Talk me out of selling everything

[COcheesehead]

If you are all in on the NAZY, you may deserve a 17 year wait- concentrated bets are risky business. "Stay the course" is meant for a diversified portfolio of stocks(US and Foreign) and bonds. If there is no risk, there is no reward.

See my post #149.

 

[mikes425]

If you are all in on the NAZY, you may deserve a 17 year wait- concentrated bets are risky business. "Stay the course" is meant for a diversified portfolio of stocks(US and Foreign) and bonds. If there is no risk, there is no reward.

The latter would be in line with my PF profile which a CFP whom I have never been on a 'percentage-of-assets' basis with - has pretty much suggested some minor changes at the margins, but no fundamental reversal of course... that is, diversification, across a roughly 50/50 allocation - of ETFs, a range of closed-end and index stock funds weighted domestic/large cap ...and on the FI side big positions in ultra short and ST bond, a little intermediate bond -corporate and treasury - index funds TIPS funds, and some closed end EM Debt/Bond exposure. Rationale in theory is that while NAVs have taken a bit hit (would be selling pretty low to bail on most bond funds at THIS point) the div. yield continues to increase - I mean I gotta say some of these posts are reminding me of the very mentality I was told NOT to have - during the '08/'09 crash - so yeah I guess that's called staying the course - well I was far from getting back to all-in on equities from '09 forward and in hindsight regret it. I was fearful and went basically 30/70 when I was in my 40s. Funny, in the last few years I have become far MORE risk tolerant...as reflected in my gradual increase to a moderate 50/50 AA. It's just seeming there's a lot of fear sentiment being expressed in this thread - I just don't see how bailing on a long-term strategy -and just taking a major hit exiting bond funds after they've taken double digit % downturns --correlates at all with everything I've ever been 'guided' to do - not just by advisors - but many alleged wise investors, on forums like this. Just saying.

 

[daylatedollarshort]

I just don't see how bailing on a long-term strategy -and just taking a major hit exiting bond funds after they've taken double digit % downturns --correlates at all with everything I've ever been 'guided' to do - not just by advisors - but many alleged wise investors, on forums like this. Just saying.

The article in this post addresses that. Don't conflate a good odds, long term strategy with stock funds to what is becoming a losing strategy with bond funds, at least those without maturity dates, in a global, rising rate environment.

https://www.early-retirement.org/forums/f28/bond-vs-bond-fund-114703-9.html#post2816309

 

[COcheesehead]

The article in this post addresses that. Don't conflate a good odds, long term strategy with stock funds to what is becoming a losing strategy with bond funds, at least those without maturity dates, in a global, rising rate environment.

https://www.early-retirement.org/forums/f28/bond-vs-bond-fund-114703-9.html#post2816309

Bond funds are not the place to be now or ever. They will continue to erode with further interest rate increases with no par value to return to. Add in redemption drag, fund expenses and bond funds will underperform.

I encourage anyone with fixed income investments to read some of the individual bond threads on here. There are alternatives, if you can break away from what you have always been told is the “right thing” to do.

 

[copyright1997reloaded]

In the long run, markets should go up because they reflect ownership of producers of goods and services, whose profits should rise over time as productivity improves.

Increases in productivity is the fundamental driver in terms of stock market wealth and overall standard of living.

That isn't to say things can't happen in which "the long run" is well beyond the investors horizon. While the following is an extreme example, it suffices to tell us that things can happen that result in (in our remaining lifetimes) permanent losses.

This is a graph of the German stock market in real terms, taken from the paper, “Excess Volatility” and the German Stock Market, 1876–
1990 by J. Bradford De Long and Marco Becht (1992). My purpose in posting isn't to say that we are the same as Germany (impacted by WW I, then hyper inflation, then the rise of Nazism followed by destruction in WW II), but rather that the long run "stocks are good" mentality (which I also have) is subject to a world where peoples and countries don't do things that cause catastrophic consequences.

(This is not meant to be political and I am not trying to take us in that direction.)

Markets WILL do better over time, but it takes an economic system that rewards innovation, increases in productivity, and encouragement of competition. Nothing is automatic without such an environment.

 

[Running_Man]

There are multiple countries and mulitple currencies that have had their stock market effectively go to zero, with populations in the hundreds of millions. The period since the Federal Reserve system was inititated in 1914 is that government debt as a percentage of GDP has gone from 9% of GDP to 123%, and this period is then used as the logic behind stocks always go up. Debt needs to continue to rise somehow or the GDP of the country will contract.

US Government spending to GDP during that time went up from 3% of GDP to 38% or about 3.5% additional GDP per decade. The twins of government spending and debt need to continue upward or there will be a giant correction from the failing shock absorbers in the economy.

What the limits of this plan is I have no idea, and it can keep going for a very long time. It will probably take a bit more pain before FED announces a pivot but I would be shocked if something doesn't cause a pivot in the next 6 months.

 

[pb4uski]

OP here....
Thanks. I'm taking things slowly. Have sold a bit into this strength but avoiding any major sales. I've bumped my cash for expenses up to 2 years and will continue to do this at opportune times. I'm re-reading this thread for places to put some of these proceeds with a short term time horizon.

Have you maxed out on I bonds, including some gift box purchases?

 

[connor77]

Have you maxed out on I bonds, including some gift box purchases?

Bought my first i-bonds this year for my wife and me so 20k. Just learned about the gift box purchase from this site so last week bought another 20k. In January I'll buy another 20k. I think I'll roll with that but I might consider another gift purchase next year to bring total to 80k.
CD's are also looking more attractive within Vanguard but they are callable.
For what it's worth, some of the ETF's I've considered selling are up but they are way down from where they once were. So I'd still be making money, just considerably less than I would have had I sold at prices closer to their 52 week highs.
I'm finding the bond threads interesting and, honestly, I think CoCheesehead has valid points when he mentions that bond funds are simply not wise investments. In addition to wanting to buy more equities with my cash on hand (which I've learned wasn't wise), I also sold my bond funds because I just didn't see them as great long or short term holdings. I don't have the tolerance to have a 100% equity portfolio. That's clear for sure. I think I just need to learn more about other options and plan better to have a suitable amount that is liquid so I won't be forced to sell stuff at inopportune times.

 

[kongmen]

Personally, I appreciate a good market correction. Every now and then you need to declutter. Capitulation posts are a good sign of a market bottom. The more people sell, the higher chance we’re at a bottom. This, along with getting rid of cheap/easy money, is a plus for long-term investors. So when I see a post like this, I feel like we’re moving in the right direction.[/QUOTE]


^^ absolutely agree!

 

[RetiredAt49]

Hopefully the OP didn’t sell everything prior to today [emoji1]…. I love seeing 5% daily pop in my portfolio!

 

[TripleLindy]

Hopefully the OP didn’t sell everything prior to today [emoji1]…. I love seeing 5% daily pop in my portfolio!

Day ain’t over yet.

- Curly

 

[W2R]

Hopefully the OP didn’t sell everything prior to today [emoji1]…. I love seeing 5% daily pop in my portfolio!

WOW!! I just looked and that sure put a big smile on my face!


I know, what goes up will come down. But I think we all enjoy watching the "up" part of the NYSE roller coaster ride.

 

[kongmen]

Hopefully the OP didn’t sell everything prior to today [emoji1]…. I love seeing 5% daily pop in my portfolio!

True! It may not mean much without selling but it still gives a nice psychological boost

 

[Dash man]

True! It may not mean much without selling but it still gives a nice psychological boost

A lot of pundits are saying it’s another bear market rally, so it might be a good move to take some off the table. That confirms my thoughts of staying put, since they wrong so much.

 

[connor77]

LOL. I'm the OP and, thanks to the wisdom of the people on this website, I did no such thing. I did, however, sell a bit of some of my holdings that have done okay. The proceeds of which are now in CD's earning around 4%. I've shored up my cash on hand to cover 3 years of expenses. Might shoot for closer to having 5 years on hand...slowly.

 

[street]

LOL. I'm the OP and, thanks to the wisdom of the people on this website, I did no such thing. I did, however, sell a bit of some of my holdings that have done okay. The proceeds of which are now in CD's earning around 4%. I've shored up my cash on hand to cover 3 years of expenses. Might shoot for closer to having 5 years on hand...slowly.

I like that plan a lot. In my opinion having enough cash to live multiple years is a wise plan/choice. To insure and sustain all investments it is a solid plan. A 5 plus year plan to cover all expenses gives you a lot of strength in any up or down-market time. IMO

I believe you made the best choice not to sell.

 

[connor77]

[/B]
I like that plan a lot. In my opinion having enough cash to live multiple years is a wise plan/choice. To insure and sustain all investments it is a solid plan. A 5 plus year plan to cover all expenses gives you a lot of strength in any up or down-market time. IMO

I believe you made the best choice not to sell.

Me too! Especially today! Thanks to so many that contributed to my thread. There were many posts that also inspired me to read other helpful threads on ER Org.

There are some incredibly bright people here. I've learned so much about how to safely manage my money to achieve my goals. So grateful for the knowledge here.

 

[RetiredAt49]

Day ain’t over yet.



- Curly

It is now and overall it finished up 5.77% for the day. My traditional IRA did much better (8.13%) thanks to some TQQQ and UPRO ETF shares I have in there. [emoji16]

 

[foxfirev5]

Yup. I sure don't want to miss these days. If I do I'll just be a long term statistic regarding market timing.

 

[EastWest Gal]

It's fun to look at the portfolio gains today. We gained about as much as my annual salary before taxes in one day. It was days like this over most of the past 10 years that make me feel unemployable. The market was beating my salary year in and year out except for this year. And despite living off of taxable since 2019, our portfolio today is exactly what it was two years ago.

 

[eytonxav]

WOW!! I just looked and that sure put a big smile on my face!


I know, what goes up will come down. But I think we all enjoy watching the "up" part of the NYSE roller coaster ride.

Careful there, that's getting pretty close to a whee!

 

[Mountain skier]

A retiree would be smart to go mostly fixed income, especially now that CD rates are improving. An easy math sample: $1M at 4%= $40,000. That generated income would really help in my humble opinion.

 

[Mountain skier]

Ladder your bonds. Buy the best yield at good to great quality levels, sit back and relax. Rates will come down and anyone with 6% yields will be very happy. Right now my ladders throw off way more than we need - an inflation hedge in itself -and will get us to social security - our return sequence hedge.

If the OPs portfolio falls even more - and it’s likely - they will need a big market surge just to get back to where they were on Friday let alone last January. What kind of inflation protection is that? They where not prepared to take on many of the risks in the five years before and after retirement - Kitces calls it the retirement danger zone and fixed income would have resolved a lot of that.

Kitces has done some good work on the subject. https://www.kitces.com/blog/managing-portfolio-size-effect-with-bond-tent-in-retirement-red-zone/

I agree with this post. We are retirees and have a CD ladder with the majority of our savings.

 

[connor77]

A retiree would be smart to go mostly fixed income, especially now that CD rates are improving. An easy math sample: $1M at 4%= $40,000. That generated income would really help in my humble opinion.

I agree with this post. We are retirees and have a CD ladder with the majority of our savings.

I'm the OP for what it's worth....4% on our accounts won't quite bring us enough to retire but it's close. I'm trying to take a page out of Cheesehead's approach by buying fixed income. I'm already feeling better about the 3 years of reserves I've built up (recently) even if some of it might erode a bit due to inflation. As I mentioned previously, I'm shooting for 5 years of cash on hand so that I can weather most storms in equities. We have a fair amount of our investments in ETF's like VYM that pay a decent dividend. I will not reinvest dividends of any of our ETF's to continue to build up "safe" money.
We're still way down from where we once were. Probably 12%.

 

[lawman]

Okay - sorry for the melodramatic title...


I'm 55 and DW is 57 and we are (were) right on the cusp of fully retiring. Now down 700k from our high and have a really lousy feeling about the foreseeable future in terms of equities.

We have a portfolio of 100% equities - all in Vanguard and all, or very nearly all, in Index funds with decent diversification in terms of value, growth, dividend payers and intl exposure.
We have a year's worth of cash to cover living expenses and probably could eek out another 6 months (total 18) without needing to sell anything.
No debt except regular monthly expenses. Recently, my wife's former employer (I'm still consulting, she was retired) has asked her to return to work. She will draw a small salary but, more importantly, we'll have healthcare insurance. We had been paying $1k for COBRA monthly.
I made what is now a mistake when bond funds started to go down by selling them and using the proceeds to add to my equity funds/ETFs.
I'm not comfortable seeing what we have in our taxable and nontaxable accounts potentially decline by another 20+ percent. If we were to sell, it's conceivable that we could live close to our "end of life" age with the proceeds invested in considerably less risky investments than equities and have enough but it would certainly change our lifestyle considerably.
I'm one of those people that is currently feeling "this time is different" meaning I have very little confidence things will get better for a very long time. I could handle an occasional 10% decline and possibly a bit more but I'm already down 22% with more downside coming IMO.
My consulting gig will probably end soon (by end of year) not by my choice but likely because of the economy slowing. My wife's job should be more stable.
I'm struggling and fighting the desire to sell and cut my losses knowing that the market has historically rebounded. There are already lots of graphs and charts for how long bear markets take to recover from so no need to rehash those.
In another forum there is a person who has posed the question: "What reason would one want to keep money in or invest in the market today?". The only answer provided is that "The market always comes back". Not much substance to that I'm afraid.
I'm aware I should have probably put aside 3 or more years of expenses worth of cash so lesson learned there. If the FED succumbs to pressure and starts to ease, we'll have another artificially propped up economy. If they continue to tighten (rip the band-aid off essentially), there will be further erosion in the markets and we'll see more of our $ erased.
Sorry for the long post. Not how I thought things would go...obviously. For what it's worth, I sort of hoped we'd make an average of 7% a year in equities with some down years and some up years but average 7%.
Thoughts? Words of wisdom?

For me it has come down to preserving what I have. I just placed an order to sell the worst investment I have ever made (MDDCX). I've lost 31% ..I also took a big hit when I sold my investment grade bond fund (VFIDX) a few months ago..Glad I sold when I did. It's lower now but I'm left with an amount I am happy with. I have begun buying my own investment grade bonds which are mostly C.D's, treasuries, and govenment agencies. I am still about 10% in an equity index fund (SWTSX) which will give a little upside should the market go back up.. I just can find no compelling reasons why the stock market will go up any appreciable amount any time soon..When I was working I wanted to grow the nest egg. Now I just want to keep it from breaking.. I'm sleeping better now. Good luck to ya..