not have an AA that you are comfortable with. Try reading "Your Money and Your Brain" by Jason Zweig.

[joeea]

Quote:

Originally Posted by redduck 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.

That is rather telling.

You may wish to engage a financial professional for a few sessions to help you come up with a viable financial plan that you could stick to.

A few hours of a CFP's time might be money well spent, rather than relying on what works for a bunch of random folks on the interwebs.

[joeea]

Quote:

Originally Posted by dallas27 If you think you know the market is going to fall, buy a put.

If you think you know the market is going to fall, think again.

[mrfeh]

Quote:

Originally Posted by redduck Yep.

That's not a good reason to sell.

[OldShooter]

Quote:

Originally Posted by redduck ... Any other ideas about actionable hard and fast rules that are easy to follow through on?

" ... there is always a well-known solution to every human problem — neat, plausible, and wrong." H. L Mencken 1917

[NW-Bound]

Quote:

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

Quote:

Originally Posted by OldShooter " ... there is always a well-known solution to every human problem — neat, plausible, and wrong." H. L Mencken 1917

Maintain constant AA and rebalance at beginning of year? Sorry, but I could not help noticing the irony.

If I posted the above on another Web site, they would ban me (I visited there once or twice, a long time ago, did not register). Even here, I just made myself more of a pariah.

[GravitySucks]

Duck,
Are you thinking of changing your AA as you found it didn't meet your risk tolerance, plan to buy back in low, fund living expenses, or trade the BA for another asset?
2015 and 2016 tested my risk tolerance and my AA failed. I went from 80/20, to 70/30, now at 60/40. When my AA didn't meet my true risk tolerance I wasn't happy. The stress was not worth the extra possible earnings. If I'd stayed at the 80/20 the portfolio would have been much better off by now but those two little bumps kept me from sleeping well. Not worth the price!
I wouldn't feel bad about selling a single stock at this point. I rebalanced frequently last year and at least twice was before the point where the market is now so really left some money on the table, but looking at the bond ladder today and realizing the equities market alone doesn't control my fate was worth the few buck foregone.
I would not sell if you figure you'll buy back as soon as it goes low. I'm not that smart.

[Out of Steam]

With retirement under two years away, I'm trying to come up with a few defensive moves without over-reacting.

I rebalanced my main retirement account from just over 50% stock to just under 50% in early January.

We're also planning to put away about $25K in non-retirement accounts in the next 18 months so as not to have to pull from retirement accounts for transition expenses at retirement. This will be for moving at retirement, and bridging the 6 months until my wife meets the 59 1/2 age test for withdrawing from her accounts. Not enough time to bother with SEPP.

[OldShooter]

Quote:

Originally Posted by NW-Bound Maintain constant AA and rebalance at beginning of year? Sorry, but I could not help noticing the irony. If I posted the above on another Web site, they would ban me (I visited there once or twice, a long time ago, did not register). Even here, I just made myself more of a pariah.

Not sure what you're spun up about. The context of the OP's question is clear in his post. He's talking specifically about a rule for buying back in. IMO Mencken's observation applies:

Quote:

Originally Posted by redduck 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?

But if you want to talk about rules like "Maintain constant AA and rebalance at beginning of year?" they are neither right nor wrong, really. They are never going to be right in retrospect because they will never consistently maximize total return. But they are never really wrong, either, because they are useful in contemplation of a totally uncertain future. Really they are not rules at all, rather they are sort of aphorism.

[97guns]

They only thing you should be concerned with in retirement is having your finances set so you would never have to work again, if your NW is in stock and it takes a huge hit would that cause you to go back to work?

[easysurfer]

Quote:

Originally Posted by OldShooter Not sure what you're spun up about. The context of the OP's question is clear in his post. He's talking specifically about a rule for buying back in. IMO Mencken's observation applies: But if you want to talk about rules like "Maintain constant AA and rebalance at beginning of year?" they are neither right nor wrong, really. They are never going to be right in retrospect because they will never consistently maximize total return. But they are never really wrong, either, because they are useful in contemplation of a totally uncertain future. Really they are not rules at all, rather they are sort of aphorism.

For me, maintaining a declining equities AA based on my age and rebalancing beginning of the year is right for me for the #1 reason of keeping my emotions out of the investment equation. To avoid greed when the market is on a tear and to avoid fear when the market does't look so rosy. The worse thing I'd want to do is go chasing headlines or a "hot tip" here or there.

[redduck]

Quote:

Originally Posted by GravitySucks Duck, Are you thinking of changing your AA as you found it didn't meet your risk tolerance, plan to buy back in low, fund living expenses, or trade the BA for another asset? ... 2015 and 2016 tested my risk tolerance and my AA failed. I went from I wouldn't feel bad about selling a single stock at this point. I rebalanced frequently last year and at least twice... I would not sell if you figure you'll buy back as soon as it goes low.

Thanks, GS...
Yes, I'll be tweaking my AA just a bit (it might just be where I want now it due to the recent market activity). I see where finding an AA that works for me is a trial and error activity.

As for selling a single stock, as my old buddy, NW-Bound pointed out, individual stocks can be treated differently than a broad-based mutual fund or ETF. I'm taking his word for it.

Anyhow, I started this thread because was just wondering if selling off a bit of the portfolio right now would be such a poor decision because I'm pretty sure that after any market drop of 20-30% would be unwise. ( I guess that's the point of having an AA and sticking to it--protects the investor from making unwise decisions).

[NW-Bound]

Quote:

Originally Posted by OldShooter Not sure what you're spun up about. The context of the OP's question is clear in his post. He's talking specifically about a rule for buying back in. IMO Mencken's observation applies: But if you want to talk about rules like "Maintain constant AA and rebalance at beginning of year?" they are neither right nor wrong, really. They are never going to be right in retrospect because they will never consistently maximize total return. But they are never really wrong, either, because they are useful in contemplation of a totally uncertain future. Really they are not rules at all, rather they are sort of aphorism.

"Maintain constant AA and rebalance at beginning of year" is not a bad thing to do. Lots of people would do a lot better financially if they follow that. I do not do that though.

I was just teasing people who take that as a religious dogma.

[marko]

Quote:

Originally Posted by skipro33 When I get to feeling like the OP, I run FIREcalc and put my fears to rest. .

I look back ten years ago to late 2008 and early 2009.
Lost a bundle on paper; stayed the course and made it all back in short order

Good new/bad news: I'm pretty fearless now as a result.

[NW-Bound]

Quote:

Originally Posted by dallas27 Selling is stupid. If you think you know the market is going to fall, buy a put.

If you are sure a stock is going down, sell everything. For example, you have inside information.

If you think the likelihood is high, take some off the table.

Puts are expensive insurance and not cost effective, and should be used in some cases only. For example, if you have a lot of an individual stock you want to sell but are still waiting for the 1-year period to get long-term cap gain treatment, you may want to buy a put for them.

[limeyx]

Quote:

Originally Posted by Meadbh I think this is good advice. Andrew Coyne: Why are stock markets falling? No one knows. What should you do? Nothing | National Post

Going on vacation. Will check stock prices in March !

[dallas27]

Quote:

Originally Posted by NW-Bound If you are sure a stock is going down, sell everything. For example, you have inside information. If you think the likelihood is high, take some off the table. Puts are expensive insurance and not cost effective, and should be used in some cases only. For example, if you have a lot of an individual stock you want to sell but are still waiting for the 1-year period to get long-term cap gain treatment, you may want to buy a put for them.

Puts are far higher leveraged on you prediction. If you are going to make a bet you know what is going to happen, make a leveraged bet with limited downside.

But to each his own.