Did anyone's financial advisor see this coming?

[bmurphy]

The stock market is more based on mindless money-flows than rational thinking or expectations today. This weeks rally was based on CTAs getting long (due to models and last week's option expiration) and end of quarter money flows.

[Ablatus]

Quote:

Originally Posted by Markola I didn’t hire my Vanguard PAS advisor for his market timing omniscience. I hired him as a mistake prevention insurance policy. He’s had us in a more conservative 50/50 AA for two years than I had us in as a DIYer, and I am grateful.

I, too, was in the recommended 50/50 split at 60. I see now why!

[RHONDAVE]

I bought .5 mil index funds Jan 10 2020. Oops

[mpkcapt]

Hahahahahaha

[OldShooter]

Quote:

Originally Posted by bmurphy Yes - I did. (I'm an FA). Re-allocated portfolios defensively, but while we're out-performing the market by a decent amount - still down YTD close to double digits as of end of today.

Good for you. I'm sure there were other FAs who also decided to get defensive. There were also others that thought about it and did not. The problem is that there is really no way to distinguish between luck and skill. There are enough random opinions out there that it is certain that some of them will be right. There may be skill out there too, but it is impossible to identify separately.

Quote:

Originally Posted by bmurphy The stock market is more based on mindless money-flows than rational thinking or expectations today. This weeks rally was based on CTAs getting long (due to models and last week's option expiration) and end of quarter money flows.

I always enjoy posts like this. Certainly several billion shares changed hands this week. How many of those traders did you interview to determine that there is a single simple reason for the market behavior?

(I am re-reading Nassim Taleb's "The Black Swan" this week and he frequently points out that we humans routinely concoct simple explanations for past complex events. Right or wrong, there is no way to know but we seem to be driven to do it.).

[2177V]

Quote:

Originally Posted by RetiredAt55.5 I manage my own finances, and am not a market timer. However, I keep kicking myself for not seeing/anticipating how this virus would impact the markets once it hit the U.S., and doing some defensive measures. Did anyone's financial advisor give early warning before the market went crazy? I know it's little comfort, but if they didn't see it coming either, my backside won't be as sore!

Very few people saw this coming. When you think about it, very few people saw the 2008 sub-prime crash coming either. Very few people saw the dot com crash coming either. Very few people saw the 1929 crash coming either.

My financial advisor is Jeffrey Gundlach who stated that 2019 should be an "asset preservation year". Since the yield curve inverted and I did not believe a bull market last forever, I re-allocated my 60/40 portfolio to 100% treasury bonds in the summer of 2019. I understood how treasuries bonds work so this is now my best bear market ever.

I also believe that investing in the stock market is similar to gambling but better odds are involved. I like to quote Kenny Rogers (RIP) in his song the Gambler:

You have to know when to hold them,
know when to fold them,
know when to walk away.

If investors know when to walk away, this can make a HUGE difference in your portfolio. Since I was retired and approaching 70, it was my personal financial objective to avoid the next bear market because I did not have time to wait for the recovery. I was looking for signs to walk away, found them, and made the decision to reallocate to 100% treasuries in 2019 after the yield curve inverted.

IMO, equity risks are high at the end of a historical bull market but the equity risks are low after a crash. I am now buying equities.

[winyaz]

https://www.volatilitytradingstrategies.com/ - ($80/m) was only in bonds as of Feb 21. Within a week he went entirely to cash to wait out the storm. I am not affiliated with this service other than as a subscriber.
Mojena Market Timing - (free) issued a sell signal on March 1

I find buy and hold too risky for a majority of my assets, so I follow the services above and implement my own rotation strategies to mitigate the risk. Sometimes I outperform the market, sometimes I underperform, but I have consistently had less risk than my benchmark - a global balanced portfolio.

[OldShooter]

Quote:

Originally Posted by winyaz https://www.volatilitytradingstrategies.com/ - ($80/m) was only in bonds as of Feb 21. Within a week he went entirely to cash to wait out the storm. I am not affiliated with this service other than as a subscriber. Mojena Market Timing - (free) issued a sell signal on March 1.

No surprise. With the number of newsletters out there, you'd expect that some of them would be right about any particular event. I continue to recommend this site to people: https://www.bogleheads.org/wiki/Tayl..._timing_quotes

Excerpts:

"Among the 160 or so newsletters the Hulbert Financial Digest monitors, the market timing recommendations of only 10 have beaten the stock market over the last decade on a risk-adjusted basis." (Mark Hulbert, January 18, 2001)

"Over a 12.5 year period, 224 of 237 market timing newsletters went out of business." (indexfundsadvisors.com)

"From 1981 through 2006 the average top performing newsletter had a loss of -27.9% the following year." (Hulbert Financial Digest)

Follow the link. It's a great read.

[Dtail]

Quote:

Originally Posted by vchan2177 Very few people saw this coming. When you think about it, very few people saw the 2008 sub-prime crash coming either. Very few people saw the dot com crash coming either. Very few people saw the 1929 crash coming either. My financial advisor is Jeffrey Gundlach who stated that 2019 should be an "asset preservation year". Since the yield curve inverted and I did not believe a bull market last forever, I re-allocated my 60/40 portfolio to 100% treasury bonds in the summer of 2019. I understood how treasuries bonds work so this is now my best bear market ever. I also believe that investing in the stock market is similar to gambling but better odds are involved. I like to quote Kenny Rogers (RIP) in his song the Gambler: You have to know when to hold them, know when to fold them, know when to walk away. If investors know when to walk away, this can make a HUGE difference in your portfolio. Since I was retired and approaching 70, it was my personal financial objective to avoid the next bear market because I did not have time to wait for the recovery. I was looking for signs to walk away, found them, and made the decision to reallocate to 100% treasuries in 2019 after the yield curve inverted. IMO, equity risks are high at the end of a historical bull market but the equity risks are low after a crash. I am now buying equities.

Bolded by me - how do you know that there won't be another test of the lows, which appears to be more typical with bear markets?

[Dtail]

Quote:

Originally Posted by OldShooter No surprise. With the number of newsletters out there, you'd expect that some of them would be right about any particular event. I continue to recommend this site to people: https://www.bogleheads.org/wiki/Tayl..._timing_quotes Excerpts: "Among the 160 or so newsletters the Hulbert Financial Digest monitors, the market timing recommendations of only 10 have beaten the stock market over the last decade on a risk-adjusted basis." (Mark Hulbert, January 18, 2001) "Over a 12.5 year period, 224 of 237 market timing newsletters went out of business." (indexfundsadvisors.com) "From 1981 through 2006 the average top performing newsletter had a loss of -27.9% the following year." (Hulbert Financial Digest) Follow the link. It's a great read.

I do appreciate your consistent view of the concept of randomness in stock market outperformance.

[jmp470]

The week before the crash I reallocated my entire 401K and nest egg to fixed government bonds. I’ve been accumulating Gold stocks since the crash. I like IAG the best.

The changes to human behavior, even after the threat ends, will be felt for sometime. Companies that are going 100% WFH, will have to decide if they want to keep their employees at home and sell the office space, or move them back in.

The longer the disease persists, the more our habits will change. Give it two months, and people’s norms will be different.

I don’t see a quick V shape rebound, but a protracted recovery. This event is also show just how fragile our society is, and certain sectors are.

It’s time to see how the millennials respond and buy stocks accordingly.

[OldShooter]

Quote:

Originally Posted by Dtail I do appreciate your consistent view of the concept of randomness in stock market outperformance.

Whether you are being sarcastic or not, to me near-randomness explains virtually everything about price behavior.

One of the things I show my Adult-Ed investing class is a stock price history graph that has fairly high volatility. I tell them to draw two conclusions: First, looking at your portfolio every day is a waste of time. Second, with all that volatility it is easy to get lucky.

The lucky ones post and generally attribute their success to wisdom. A tempting conclusion that any of us might draw.

The unlucky ones don't post.

[Dtail]

Quote:

Originally Posted by OldShooter Whether you are being sarcastic or not, to me near-randomness explains virtually everything about price behavior. One of the things I show my Adult-Ed investing class is a stock price history graph that has fairly high volatility. I tell them to draw two conclusions: First, looking at your portfolio every day is a waste of time. Second, with all that volatility it is easy to get lucky. The lucky ones post and generally attribute their success to wisdom. A tempting conclusion that any of us might draw. The unlucky ones don't post.

To make it clear, I was being totally honest and not sarcastic.
Your posts on this conceptual topic help keep things in line.

[OldShooter]

Quote:

Originally Posted by Dtail To make it clear, I was being totally honest and not sarcastic. Your posts on this conceptual topic help keep things in line.

Thank you.

To be clear on my end, too, I would love to discover a secret method that allowed me to predict the markets. In 48 years of investing, though, I have failed. At that same time I have run into a mountain of evidence that supports the near-randomness hypothesis. So I am (so far) stuck.

[tenant13]

If I didn't put my foot down my "advisor" would have grabbed my entire cash stash and invested it ALL in equities. This was November 2019. I had 5 years worth of cash in a high yield savings account. Why? Because I'm paranoid and I expect disasters. But I grew complacent and I wanted a 2k Chase bonus so I let the Chase guy invest - except that I insisted on keeping one year worth of cash and told him to buy bonds for half of the cash he was getting his hands on. That was a good thing because all the equities he bought for me are 30% down. It's all dividends stock but it's anyone's guess if those dividends keep coming.

I'm actually not entirely unhappy about it: I'll sell at a loss and either offset it against gains IF market rebounds later this year (and I have gains from the stuff I've been sitting on for years) or hold on to the losses and use them incrementally for ROTH conversions in the future.

Right before the crash I debated about rebalancing my main portfolio - which is in IRA. There's a lot of Apple stock in it that I bought a lifetime ago. I knew I didn't care about it being above $300 so once it hit that price, instead of selling out right, I started selling short term call options. Just for fun and kind of as a learning experience. I actually expected those options to exercise. Well, they never did. I made around 50k in the process but the stock is down so in theory I "lost".

I probably should have been more sensible about rebalancing but options - especially when you don't care about the outcome - are fun to play with so I have no regrets. Plus I'm not losing my sleep over sitting on a pile of Apple stock.

[GoodLife59]

Quote:

Originally Posted by RetiredAt55.5 I manage my own finances, and am not a market timer. However, I keep kicking myself for not seeing/anticipating how this virus would impact the markets once it hit the U.S., and doing some defensive measures. Did anyone's financial advisor give early warning before the market went crazy? I know it's little comfort, but if they didn't see it coming either, my backside won't be as sore!

I started talking to my advisor about early retirement about 2 years ago. Then retired in mid-January. His firm didn’t know the exact time we’d seen a serious recession but he told me it would happen. They were very clear that this year would be softer and they always counsel that an unexpected global crisis could create a severe event. So to make my plan work we accumulated $100k in cash, retired our mortgage, and for 10years I maxed out our HSA and took nothing out. By the time he was giving us this advice we were most of the way there. So yes, we’ve taken a hit too but not as hard as the S&P due to our age appropriate investment mix. Their projection models looks good for the next 30+ years and we’re not changing anything at this point. This will be a rough and bumpy bottom but once we figure it out we’ll make good progress forward. Not so different from 911. Not as bad as the financial crisis.

[devans0]

I lost money repeatedly with the series of tariffs and trade wars. I do not consider unprovoked trade wars as normal market risk. The tax windfall was a panacea to prop a weakening economy and felt desperate. Volatility led me to believe that one big hit and the market would tumble. We moved from 100% stock funds to 100% bond funds several months ago. We locked in the profits.

Did I call Covid-19 as THE big thing? No.

Did I assess risk versus reward and position us relatively well? I so.

Did I time it well? No. I would have ridden that position for years but came close only by luck. My timing is always less accurate. I trust my calls though.I

An expat professor on this board gave me the tools to learn to invest and profit when I was agonizing over whether I had saved enough. I did, as of four years ago.


edit add. I am not buying equities and won't for a while. This won't end until there is much more pain IMO. People are not bleak enough yet. My source is my amateur pop read of market psychology. I won't know when the bottom is. I may improve my basis a little more though.

[winyaz]

Quote:

https://www.bogleheads.org/wiki/Tayl..._timing_quotes ... Follow the link. It's a great read.

I was a member of the Bogleheads forum for years so am familiar with the quotes. The site is a great source of information, especially for those that don't want to spend much time managing their portfolio. Still the US market has had drawdowns over 75% (twice counting the Nasdaq) and Germany, Japan and others have had complete losses. Whose to say that can't happen here, or whether I'll live long enough to recover from such a loss. I've done my own research and simple moving average timing strategies and rotation strategies generally outperform the market on a risk adjusted basis. Here's a paper demonstrating it better than I could. It's a great read as well:
https://mebfaber.com/2009/02/19/a-qu...ation-updated/

[2177V]

Quote:

Originally Posted by Dtail Bolded by me - how do you know that there won't be another test of the lows, which appears to be more typical with bear markets?

I buy equities using 10% of my treasury portfolio at a time and not everything at once. I am now 30% equities/70% treasuries because the market had at one point declined over 30%. Each 10% increment of my portfolio was purchased at the 10%, 20%, 30% decline.

After the recovery, I should have a 10%, 20%, 30% growth of the three 10% increments of my portfolio. No guessing the bottom. No fretting if there is another test of the lows. In fact, I want another test of the lows so I can buy more equities using another 10% of my treasuries.

Since I was 60/40 in 2019, this means my 60/40 portfolio will be restored if the market decline 60%.

[Ablatus]

And how did you rebalance to 40/60? Or will you?