For the first time ever I sold all my stocks

Been thru a few ups and downs since 1966 and after 26 years of ER it is starting to look like I may leave something on the table even after my RMD Pals at the IRS get their cut.

So I'm planning to dollar cost average Total World Stock Index over the next ten years and leave any excess to a trust/foundation.

Heh heh heh - Vanguard VT. :cool: It's a male hormone thing - IMHO. :greetings10:
 
OP - I hope you have limit sells on the stocks and ETF's and not market sells, just in case Monday does an airpocket drop.

I certainly have had a plan, it was a high stock allocation, worked out fine in 2000, 2008, but this time is different, no excuse for the market to be so high.

I'm not selling anything in the taxable accounts as driving up higher tax rates is pretty unappealing.

I have however, sold approximately $200K in a Roth this week, since the market has unreasonably come back so fast and so close to the original highs.

I don't mind having less stock, and more cash, just in case this does turn into the Great Repression.

Long term I think stocks are fine, and would certainly buy back in if they drop 20% or more from today's price.
 
We came *this* close to plunking down about 30% of our cash (about 15% of our investment net worth) into equities after filing 2019 taxes in mid-February. 12 years of prior stock market avoidance caused us to procrastinate, as usual.

After what we've just experienced, with the precedent being set to shut down the country whenever a "serious" virus is foisted on the planet, I don't think my DW and I will ever invest in equities again. Sadly, I don't think the safety of bond funds outside of treasuries is all that comforting either.
 
brewer12345 said:
Boy, you sure do know everything.
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+1

Takes an awful lot of arrogance to tell someone who decided to sell their stocks that they don't have a plan, or that they don't stick to it. It's really saying that if you ever change your asset allocation drastically then you're naive or worse.

All the critic is saying is that you're stupid if you don't agree with me as to the economic results of a worldwide pandemic given the amazing lack of knowledge or even lack of consensus opinion on how this will end.

Then there's this silly trope that now you have to make another smart decision as to when the op gets back in. One 1% pullback and she can go back in and be ahead if she wants.

If the facts change what do smart people do?
 
The won the game theme has been in the back of my head for some time now. While I do think that when portfolio draw-down (spending) is highest, short term risk taking should be lowest. Avoid SORR, I have that healthy fear and I positioned my portfolio to deal with it.

I just can't imagine a portfolio that consists of 100% fixed income....too many possible bad outcomes with that much skew....too much risk long term for me. Just as a stock "heavy" allocation can fail so can a fixed income "heavy" portfolio.
What I have been pondering lately is the ramifications of all the current fiscal and monetary stimulus. Seems to me that at some point inflation will ratchet up. I have to admit I did think that was going to happen in 2010 and beyond....10 years later...still waiting.

I do like to look at the Callan periodic table of investments from time to time to remind me of the variability of asset classes.
https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf
 
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I can understand the OP's position. While I haven't abandoned my 40% equity stake it has shrunk a bit. Even with small purchases on the way down (<1% total) I'm currently holding at roughly 35% equity. The only reason I'm holding at this level is that I believe I have enough.

Most of my fixed income (25-30X expenses) is in CD ladders, which I am holding my nose and reinvesting as each issue matures. The rest (15-20% of fixed) is invested in higher risk bond funds -corporate, high yield, EM etc.

If I make it to age 70 I would have no problem being lower in equities. Actually I am passively reducing my equities by not reinvesting most of my dividends.
 
Options we face are usually based on experience, knowledge, age, available income, size of portfolio and if drawing from our savings.

It is no wonder we have so many opinions on what the current situation means, because it means different things to different people. Without self disclosing, there is no way for us to know the particular situation of someone offering advice (which could be coming from an inexperienced 23 year old investor).

Steady job and saving for retirement in while in the 20-50 year old range? - sounds like stay the course and keep buying - maybe some cheap stocks soon, but it won't matter too much in 10-40 years what the market it doing today.

Retired and with a portfolio of 30-40 times expenses for life expectancy and having SS / pension income to cover basic expenses? - Let'er rip in the stock market - its for the kids anyway.

Within 5 years of FIRE or Newly retired before SS and pension kick in or less than a 25 x expenses portfolio? - It makes perfect sense to be cautious about risk in an over valued stock market because of Sequence of Returns Risk.

One size DOES NOT fit all.

atom
 
I reevaluated my risk tolerance in 2018. I was 64 at the time. I reduced my equities allocation to 25%, from 45%. I missed the run up from S&P 2650 to the recent high, whatever it was before the Corona collapse. I found that missing that run up, albeit only 20% of my original portfolio missed it, didn't bother me at all. I still had 25% enjoying it, and I slept fine at night feeling well insulated from a debacle.

I'm with the OP here, sort of, in that because of the ridiculously low returns on any sort of interest bearing account, I felt compelled to leave that 25% in a market I personally don't have much confidence in.

We all have to find our comfort zone, if we can, if there is one.
 
And on the personal investing front:

We had another neighborhood street happy hour last Friday. A recently retired corporate lawyer (and very success senior partner) told me he is completely out of the stock market for the first time in his life because of unrealistic forward PE estimates. His firm was in Delaware, so he provided legal advice primarily for companies listed on the NYSE.

Based on his 2008-2009 experience, he said corporate boardrooms in many sectors are likely in the panic mode right now, trying to raise capital in the short term to avoid bankruptcy filings by creditors, while not taking on too much debt and cripple earnings for too many years in the future. Since company executives and board members of publicly traded companies are heavy equity holders they have a personal interest to avoid restructuring under federal bankruptcy laws which can wipe out owners and replace them with the previous bondholders. At the same time, many of these companies have pulled annual earnings estimates because executives have little idea of what the future looks like, and are still trying to plan for different scenarios.

On a side note, he told me never to invest in a Chinese company (not that such risk was on my radar anyway) because they file onto the NYSE through shell companies, don't follow GAAP, and the Sarbanes-Oxley law cannot reach into China and imprison a CEO for cooking the books.

But what the hell does he know anyway?
 
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It is the right decision for the OP. Always can look at it 2 ways if one has won the game.
In the end, will this bear market resemble the 2 or 3 legs down from 2000/2008, or is the current state resembling 2009, when the news was still fairly bad, but that was the start in hindsight of the bull market.
 
BeachOrCity said:
There is some kind of freakish disconnect going on.
2019 peak earnings were 140 a share for s&p 500. Right?
So right now it’s trading at over 20x past peak earnings and a much bigger multiple for 2020 and almost certainly 2021 earnings.
If we are lucky we can get back to the previous level in 2022.

To me, it reeks of being overpriced, especially given the huge amount of uncertain stuff. Estimate are unemployment stays above 9% thru 2021 at this point (cbo).

I agree on equities for the long term. Always have (along with real estate).

But something is wrong, and when something is wrong like this it is time to dial down risk.
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Since when do markets trade based on valuation? Do investors and the computers which drive the markets consider valuation? As markets were hitting all-time highs just a couple months ago, was anyone mentioning valuation, that stocks and the market were appropriately valued for current/expected earnings and the economic environment? What valuation is too high? Most certainly not. Just because earnings will be low for a while, does that mean stock prices and the markets must be priced lower for that time frame? Why? If the Fed will be in there buying everything and preventing the market from going lower, where will that leave everyone heading for the exits now?

Many say the markets are forward-looking, about 6 month into the future. Maybe this is why they have bounced off the lows - there is actually less uncertainty at this time? Personally, I think there are still some tough times ahead which may not be properly understood or accounted for currently. However, maybe just the likelihood that that the country will be getting back to business very soon is good enough at this time? Yes, there will be a period of difficulty, but it's better than continuing in lock down mode, which would prolong the business downturn. On top of this, remember that the Fed has indicated it will do everything it can to support the stock market. We are now into "QE Infinity". "Don't fight the Fed" is a well known saying and accepted by many.

Our AA continues to be 2/98 with high quality fixed income, so I'm not really concerned with what equities are doing. Maybe we'll get to 5/95 or 10/90 by year end. About a month ago we did add a small cap mutual fund to DW's 401k monthly contribution allocation (just a tiny sliver of overall portfolio).
 
COcheesehead said:
A lack of a long term plan leads to emotional decisions like these.

You now have to make at least one more correct decision or stay in cash the rest of your life.

I see more and more evidence on this board of people who do not have a strategy first investment plan.

Based on prior year posts made it seem like almost everyone on here had one.

Maybe this year is the great shakeout.

Reminds me of the Mike Tyson quote. Everyone has a plan until they get punched in the face.
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+1000
 
atmsmshr said:
And on the personal investing front:

We had another neighborhood street happy hour last Friday. A recently retired corporate lawyer (and very success senior partner) told me he is completely out of the stock market for the first time in his life because of unrealistic forward PE estimates. His firm was in Delaware, so he provided legal advice primarily for companies listed on the NYSE.
.
.
.
But what the hell does he know anyway?
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Similarly, back in 2009, as the markets were hitting their lows I had a conversation with a college buddy of mine who was portfolio manager of one of the most successful ESG mutual funds at the time. His senior partner was terrified and indicated he was selling everything he had and buying farm land...said it was all over and things would never be the same again.

As the panic increases, there will be opportunities. The situation will take out the weak companies and individuals, but as a country, we will get past it. For those who do have appropriate AAs, there's nothing to do - stay the course. For those with too high an equity allocation, this is when you learn more about yourself - in practice, how high is your risk tolerance? For those with low equity AA's, now may be the time for increasing the equity portion going forward.
 
We'll still with 50% equities as a target. But not rebalancing. OP decision was right for them, as risk level was too high. I would have stepped down 5%.
 
bmcgonig said:
+1

Takes an awful lot of arrogance to tell someone who decided to sell their stocks that they don't have a plan, or that they don't stick to it. It's really saying that if you ever change your asset allocation drastically then you're naive or worse.

All the critic is saying is that you're stupid if you don't agree with me as to the economic results of a worldwide pandemic given the amazing lack of knowledge or even lack of consensus opinion on how this will end.

Then there's this silly trope that now you have to make another smart decision as to when the op gets back in. One 1% pullback and she can go back in and be ahead if she wants.

If the facts change what do smart people do?
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It seems to be contagious, doesn't it....

Maybe this should be placed in the COVID containment section? The fear driving this action seems to be 100% related to that issue, not based on any financial plan? JMHO.
 
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Tiger8693 said:
Maybe this should be placed in the COVID containment section? The fear driving this action seems to be 100% related to that issue, not based on any financial plan? JMHO.
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Not moving, as this took 3 pages to mention C.

Changing one's mind in the face of epic challenges doesn't imply never having a plan, and having weathered many storms in the past OP is far from the only one going "this is different" and making a decision about maybe taking some chips off the table.

I've also made some changes recently, but clearly sharing them here brings out some very odd judgmental responses, from folks that have zero stake in my decisions.

COcheesehead said:
A lack of a long term plan leads to emotional decisions like these.
You now have to make at least one more correct decision or stay in cash the rest of your life.
Click to expand...

lol. "rest of your life" no, OP or anyone can increase their equity position at any time. Do they maybe end up buying back in later than everyone that doesn't sell? Sure maybe they miss the first 6 months of the recovery. Maybe they factored that in and are ok with it.

So maybe let's dial the judgment back a bit?
 
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Aerides said:
Not moving, as this took 3 pages to mention C.
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Ok, my bad. I thought I read reference in post #10, and subsequent.

I agree no one should be chastised for making changes they deem prudent. Just about any change could be called market timing I guess.
 
OP here, wow I did not mean to start a war. I just thought it was worth mentioning that someone who was an investor for 40 years was getting out of the market. My situation is different than most--I feel I have won the game. DH gets SS and a pension and I get half his SS and we can live on that (especially now that we are spending little money). At age 70 (in 1.5 years) I will receive $3,000 a month in SS so we will be in the lap of luxury. We are not big spenders and have no debt and no one depending on an inheritance from us.

My actions were related to what I see as a very overpriced market that in my opinion has no justification.
 
I have a friend who moved away from my area but I still keep in touch. He had a problem letting his emotions rule his investment decisions and he knew it, he would watch the business news, listen to the sensationalist talking heads and churn his portfolio as a result. He was doing terrible and he knew it. Several years back he decided it was worth it to have Fidelity manage the account and suck it up and pay the management fee. IMHO based on his history, I couldn't disagree with him. Along comes the recent turmoil and what does he do.....he calls Fidelity and demands that they sell everything....they tell him he can't since he has a managed account so he has them change it back to un-managed and unloads his entire portfolio.
 
harllee said:
Op here--I have had a long term plan for 40 years that I have closely followed until now.. But I have never seen an economic situation like we are in now and so decided that my long term plan was no longer working for me. Maybe it was an emotional decision but I think I will sleep much better tonight. Maybe I will stay cash/bonds/ CDs the rest of my life, that might be the best for me at my age (almost 70). But I will probably not. Some day there may be a vaccine or an antiviral and I will get back in the market. Or maybe some day our government will do a better job in managing things and I will get back into the market. We shall see.
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Won the game, take your chips off the table sounds like a good plan to me.

But you need to write down what will get you back in the market. Otherwise you may be accused of making an emotional decision.

I like my MIL. She has enough income from SS and pension to cover her needs. She also has a 7 figure 60/40 portfolio. She's hated the money she has lost but understands she doesn't need any of it so she is investing for her heirs. Smart gal.
 
harllee said:
OP here, wow I did not mean to start a war. I just thought it was worth mentioning that someone who was an investor for 40 years was getting out of the market. My situation is different than most--I feel I have won the game. DH gets SS and a pension and I get half his SS and we can live on that (especially now that we are spending little money). At age 70 (in 1.5 years) I will receive $3,000 a month in SS so we will be in the lap of luxury. We are not big spenders and have no debt and no one depending on an inheritance from us.

My actions were related to what I see as a very overpriced market that in my opinion has no justification.
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You didn’t start it, the others did by ignoring your question and instead choosing to focus on the allocation aspect.

harllee said:
I will decide what to do with all the money market funds in the near future--CDs? Bonds? Treasuries? but I just don't think stocks are the right place for me to be now.
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If you want to remain in fixed income, CDs and Treasuries are good options. You might want to add TIPs to that mix to make sure you have some protection against inflation.

I invite other members to steer away from the discussion on market timing, which is an ongoing discussion and found in hundreds of threads, and focus on helping OP with her request, which is how to allocate just fixed income.
 
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