Indicators to get you back to the market?

[walkinwood]

I'm fascinated by the people who had the foresight & courage to get out of equities before or even during the early stages of this pandemic driven market drop.

But as we all know, there are two crucial decisions - when to get out & when to get back in - that drive success.

I understand that if you're old enough & have "won the game", the need for capital preservation over-rides the need to participate in long term market gains. That does not apply to me (and many others), so let's leave that line of thinking out of this particular thread - please.

What are the market indicators that you'll use to decide when to jump in?

Say the market rallies another 10% - do you jump in?

If the market falls another 10%, do you jump in?

More difficult (and likely), it goes down 10%, then goes back up to current values. what do you do then?

Or are you looking at non-market indicators - like a promising phase 3 for a cure or vaccine?

And do you jump all in or have a staged approach?

I brought my asset allocation within my "rebalance band" but haven't gone all the way to my normal 60/40 allocation.

 

[bobandsherry]

If you aren't back in, you've already missed about 10% ride up.

 

[razztazz]

If you aren't back in, you've already missed about 10% ride up.

So? Why would that matter if you got out at or near the top?

 

[Mountain skier]

perhaps after Q2 earnings reports in July

 

[51notout]

perhaps after Q2 earnings reports in July

That’s my plan. I asked my fidelity person to call towards end of June so we can chat about it.

I’m currently 21/31/48. Mostly sold in October thinking the “market” was overblown. I tax managed the after tax account sales and sold everything in 401k’s/IRA’s/HSA’s. I’ve never taken that kind of drastic action before. We retired in March so that was mostly the thinking. We had attended an information session with Fidelity and they had advised that 2020 would be end of bull market and suggested moving out of S&P500 and into investment grade bonds. That’s what we did mostly but I did the bond thing so slowly that we have lots of cash [emoji57]

The plan is to get to 50 or 60 % equities again. Not that bothered if we miss upside at the moment...I want stability in this environment. I’m not convinced that the financial impact to business is properly built into the current market levels. I’m far far far from an expert though [emoji57]

 

[Oz investor]

i stayed mostly invested ( take-overs and hybrid redemptions boosted the cash reserves )

and have been cautiously trickling cash in when i see good value if those stocks fall further i will CONSIDER buying a FEW more ( NOT backing up the truck )

there is a whole global economy and supply chain issue to re-assess IF the virus is controlled .

i think there will be more 'bumps' to come ( currency wars , trade wars , Brexit etc. etc etc. ) with cash rates so low can you really afford to stay on the sidelines for MAYBE years , even rental incomes will be challenged in the coming months

however those inclined to write a diary , have the potential for a classic read ( in the investment world )

good luck , i think most of us will need lots of it

 

[Dtail]

perhaps after Q2 earnings reports in July

Same here.
If not then, also looking at Nov around election time depending who wins.
Lastly, then will make a year end decision.

 

[LRDave]

Hi, my name is LRDave and I'm a dirty market timer....

Never in our 40 years of investing (well, really mostly just contributing to employer 401(k)s) had I ever tried to time the market.... until February.

On 2/20, I moved almost all of our equities to the sidelines. (from 50/50 to basically 5/95) For one reason only: the dystopian relationship between the market at the time and the oncoming train that was Covid-19.

I've never tried to guess market moves before or imagine I'm a soothsayer. But for us, this time was different:

1) We've recently retired. Capital preservation had a new feel.

2) Establishing one's own appetite for risk is one thing when markets are going up or (most importantly) when you are still working and plowing ahead with your savings. You can kick me around if you want to for not foreseeing how it would feel in a real downturn when I knew we couldn't just earn our way through with our paychecks, but I had never experienced it before. The punch in the gut was real - and new.

3) Mid February was about the height of the "it's just the flu, brah..." narrative. I knew that wasn't true.

So - I've done the easy part. February 20th wasn't the top, but very close.

When back in? I am only watching the progress of the virus. This has forced me to watch this nightmare unfold closely, plus I'll probably get this part wrong. But I will admit this: I've slept better with much of our funds on the sidelines.

DW and I are going to sit down and think through a different strategy. I thought we had the stomach for a 50/50 portfolio, but I don't think we really do. I want to get back to a strategy that will allow me to get off this road to perdition and ignore future market ups-and-downs.

I'll close the meeting with the serenity prayer....

 

[COcheesehead]

I think you need to have a strategy first investment approach. If you let the noise of the markets, forums and the media get into your head, then emotion enters the picture and we know how emotion and investing go.

There is fear all over this board and other investment forums that I participate in. Fear makes people do weird things, like go all to cash. So just because someone “got out” at the right time doesn’t make them smart because now they have to get back in and are going to guess at an indicator of their next move.

Here’s the secret: nobody knows.

I am not going to tell you what strategy to use. I have a couple that overlap that make me happy. Sounds like you have or at least had one. If you felt good about your plan before the virus, stick to it.

 

[razztazz]

If you let the noise of the markets, forums and the media get into your head

How about the "not noise"? Real stuff that one could be well served to let into their head? ie Useful knowledge?

There is fear all over this board and other investment forums that I participate in.

Mostly from former stay-the coursers.

Fear makes people do weird things,

Like protect themselves. That's what it's there for

just because someone “got out” at the right time doesn’t make them smart

Not in and of themselves. They could be informed (smart technically) and lucky or just lucky.

because now they have to get back in

Actually, they don't.

Here’s the secret: nobody knows.

So, why buy-and-hold?

 

[COcheesehead]

How about the "not noise"? Real stuff that one could be well served to let into their head? ie Useful knowledge?

Mostly from former stay-the coursers.


Like protect themselves. That's what it's there for

Not in and of themselves. They could be informed (smart technically) and lucky or just lucky.



Actually, they don't.


So, why buy-and-hold?

Looks like you have all the answers. Ring a bell when we hit the bottom.

 

[Oz investor]

LRDave ,

i respect your choice to 'time the market ' and am pleased you have accomplished it successfully

the virus was NOT the problem , merely the pin that popped the everything bubble , or more precisely pushed that key domino

the virus MIGHT become a major problem ( if no vaccine is successful and personal immunity is ineffective .. this DOES have HIV components it MIGHT stay in your body forever in 'remission' or until triggered again )

so what if the virus is a problem that we have to live with ( for decades ) but we have to rebuild the economy national at first , and THEN see if we have any trading partners left , that will still talk to us .

so now you are safely on the sidelines , when and what strategy will you use to re-invest in the market , trickle into individual stocks , or perhaps select index funds

good luck on whatever you choose

 

[Oz investor]

for those on the side-lines , if you don't invest ( some ) into the stock-markets

where do you go

property in a scenario where extra government taxes are likely

bonds in a scenario of greater uncertainty how will they go , in a logical world they should rocket .. but will they

gold is nice but that won't generate income for most folks

cash rates are liable to do anything since some have already tried negative rates

so cash in the banks .... will you still trust them when the dust settles

all those generous handouts/loans will have to be paid for ... BY THE TAX-PAYER

so do you move first THEN look around for opportunities

 

[Animorph]

I guess if you got out just for safety, then you want to buy back at any price cheaper than you sold at. I'm happy when I can do that if I have to be partially out of the market, as in transferring from a 401k. But if the plan is to sell all and then buy back at nearly the same price, then why bother? Two routes to the same destination.

If I got out at the peak I'd want to buy back at the bottom. Might as well make as much as possible if you're taking the risk of getting out of the market for a while. As far as I'm concerned, the lower the market goes the less risk I'm taking by buying in.

With coronavirus there was a fairly clear time to sell, if that's what you wanted to do. There may well be a similarly clear signal to buy if some vaccine/cure is announced. But it might be tough to buy low if there is a quick run up. If it's a gradual up trend, then I guess you should buy earlier rather than later.

I had my normal 25% bond allocation at the market peak. I left it there. I lowered my bond allocation twice, at -20% and -30% from the peak, so I've been trying to buy low, and currently have positive gains on both buys. I'm fine with making 25% to 43% on a small portion (two 5% pieces) of my portfolio. I'll reset the AA back to normal sometime after a full recovery. That's the extent of my market timing. If we get to -40% I'll put another 5% of the portfolio into stocks. Getting into the market again is not a problem I have.

 

[targatom2019]

If you aren't back in, you've already missed about 10% ride up.

Those that sold into the bottom:

"If you aren't back in, you've already missed about 27% ride up"

 

[razztazz]

for those on the side-lines , if you don't invest ( some ) into the stock-markets

where do you go

property in a scenario where extra government taxes are likely

bonds in a scenario of greater uncertainty how will they go , in a logical world they should rocket .. but will they

gold is nice but that won't generate income for most folks

cash rates are liable to do anything since some have already tried negative rates

so cash in the banks .... will you still trust them when the dust settles

all those generous handouts/loans will have to be paid for ... BY THE TAX-PAYER

so do you move first THEN look around for opportunities

If all those things, cash, gold, etc are dog meat, why would anybody think stocks would be better? Especially since they pay the owners about half the historical share of the profits they have coming.

 

[Shredder]

I'll keep watching the market, but I doubt I'll get back in soon. Probably when the news gets better, and when I have a better sense on stock/bond prices. At this moment in time I really don't understand whats driving current prices.

 

[COcheesehead]

I learned a valuable lesson in 2008/2009. I had a lot of cash on the sidelines. I kept waiting for the all clear sign, but if folks remember those times, there was talk of much pain yet to come. I listened to that stuff when I should have at least dollar cost averaged back in. Strategy over emotions.
By the time I was back to fully invested in 2011 I missed a lot of the gain.

 

[sengsational]

Pe-10 @ 18

 

[razztazz]

I learned a valuable lesson in 2008/2009. I had a lot of cash on the sidelines. I kept waiting for the all clear sign, but if folks remember those times, there was talk of much pain yet to come. I listened to that stuff when I should have at least dollar cost averaged back in. Strategy over emotions.
By the time I was back to fully invested in 2011 I missed a lot of the gain.

Did you sell high and simply fail to get back in, in a timely manner? Or was this cash on the side just extra cash you have been sitting on for some reason? Not taking advantage of a gift horse, especially a somewhat suspicious one, is not the same having cost yourself anything. They are two different things

 

[COcheesehead]

Did you sell high and simply fail to get back in, in a timely manner? Or was this cash on the side just extra cash you have been sitting on for some reason? Not taking advantage of a gift horse, especially a somewhat suspicious one, is not the same having cost yourself anything. They are two different things

Point missed, again.

 

[brewer12345]

I bailed on the market and actually went short back in January and February. I covered my shorts as the downdraft ran out of steam because I figured the easy money had been made and I wanted to book profits. Now I sit largely in cash. I have no crystal ball on what the bottom will be or when. I don't think this bear market will be over with one swift drop and an equally fast rebound, instead I expect to see the usual bear market rally followed by new lows after a while.

What will get me to buy? Valuation. Considering the dire economic circumstances, the market is wildly overvalued IMO. When prices are more reasonable compared to what is really happening in the real world, I will happily start buying. If it gets cheap enough, I may end up well over my target of 60 to 65% equities.

 

[targatom2019]

I bailed on the market and actually went short back in January and February. I covered my shorts as the downdraft ran out of steam because I figured the easy money had been made and I wanted to book profits. Now I sit largely in cash. I have no crystal ball on what the bottom will be or when. I don't think this bear market will be over with one swift drop and an equally fast rebound, instead I expect to see the usual bear market rally followed by new lows after a while.

What will get me to buy? Valuation. Considering the dire economic circumstances, the market is wildly overvalued IMO. When prices are more reasonable compared to what is really happening in the real world, I will happily start buying. If it gets cheap enough, I may end up well over my target of 60 to 65% equities.

so did you sell 100% of your equities at the top or just partial ? congrats on saving about 18%.

 

[racy]

I'm not supposed to post (since we've "won the game"), but, we've been invested in the market since 1976 and have seen a lot of "crises"; I'll spare you the list. We never tried to time the market .... maybe a reason we've won the game? No body knows nothin', including me! :`)

 

[easysurfer]

I've never left the market. Buy, hold and rebalance .