Did anyone's financial advisor see this coming?

[harley]

Guess depends on how big your portfolio is and how much you spend. The original person I quoted was 3 years, for me that would be more like 85/15. Five years would be 80/20. Might need to revisit those ratios now based on all the fun we had. [emoji20]

Actually, the original person you quoted (me) intended the fixed income to mean cash money. My bad for conflating that with bonds. I have an allocation of bonds, but also want to keep 3 years worth of expenses in cash (CDs, MM, etc.) to be able to not have to sell either of the other two categories during a major downturn. As I said, some people consider holding cash a waste, and possibly over the long term it is. But if your overall portfolio is large enough to allow for it, it greatly increases the sleep-at-night quotient.

 

[bobandsherry]

Actually, the original person you quoted (me) intended the fixed income to mean cash money. My bad for conflating that with bonds. I have an allocation of bonds, but also want to keep 3 years worth of expenses in cash (CDs, MM, etc.) to be able to not have to sell either of the other two categories during a major downturn. As I said, some people consider holding cash a waste, and possibly over the long term it is. But if your overall portfolio is large enough to allow for it, it greatly increases the sleep-at-night quotient.

Ah, OK. So then more like 85/0/15?

 

[harley]

Ah, OK. So then more like 85/0/15?

Sure, if that floats your boat. I like the decrease risk of the mixed AA. If I was still working and single, I'd probably be right in line with your 85/0/15. But with DW along and being retired I still want some bonds.

 

[OldShooter]

Our bonds are mostly 2026 dated TIPS and we won't need to do any selling for a couple of years, so pretty much the same as cash and not really risky. No bond funds ever/family policy.

I have commented though that the 25 portion of our formerly 75/25 AA is starting to look to me less like an allocation and more like a bucket.

 

[youbet]

I've made few changes YTD. Mostly planning to just ride it out. With pensions, SS and some cash over at the local B and M bank, we have spending covered for several years.

But.....

1. Did manage to remember to cash our granddaughter out of enough of the VTI in her Coverdell ESA in January to cover her freshman year at college. (Thank goodness! I would have been Papa non-grata otherwise!)

2. Despite having enough income and cash for the moment, it's still gives me a bit of an acid stomach looking at the carnage to my now 48-42-10 FIRE portfolio. It seems like just yesterday (and it was only a few weeks ago) that it was more like 57-34-9 or so. Not to mention the 20%+ drop in value!

Sigh

 

[OldShooter]

... it's still gives me a bit of an acid stomach looking at the carnage to my now 48-42-10 FIRE portfolio. ...

Stop looking. I haven't looked at our AA since the excitement started. For sure I'll look during our annual portfolio review in December. Maybe not 'till then. It's a long-term plan, after all.

 

[youbet]

Stop looking.

Good advise. But, in my case, easy to say and hard to do!

 

[OldShooter]

I can't give you the citation, but I read about research showing that investors that looked at their account frequently had poorer results than those who did not.

The behavioral finance explanation was human risk aversion; the investors kept seeing frequent zigs upwards and frequent zags downward, but the zags had more impact and caused them to play with their food too much.

 

[free2020]

I can't give you the citation, but I read about research showing that investors that looked at their account frequently had poorer results than those who did not.

The behavioral finance explanation was human risk aversion; the investors kept seeing frequent zigs upwards and frequent zags downward, but the zags had more impact and caused them to play with their food too much.

I don’t remember the citation but yes it is what it said. The report said that dead people’s accounts were included in the inactive list.

 

[rick55]

The only people I see who can predict market moves are members of congress...

I guess they can give investment advice when they get thrown out.

 

[Redbugdave]

I keep an eye on the markets each day and when I saw the quickness of the virus spread, I did move my 401 out of equities when the DOW hit 27K. I am a Do It Yerselfer Indexer and do not play the markets. I just had a bad feeling about the markets this time. One of my friends is a Financial Advisor and I told him what I did and he said he thought it was a good move, but he himself did not move much out of equities. I think he believed this was just another bump and used to riding the wave. It was just a hunch for me. I will sit tight and shuffle extra cash and 401 back in when things turn around. I don't look at the market much right now in all this turmoil. I have IRA's mostly in equities but do not plan on touching that money for years. I am retired by the way. Class of 2014.

 

[bobandsherry]

I keep an eye on the markets each day and when I saw the quickness of the virus spread, I did move my 401 out of equities when the DOW hit 27K. I am a Do It Yerselfer Indexer and do not play the markets. I just had a bad feeling about the markets this time. One of my friends is a Financial Advisor and I told him what I did and he said he thought it was a good move, but he himself did not move much out of equities. I think he believed this was just another bump and used to riding the wave. It was just a hunch for me. I will sit tight and shuffle extra cash and 401 back in when things turn around. I don't look at the market much right now in all this turmoil. I have IRA's mostly in equities but do not plan on touching that money for years. I am retired by the way. Class of 2014.

The trick is when will you move that money back? Market up big so far today, a bounce or is this the "v" in the market movement. Timing that will be the real verification of if you win or not. Good luck

 

[Redbugdave]

The trick is when will you move that money back? Market up big so far today, a bounce or is this the "v" in the market movement. Timing that will be the real verification of if you win or not. Good luck

Well, really for me there is no big rush. I make money as long as I get back in somewhere below 27K on the DOW. When things are not as volatile. That may be a while.

 

[prudent_one]

I don't use an FA but if I was an FA, I wouldn't have done anything. If you make a knee-jerk reaction with your client's money that ended up being a bad move, then you overreacted and panicked, and your rep is ruined. If instead you do nothing and THAT was wrong, well, "unprecedented scenario", cite many experts who also did nothing, and you get a pass.

 

[OldShooter]

I don't use an FA but if I was an FA, I wouldn't have done anything. If you make a knee-jerk reaction with your client's money that ended up being a bad move, then you overreacted and panicked, and your rep is ruined. If instead you do nothing and THAT was wrong, well, "unprecedented scenario", cite many experts who also did nothing, and you get a pass.

Many of the panel clocks in older airplanes are mechanical -- they keep working if the aircraft loses power.

One of the memes in flight training is: "In an emergency, the first thing to do is to wind the clock." The rationale is that if you don't have time to wind the clock, things are probably so bad that nothing you can do will matter. Also, winding the clock gives you a little bit of thinking time before you try to take action.

 

[harley]

I got a call from my old FA today. I quit working with him 10+ years ago. Nice guy, but I wanted to do things my way. He left a voice mail, just checking in, and mentioned what a great day it was in the market today. I'm going to give him a call tomorrow, since we always got along pretty well. Be interesting to see if he's offering to manage my money again during this "crisis".

 

[audreyh1]

Wow, he had time to call you?

 

[harley]

Yeah I was a little surprised too. Of course, he's getting pretty old now, and his son is working with him. Maybe Jr. is handling the panicking masses and Sr. is just being sociable.

 

[bobandsherry]

Anyone making sense of the market the past few days? Nothing has changed in regards to solving/curing C-19. It's so bad that government has determined it needs to pump $2 trillion into the economy. Administration boasting how that's the most in the history -- isn't that a sad statement to make? The # of jobless claims exceeded estimates, so things are worse than anticipated. VIX still high. And since there is no cure or prevention, we'll be right back where we are in a short time. And yet the market is up strong again today. Crazy -- not sure where this goes next but I guess I'll just enjoy the ride.

 

[OldShooter]

... making sense of the market ...

Ooga! Ooga! Oxymoron alarm!!!

 

[Toocold]

Anyone making sense of the market the past few days?

The stock market is based on expectations -- not the actual. Some people say it's a barometer of people's thoughts/feels about 6-12 months out. All those things that you mentioned likely have been priced in.

My guess is the more certainty there is on the situation (the # of new cases and likely hospitalization, capacity of the health care system to take on patients, likely curve of spreading with all the actions taken to date, approximate end to the epidemic, and how all of this will impact the overall economy), the more likely that volatility will reduce.

From my state's presentation it appears there are existing epidemic models on the health part.

 

[Spock]

Anyone making sense of the market the past few days? Nothing has changed in regards to solving/curing C-19. It's so bad that government has determined it needs to pump $2 trillion into the economy. Administration boasting how that's the most in the history -- isn't that a sad statement to make? The # of jobless claims exceeded estimates, so things are worse than anticipated. VIX still high. And since there is no cure or prevention, we'll be right back where we are in a short time. And yet the market is up strong again today. Crazy -- not sure where this goes next but I guess I'll just enjoy the ride.

Look at graphs from the '29 crash, the '87 crash, etc. There are bear market rallies and "Dead Cat Bounces" (if you drop a dead cat from high enough, it will bounce back up a little before falling again).
Chartists/technicians will state a market must re-test its prior lows before climbing again.
I'm no expert. But my view is there is more bad news coming when all these places that were ordered closed "until April 1" learn they are still closed until April 15, April 30th, whatever.

Then again, maybe the bottom is in and off we go again surfing a wave of printing money. Place your bets.

 

[bobandsherry]

The stock market is based on expectations -- not the actual. Some people say it's a barometer of people's thoughts/feels about 6-12 months out. All those things that you mentioned likely have been priced in.

My guess is the more certainty there is on the situation (the # of new cases and likely hospitalization, capacity of the health care system to take on patients, likely curve of spreading with all the actions taken to date, approximate end to the epidemic, and how all of this will impact the overall economy), the more likely that volatility will reduce.

From my state's presentation it appears there are existing epidemic models on the health part.

I get and understand that, which is why I posted the question.

So what has changed in expectations from a few days ago when market dropped almost 3,000 and now? Fundamentally nothing. Cases still climbing. Testing still insufficient. Deaths still climbing. No cure. No vaccine. Still short hospital rooms and staff, perhaps even at a higher level than anyone expected The only new information is unemployment level is significantly HIGHER than was expected. And I guess cost is now $2 trillion, not the $1.2 trillion that was mentioned days ago. And BTW VIX is still high, sitting at 58.

Cruise lines are now extending their suspended operations. Communities are extending or instituting shelter in place. All this is saying the worst is not yet behind us.

So what's changed for the good in regards to expectations?

 

[Spock]

I get and understand that, which is why I posted the question.

So what has changed in expectations from a few days ago when market dropped almost 3,000 and now? Fundamentally nothing. Cases still climbing. Testing still insufficient. Deaths still climbing. No cure. No vaccine. Still short hospital rooms and staff, perhaps even at a higher level than anyone expected The only new information is unemployment level is significantly HIGHER than was expected. And I guess cost is now $2 trillion, not the $1.2 trillion that was mentioned days ago. And BTW VIX is still high, sitting at 58.

Cruise lines are now extending their suspended operations. Communities are extending or instituting shelter in place. All this is saying the worst is not yet behind us.

So what's changed for the good in regards to expectations?

The Fed said they are going to buy a lot of securities.

 

[Toocold]

So what has changed in expectations from a few days ago when market dropped almost 3,000 and now?

I'm truly guessing but perhaps it's (likely) passing and size of the CARES act, a backstop on the run on corporate bonds, lower hospitalization rates, additional mobilization of companies to produce needed supplies, an end date (april 16th) that noone believes but at least there is an anchor... We still haven't gotten word on any impact of some of the treatments but I'm sure some people know how they are going.

I think what will be a net negative is if there is a huge spike in California or Florida. Countless other things that noone can anticipate.