What if a person who has been buying equities for the last nine years and now, right now decides to sell, let's say, a 1/4 of his equities--would that be such a bad decision? He might not be selling at the low (or if it turns out to be the low, it would be a very, very high low). Let's also say that taxes are not a significant factor.
Would selling right now be such a poor decision?
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REWahoo
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Getting nervous? 
ERD50
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I'll let you know in 10 years.
But you might want to do a back-test - what would have happened if you sold 1/4 every time the market dropped 10%? I don't think you'd have much in the market at all during most of this run up. Unless you got back in at just the right time (are you a Dirty Market Timer?).
-ERD50
But you might want to do a back-test - what would have happened if you sold 1/4 every time the market dropped 10%? I don't think you'd have much in the market at all during most of this run up. Unless you got back in at just the right time (are you a Dirty Market Timer?).
-ERD50
What Would Jedi Do?
A sage once told me "You're never wrong to get out."
That's not the same as "Getting out is always the most profitable decision." It might be, it might not be. There are plenty of discussions here about updating one's AA over time.
But if you sense a need to get out because your investment is causing you distress, that may be much more important than any financial consideration.
Before you decide anything, be sure of why you want to do it. As Darth Vader said to Luke Skywalker, "Search your feelings."
A sage once told me "You're never wrong to get out."
That's not the same as "Getting out is always the most profitable decision." It might be, it might not be. There are plenty of discussions here about updating one's AA over time.
But if you sense a need to get out because your investment is causing you distress, that may be much more important than any financial consideration.
Before you decide anything, be sure of why you want to do it. As Darth Vader said to Luke Skywalker, "Search your feelings."
skipro33
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When I get to feeling like the OP, I run FIREcalc and put my fears to rest. What a historic event it would be if now, after all these years, investments didn't follow the model?
Keep a paper loss from becoming a real loss by staying invested. No one's lost a dime until they actually call for a check to be mailed to 'em.
Keep a paper loss from becoming a real loss by staying invested. No one's lost a dime until they actually call for a check to be mailed to 'em.
OldShooter
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Through history, riding out corrections has always worked, but "riding out" typically takes several years. Beginning in 1987 I have always ridden them out and been happy with the results.
Whether you have a gain or a loss really isn't relevant to your decision since you exclude tax considerations. What may affect the decision, though, is your time horizon. If these are equities that you will have to sell in the next three years, say, then you may decide to cut your risk and eliminate your upside by selling now.
As the man said, do you want to eat well or do you want to sleep well? Eating well probably means sitting tight. Sleeping well may mean selling.
All opinions guaranteed worth price paid.
Whether you have a gain or a loss really isn't relevant to your decision since you exclude tax considerations. What may affect the decision, though, is your time horizon. If these are equities that you will have to sell in the next three years, say, then you may decide to cut your risk and eliminate your upside by selling now.
As the man said, do you want to eat well or do you want to sleep well? Eating well probably means sitting tight. Sleeping well may mean selling.
All opinions guaranteed worth price paid.
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I think getting out after a long, significant run up and quick downturn could be very wise if you either have a hard and fast rule for when you'll get back in or plan to stay allocated like that "forever".
Bestwifeever
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Where would you put the proceeds?
Good reminder about the FIREcalc.
But, is it a loss if an investor sells some of his holdings at a huge (and probably unwarranted) profit? My Boeing is up about 100%. I bought it for its dividend, not for its potential capital gain. It wasn't supposed to go that high. Stupid Boeing.
OK, on another thread people are talking about the kinds of cars they "lost" in this market downturn. This is what I lost. The only saving grace is that she never treated me all that well.
ShokWaveRider
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I may not be alive in 10 years.
Stop Panicking, there is still 2 hours and change to go. Anything can happen.
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NW-Bound
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OK, on another thread people are talking about the kinds of cars they "lost" in this market downturn. This is what I lost. The only saving grace is that she never treated me all that well.
What a thing to lose! 
You should cherish the time she spent with you, and let her off your mind.
NW-Bound
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But what if my friend does it only once, and that gets him enough extra cash to sleep well? And he promises not to do it again?
About selling then buying back, any time I can buy back at a lower price than I sold, I call it a success even though I do not get back at the exact bottom.
PS. Oh, if you really bought Boeing, then selling after such a run up would be called "rebalancing". Absolutely nothing wrong with that, and it should not have anything to do with the current market rout.
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REWahoo
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redduck, I think you should tell your friend to do whatever he thinks best - and stop trying to mooch free financial advise off you.
W2R
Moderator Emeritus
redduck, I think you should tell your friend to do whatever he thinks best - and stop trying to mooch free financial advise off you.
+1 Also, at the risk of seeming extremely old fashioned, redduck might suggest to his friend that he should read Bernstein's Four Pillars of Investing twice before deciding what to do.
NW-Bound
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About the pain of "losing", here's one of my favorite songs.
That's nowhere near enough to conclude if this is a good or bad decision.
If you wanted to avoid selling low, then it's not a very good decision. If you need the money then it might be good.
Are you doing this because you concluded that the market is going much lower soon, and won't recover by the time you need the money? If so, then it's probably a good decision for you. And if that's the case, then you may have proven to yourself that your asset allocation is too equity-rich for your senses. Adjust it accordingly.
I'm not selling now. But I'm not you. You need to include a lot more about your situation to get any kind of good/bad judgement.
But remember, you don't need validation from folks here to make your decision. Go with whatever is right for you, not what pleases a bunch of unknown people on a website.
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Pilot2013
Full time employment: Posting here.
I think it 100% depends on the individuals situation. If money is going to be needed in the next year (maybe two), might not be a bad idea.
If not needed for 3-5 years, is this causing you heartburn (or worse)? Maybe sell, and don't get back in.
If not needed for 5-10 years. No way.
JMO
If not needed for 3-5 years, is this causing you heartburn (or worse)? Maybe sell, and don't get back in.
If not needed for 5-10 years. No way.
JMO
exnavynuke
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After 9 years of investing, I would assume there are many years to go, thus it would generally be financially unwise to start cashing in investments at this stage.
audreyh1
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No, we are still near the highs.
But I think you would have made a new asset allocation and should stick to that in the future.
Al18
Full time employment: Posting here.
Sell is the wrong move IMHO.
Everything's on sale for 10% off - now's the time to buy
Everything's on sale for 10% off - now's the time to buy
haha
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If what you are trying to test is the current situation, this wouid not do it
Add that the Shiller PE is way above its usual level, even above its usual level when things go bad, then you have a test.
In answer to Redduck- you could sure do worse. If i had managed to sell nothing up until now, you can bet I'd get rid of whatever I felt overexposed in. This may well be merely a way station on the way to even more marvelous gains. But nobody guarantees that. It is easy to forget how exposed a person who is no longer actively earning income really is. And social media is prone to group think. Of course I concede that this could not hold true for us anointed ones.
Ha
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NW-Bound
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Seriously, if what redduck is looking to sell is an individual stock (he said Boeing, but it was most likely a jest), then it is not the same thing as selling a broad-based ETF or MF. The stock has to be looked at individually.
And then, even if it is the latter, it is not necessarily wrong after the market run-up that we had. He is not offloading everything! Could be just "rebalancing" a little later than many posters here.
And then, even if it is the latter, it is not necessarily wrong after the market run-up that we had. He is not offloading everything! Could be just "rebalancing" a little later than many posters here.
SecondCor521
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Does he have a plan that reflects his goals and circumstances?
If he has a plan, is he following it? If so, then he shouldn't worry about what the market is doing or SGOTI.
If he is not following it, why not? If not, I suggest he figure out why not and adjust his plan to one he can follow.
If he doesn't have a plan, he should make one and follow it.
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(I'm a planning type, so that is my preference and style. Some people with different personalities are not planners. Surprisingly to me, they do OK in life in general, but I suspect they are not as good at investing. BWDIK.)
If he has a plan, is he following it? If so, then he shouldn't worry about what the market is doing or SGOTI.
If he is not following it, why not? If not, I suggest he figure out why not and adjust his plan to one he can follow.
If he doesn't have a plan, he should make one and follow it.
---
(I'm a planning type, so that is my preference and style. Some people with different personalities are not planners. Surprisingly to me, they do OK in life in general, but I suspect they are not as good at investing. BWDIK.)
