VanWinkle
Thinks s/he gets paid by the post
The market is looking 2 quarters ahead, as it has done for years. The market thinks things will be marginally better in 2 quarters.
For the first time ever I sold all my stocks
- Thread starter harllee
- Start date
The market is looking 2 quarters ahead, as it has done for years. The market thinks things will be marginally better in 2 quarters.
RetiredAt55.5
Full time employment: Posting here.
At the same time, the market goes up/down/sideways daily based on the good/bad/no news of the day. Or so the talking heads/analysts would have you believe.
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
At the same time, the market goes up/down/sideways daily based on the good/bad/no news of the day. Or so the talking heads/analysts would have you believe.
Yup, the market is forward looking and correct, until it is not.
Prime Example:
Dec 2018 - 20% markdown. Was the market looking forward to June 2019
?
OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes. I get a particular kick out of the fact that a few minutes after market close, after a couple of billion shares have changed hands, that the talking heads have apparently interviewed a statistically significant number of traders and hence can give us this news. Kind of like Santa making his worldwide rounds on Christmas Eve. If you want to believe the myth you have to abandon logical thinking. I've never been good at that last bit.
bmcgonig
Thinks s/he gets paid by the post
- Joined
- Aug 31, 2009
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- 1,578
Wasn't it looking forward to tighter money and higher interest rates? Which Powell then reversed?
Yup, the market is forward looking and correct, until it is not.
Prime Example:
Dec 2018 - 20% markdown. Was the market looking forward to June 2019
Brat
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I have limit orders at bargain levels, not just somewhat lower, good for a month. We may encounter another big downdraft. If filled great, if not I have cash for another day.
LA_Newsboy
Recycles dryer sheets
- Joined
- Jan 7, 2003
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- 53
I went to all cash in four IRA accounts earlier this week. I had some fat, quick profits from buying near the March lows so I took 'em. "Nobody ever went broke taking a profit" is one of my favorite investing adages.
What triggered my selling was reading the views of Stanley Druckenmiller on the market's weeks and months ahead. He is very pessimistic. He is one of the sharpest minds when it comes to investing and I believe his pessimism is warranted.
I've parked the money in MINT, SHY, VCIT and VCSH. I think those are good places, altho they do have some slight risk attached. I'll look at re-entering the market in 3-9 months. I'm 75 and have been investing for almost 50 years and this is the first time I have "sold in May and went away." There is just too much uncertainty these days.
My taxable account is almost all energy MLPs that I've owned for 10-12 years and any selling there would trigger horrific tax bites. Plus, they throw off $80,000 a year in tax-deferred income. I plan to leave them to my heirs. They'll get a stepped-up basis and avoid any taxes, at least under the current tax code.
What triggered my selling was reading the views of Stanley Druckenmiller on the market's weeks and months ahead. He is very pessimistic. He is one of the sharpest minds when it comes to investing and I believe his pessimism is warranted.
I've parked the money in MINT, SHY, VCIT and VCSH. I think those are good places, altho they do have some slight risk attached. I'll look at re-entering the market in 3-9 months. I'm 75 and have been investing for almost 50 years and this is the first time I have "sold in May and went away." There is just too much uncertainty these days.
My taxable account is almost all energy MLPs that I've owned for 10-12 years and any selling there would trigger horrific tax bites. Plus, they throw off $80,000 a year in tax-deferred income. I plan to leave them to my heirs. They'll get a stepped-up basis and avoid any taxes, at least under the current tax code.
Sell or Not
Its not clear to me why the OP owns stocks - for price appreciation or for income? Being in his late 60's I would hope its for income and he really doesn't need share appreciation but everyone has a different objective.
I believe the current state of one's shares need to be evaluated based on your goals. If you own JNJ for income - well that's not going to change no matter what the share price does. Just ignore it. If you own it because you hope it goes from $150 to $200 in the near term well that's another story....
As an income investor I spend most of my time looking at the reliability of the dividend and if the share price goes up or down so be it. No doubt in the short term the consensus on share price seems to be downward. Its always a struggle to convince yourself share price doesn't matter unless you're buying or selling.
Its not clear to me why the OP owns stocks - for price appreciation or for income? Being in his late 60's I would hope its for income and he really doesn't need share appreciation but everyone has a different objective.
I believe the current state of one's shares need to be evaluated based on your goals. If you own JNJ for income - well that's not going to change no matter what the share price does. Just ignore it. If you own it because you hope it goes from $150 to $200 in the near term well that's another story....
As an income investor I spend most of my time looking at the reliability of the dividend and if the share price goes up or down so be it. No doubt in the short term the consensus on share price seems to be downward. Its always a struggle to convince yourself share price doesn't matter unless you're buying or selling.
I have no idea what action is correct (OP selling/staying the course, etc); I do think it will take a long time for small business and small business employment to make it back to late 2019/2020 levels.
One thing propping up the 1918 economy was the mobilization and war spending--but I suppose we can always start a new big war to create demand. The Fed and Congressional willingness to use a big stick is, I suppose, a plus for stocks; I'm just not sure how soon the recovery will start--I'm suspecting 2022 at earliest to reach 2019 levels. The current market has balls of steel if it's looking at 2022/2023 for current pricing.
If cash and bonds can get you through, I don't see a problem in selling stocks when you've already won the game, as Bernstein says.
I reduced stock allocation to 45% as part of a gliding path plan, and plan to buy more when it hits 40% (as already happened in March).
One thing propping up the 1918 economy was the mobilization and war spending--but I suppose we can always start a new big war to create demand. The Fed and Congressional willingness to use a big stick is, I suppose, a plus for stocks; I'm just not sure how soon the recovery will start--I'm suspecting 2022 at earliest to reach 2019 levels. The current market has balls of steel if it's looking at 2022/2023 for current pricing.
If cash and bonds can get you through, I don't see a problem in selling stocks when you've already won the game, as Bernstein says.
I reduced stock allocation to 45% as part of a gliding path plan, and plan to buy more when it hits 40% (as already happened in March).
Beachcomber
Recycles dryer sheets
OP, I just got this email - not sure why it takes a week.
Anyhow, I felt the same way after rebuilding losses from 2000 and 2008. I simply do not want to spend years rebuilding a loss.
My broker assured me we re-balanced the portfolio and took profits in January. He does not want to miss out on the growth later. I have about 50% equities via ETF's and MF's. I am in moderate risk at 65 and could convert to conservative exposure but would miss out on the buying opportunity that will arrive soon. We have lots of powder to buy large cap, solid companies at their low - or our perceived low.
I do feel the feds are propping up the market right now, however.
Anyhow, I felt the same way after rebuilding losses from 2000 and 2008. I simply do not want to spend years rebuilding a loss.
My broker assured me we re-balanced the portfolio and took profits in January. He does not want to miss out on the growth later. I have about 50% equities via ETF's and MF's. I am in moderate risk at 65 and could convert to conservative exposure but would miss out on the buying opportunity that will arrive soon. We have lots of powder to buy large cap, solid companies at their low - or our perceived low.
I do feel the feds are propping up the market right now, however.
gwraigty
Thinks s/he gets paid by the post
harllee
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Oh boy, I certainly do hope that someone in power does not decide to start a war just to help the economy. That would be the worst.
Me too! I honestly don't know where to put it at this point....but I have plenty of cash to buy some bargains.
harllee
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes, that's the question I have now--where to put the cash for the time being.
I went to cash then to vanguard short term federal fund. I'm not sure for how long.
I'll probably dollar cost average back into the market when I feel safer. I think the timing of my return will be related to this virus, and political stability. A pretty wide open time table, lol.
Just thinking out loud,
but if some countries come out of this sooner, international funds might be worth a look. There might even be a new world order. Those with good health care would obviously do better, and vice versa.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
+1 My tax-deferred "cash" is in Vanguard Short-Term Federal Fund Admiral Shares (VSGDX) and taxable account "cash" is in Vanguard Short-Term Tax-Exempt Fund Admiral Shares (VWSUX).
For me, I'll be not so much when the market feels safer but when the market seems more connected to the economy and valuations are attractive. I still have concerns about the Fed propping up the market with easy money and making alternatives to equities unattractive and the impact of softwre programs trading with other software programs creating a bubble in equity values.
I'm not sure if I'll buy back into equities directly... I may just buy long-dated call options on the S&P 500 and declare victory. I do have a couple small positions in SWAN, which has some equity like aspects to it, but currently only 3.7% of the total.
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atmsmshr
Full time employment: Posting here.
Agreed.
The published nonsense by analysts is usually just a reporter trying to meet a deadline for their editor to review. I try to look past the "market declined because..." lead and just read the story to get the facts, not the inferred causality to stock prices.
At other times, when markets decline when Powell or Fauci are cautiously pessimistic in a hearing or briefing and the story is written - it is no kidding Captain Obvious. But I still like to read the substance of the factual reporting.
Worst on my list - The prognosticators who 'predicted the Great Recession' now making the next pronouncement are just as bad in selling articles to news agencies. Ranked down there with used car salesmen and congress.
We also sold most stock index funds on 5/8/20 when DJI closed at 24331.
Now sitting with 43% bond index funds, 5% stock index funds and 52% cash (VMMXX).
Still looking for work to replace investment earnings with wage income. Plan to work until 70 or 71, I am 65.7 right now.
Now sitting with 43% bond index funds, 5% stock index funds and 52% cash (VMMXX).
Still looking for work to replace investment earnings with wage income. Plan to work until 70 or 71, I am 65.7 right now.
themillerman
Dryer sheet wannabe
In a world where no one wants to be in business, money won't be worth much. Owning stocks is owning businesses. If I owned a viable business right now, regardless of what is going on, I wouldn't sell the business, especially if I needed to fund my life for more than 10 more years. Also, interest rates are about to turn negative which means you will be charged to keep your money in a financial institution. At least stocks provide an opportunity for growth. Only alternative is buying physical gold with all your money. Glad you will be able to sleep though. Best wishes for you and your finances. Sincerely, no sarcasm.
harllee
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Can you or anyone tell me about the Vanguard Short Term Federal Fund Admiral Shares (VSGDX). I am thinking that may be better than CDs for my cash in my Vanguard IRA since I may not want to tie up the cash too long. Thanks.
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pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
What will be interesting to see if rates go negative is whether that will extend to FDIC insured checking and savings accounts. I'm skeptical that retail customers will be subject to negative interest rates, but I concede that it could happen. I seem to recall reading something this week that the Fed was not keen on the idea of negative interest rates.
I hope it works out for you too. Good luck.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
See https://investor.vanguard.com/mutual-funds/profile/overview/vsgdx
SEC yield is 1.70% and distribution yield is 2.03%. Duration is 2 years, so there is more interest rate sensitivity than a money market fund but not much interest rate sensitivity.
Chuckanut
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+1
I agree. That is to much like the Depression where money in the bank was just lost with no recourse, no insurance, nothing except nothing. If you want to see an old fashioned run on the banks, go to negative interest rates for the ordinary retail customers.
aja8888
Moderator Emeritus
I am planning on making my bank run when rates hit zero first. You may be too late when they go negative.
