Would selling right now be such a poor decision?

[1-31-18]

Perhaps I should have added that the stock market story never ends but it does end for each individual. So particularly for folks on this site who are getting up there in age, it's important to consider AA adjustments as markets move towards extremes.

That is where I am: 61 years old, DW is 59, and I will retire in 3 to 36 months, very possibly this year. Burn-out is driving retirement timing such that I might really need to go soon. My AA is either 40 or 47 common equity, depending on how you count the preferred. Reading Pfau and Kitces, and observing that CAPE is still north of 30, SOR risk is very much on my mind. I think that 40 to 47 percent is too much common equity exposure for a near-retiree at my age. So I’m using a mandatory roll-over of DW’s 401K to de-risk the portfolio somewhat by going to 33 to 40 common equity, the remainder mostly cash until I can structure it out into fixed income. Then a rising glide path up in common equity. Because I’m in the retirement red zone, I see this as “heads we win, tails we don’t lose.” Also might say, “having won the game, it’s time to stop playing.” I know we can retire on that conservative allocation even if we enter a bear market — and I will sleep better by making this adjustment.

 

[dallas27]

Emh people, emh.

 

[NW-Bound]

I have seen a video where Eugene Fama bemoans the fact that 90 years of stock market data is not enough to permit reliable statistical analysis.

Amen.

Exactly. And there were so many other events happening during those 90 years that will be replaced by who knows what other more cataclysmic crises in the future that we cannot predict.

Yet, it did not keep economists, Farma included, from analyzing and drawing conclusions and recommendations from this limited data set. It's all that we have.

 

[redduck]

This is pretty much the definition of market timing. Never worked for me before. Don't think it would now.
How about sell now, use the money to go to Tahiti, check your portfolio when you return in two months.

OK, majority rules (backed by statistics and graphs and studies and research)--it's just another definition of market timing. If it never worked for you, GS, I guess it's never going to work for me (that would be based on intuition). But, don't any of you, aside from NW-B and LOL and maybe a few others ever get the urge to market time?

 

[dallas27]

OK, majority rules (backed by statistics and graphs and studies and research)--it's just another definition of market timing. If it never worked for you, GS, I guess it's never going to work for me (that would be based on intuition). But, don't any of you, aside from NW-B and LOL and maybe a few others ever get the urge to market time?

Of course, everyone has the impulse to time. But thats the animal in you trying to override the intellect. Not good to listen.

I would argue the only instance to time is when you see what buffet calls a soft ball. When you see something so out of whack, and everybody has bet in the same direction. After the housing bust. The 2000 tech bust. The oil drop last year. Etc.

This euphoria is not a softball. Up 100% from here might be a softball.

 

[NW-Bound]

OK, majority rules (backed by statistics and graphs and studies and research)--it's just another definition of market timing. If it never worked for you, GS, I guess it's never going to work for me (that would be based on intuition). But, don't any of you, aside from NW-B and LOL and maybe a few others ever get the urge to market time?

Yes, LOL and I are market timers. Clean and not dirty ones, as we bathe or shower frequently. Brush my teeth and floss several times a day too. Don't know about LOL though (he may wear dentures?).

And we both recently bought. And we both think to sell to get that incremental money out if the market bounces and gives us a bit of gain. We have not made major change to our stash.

For what it's worth...

 

[OldShooter]

John Bogle: "The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently."

William Bernstein: "There is absolutely no evidence that anyone can time the market."

Charles Ellis: "Market timing is a wicked idea. Don't try it -- ever."

Eugene Fama: "Do nothing. I think all of this market timing is statistically unfounded. I don't trust it. You may avoid a downturn, but you may also miss the rise. Choose the risk tolerance you're OK with and hold tight."

But OK. I totally agree that it is tempting to try and will admit to having done a little of it from time to time. Whether it did me any good, I have no idea.

 

[Luck_Club]

I'm contemplating taking more money to cash on Monday. I locked in some nice gains as the market was tanking, but some investments didn't allow auto sell features.

I've been calling this market over priced for some time now, both on a PE and yield basis. My concern is that even though most of my investments are in dividend producing holdings that the dividend will be cut to reflect the lower stock prices in the future. Looking back at VZ in 2008 lost about 1/2 it's value in 3 months, and took over 3 years to get back to the same value.

Can you say double your money?

I've noticed many of the buy and hold indexers are now silent.

I recall a very heated debate about buying dividend companies vs buying the total market index funds. Some very vocal people, who have been very quiet with regard to the recent pull back.

 

[NW-Bound]

Well, we do not know yet. I posted a Bob Dylan song in the other thread which has the lyrics,

And don't speak too soon
For the wheel's still in spin
And there's no telling who that it's naming
For the loser now will be later to win

I do what I do, and others do what they like with their money. I will not feel vindictive if I am right one time. Or even two times.

Heck, even the song I posted earlier had this lyrics,

You laugh tonight and cry tomorrow
When you behold your shattered schemes

I would hate to be an FA in times like this. They have to listen to their clients berating, and I don't think there is any money that can make me take their job.

 

[Lsbcal]

There are all kinds of market timing. A few:
1) The hunch
2) daytrading for fun and profit
3) moving average approaches based on days or months
4) very occasional moves (maybe once per 5 years) based on past market history

Then there is AA adjustment based on all kinds of methods. A few:
1) Age related
2) Got enough to live the good life
3) Recognition that the old risk tolerance is not for one now

The "market timing" label can be used in very unfair ways. Investing is not a morality issue unless perhaps one is financing the Third Reich.

And if you created an IPS back some years ago, who is to say that that document is like Moses's tablet? It's just what you thought was best in your world at the time.

I think one has to be flexible and pragmatic. Maybe I'm taking some of these comments too seriously? Time to get a glass of wine.

 

[SecondCor521]

I've noticed many of the buy and hold indexers are now silent.

I recall a very heated debate about buying dividend companies vs buying the total market index funds. Some very vocal people, who have been very quiet with regard to the recent pull back.

Hi, I'm secondcor521 and I've been a buy and hold indexer since about 1987, retiring in February 2016 at the age of 46.

The market recently pulled back.

I continue to be a buy and hold indexer and have done no buying or selling except to rebalance to my 90/10 AA, which has remained the same since June 2016. (From 1987 through June 2016 my AA was 100/0.)

Recently that has meant selling some stocks to buy some bonds. Soon that might mean selling some bonds to buy stocks.

I'm not sure that is enough non-silence for you, but I hope it helps.

 

[NW-Bound]

...From 1987 through June 2016 my AA was 100/0...

I hate to sit down and figure out how much money I would have if I were 100% in stock for the above period.

Congrats.

 

[mrfeh]

I'm not sure that is enough non-silence for you, but I hope it helps.

+1

Another buy and hold indexer here. No regrets.

 

[copyright1997reloaded]

I confess. Like NW-Bound and a few others, I don't do a strict fixed AA methodology.

I was selling around the edges in January, mostly because my equity % was getting up there. I've been buying around the edges in February. So far, I've got some bleeding fingers from those pesky falling knives.

By around the edge's I mean a percent or so in terms of AA.

 

[redduck]

...I do what I do, and others do what they like with their money. I will not feel vindictive if I am right one time. Or even two times.

Heck, even the song I posted earlier had this lyrics,

You laugh tonight and cry tomorrow
When you behold your shattered schemes

And you even posted one with this lyric:
When you behold your shattered dreams.

 

[NW-Bound]

One schemes, because he dreams.

 

[NW-Bound]

I confess. Like NW-Bound and a few others, I don't do a strict fixed AA methodology.

I was selling around the edges in January, mostly because my equity % was getting up there. I've been buying around the edges in February. So far, I've got some bleeding fingers from those pesky falling knives.

By around the edge's I mean a percent or so in terms of AA.

Bleeding fingers? Just paper cut so far.

 

[redduck]

I've been calling this market over priced for some time now, both on a PE and yield basis. My concern is that even though most of my investments are in dividend producing holdings that the dividend will be cut to reflect the lower stock prices in the future. Looking back at VZ in 2008 lost about 1/2 it's value in 3 months, and took over 3 years to get back to the same value...

I've noticed many of the buy and hold indexers are now silent.

I recall a very heated debate about buying dividend companies vs buying the total market index funds. Some very vocal people, who have been very quiet with regard to the recent pull back.

I was contemplating starting yet another Dividend thread. My good judgment stopped me. Either that, or I got lost in a thread entitled, "My co-workers make lots of money, but they are always broke and think I'm crazy for thinking of planning on retiring early--but not only my co-workers, but my family, too. And, also the friends of my family, most of whom I haven't even met, but think I'm lucky."

OK, now back to the Dividend thing. Over the last few years, I was buying relatively safe dividend stocks--mainly because they were paying reasonably good-sized dividends. However, in the last year or so, these stocks have gone up in value and their dividends have not kept up. So, I stopped buying dividend stocks because of the paltry dividends involved. I've mainly been buying Wellington.

It seems to me that for the time-being, the Dividend stock buying enthusiasm craze has run its course.

more to follow...

 

[aja8888]

I was contemplating starting yet another Dividend thread. My good judgment stopped me. Either that, or I got lost in a thread entitled, "My co-workers make lots of money, but they are always broke and think I'm crazy for thinking of planning on retiring early--but not only my co-workers, but my family, too. And, also the friends of my family, most of whom I haven't even met, but think I'm lucky."

OK, now back to the Dividend thing. Over the last few years, I was buying relatively safe dividend stocks--mainly because they were paying reasonably good-sized dividends. However, in the last year or so, these stocks have gone up in value and their dividends have not kept up. So, I stopped buying dividend stocks because of the paltry dividends involved. I've mainly been buying Wellington.

It seems to me that for the time-being, the Dividend stock buying enthusiasm craze has run its course.

more to follow...

Duck, I'm still in the closet on my dividend stock buying habit. Only my closest friends know the truth. Now where is that thread you mentioned above?

 

[NW-Bound]

... Over the last few years, I was buying relatively safe dividend stocks--mainly because they were paying reasonably good-sized dividends. However, in the last year or so, these stocks have gone up in value and their dividends have not kept up. So, I stopped buying dividend stocks because of the paltry dividends involved. I've mainly been buying Wellington.

It seems to me that for the time-being, the Dividend stock buying enthusiasm craze has run its course...

I have some dividend stocks too. And of course there are dividend stocks in the S&P500. Since this market rout, I am preoccupied with counting my total losses, and have not looked to see if the dividend payers dropped more than the total market. Have they?

 

[redduck]

Furthermore...

I learned some interesting stuff along the Dividend trail.

A. If you don't have a large amount of money invested in each dividend stock, it makes selling a portion of that dividend stock a nuisance. Because then your stuck with a portfolio which includes somewhat inconsequential amounts of each individual stock. From what I gather, the goal of many Dividend stock investors is to have 30-60 (or more) stocks to own. Selling is going to be tougher and more intricate than they thought.

B. One major argument the Dividend Investors put forth is not having the need to ever sell a stock because the dividends will take care of their financial needs. Seems as if that's only in theory, because those who started buying dividends stocks in the last few years are going to have trouble getting enough dividends to live on (unless they enthusiastically buy--if and when the market crashes).

C. Turns out it's incredibly easy to sell off some of a Mutual Fund or ETF. I thought it would be an emotionally difficult process seeing your portfolio take a hit by selling. Wrong, yet again.

 

[NW-Bound]

I am neutral on the choice between pure dividend, growth, and total (index) portfolio choices. Different styles, different risk/reward profiles.

I am curious on your points above.

A. I have a lot of individual stocks, and they are spread out on many accounts (his/her/IRA/after-tax/Roth). Without Quicken to show me everything on one screen, I will not be able to track them. The cost of trading smaller lots added up to a couple of thousands/year, back when I did not have accounts at Merrill Edge that were commission-free. I do all my trading there now for portfolio rebalancing or market timing.

B. The dividend yield is going down, but even these dividend payers have big capital gain now. Like Boeing. Is that a problem? Cap gain or dividend, it's money just the same. Of course you need to sell a few shares here and there, but that's where choosing a low or no-cost brokerage is important.

C. The only difference between selling MF and individual stock shares for me is with the MF one sells/buys in dollar amounts, while with the individual stocks I usually deal in round lots. And with high-priced shares like Boeing, that's $33K for a round lot. Not a small amount. However, I like to have round lots so I can write options on them if I want. Just a habit that I have. Of course, because there is no commission, there's nothing to prevent me from buying/selling an odd lot of Boeing stocks.

 

[OldShooter]

... I've noticed many of the buy and hold indexers are now silent. ...

What were you expecting? Maybe you don't understand passive investing. Market gyrations like this are irrelevant to the long term, except to provide a little temporary entertainment as spectator sport. What we know, statistically, as passive investors is that over the long term we will outperform all but a tiny fraction of stock pickers and those we do not outperform are simply lucky monkeys, not identifiable in advance.

So ... really nothing to say. Hence "silent."

 

[pb4uski]

.... 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.

Did she blow up with nitrogen or just regular air?

 

[copyright1997reloaded]

Furthermore...



B. One major argument the Dividend Investors put forth is not having the need to ever sell a stock because the dividends will take care of their financial needs. Seems as if that's only in theory, because those who started buying dividends stocks in the last few years are going to have trouble getting enough dividends to live on (unless they enthusiastically buy--if and when the market crashes).

One time when I was bored I did some Value Line Analysis of dividend payments after the 1929 crash to see how well dividend flows were in the depression. What I found (going on my failing memory now) is that dividends were dramatically impacted, falling something like 80% or more from the peak in 29.

I say this as a warning. If we ever get in a true long term economic depression, all so called "safe" investments become impacted.

ETA: That is why I'm a believer in the LDS philosophy of having an adequate food supply, wood supply (for heat), and so on.