For the first time ever I sold all my stocks

[frayne]

Haven't done a thing here except to stay the course. In fact I'm looking for buying opportunities.

 

[targatom2019]

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.

There is nothing wrong with locking in gains at age 70 but thinking of going back in once the vaccine is found or "dust to settle" is a big mistake. I almost guarantee you will be buying higher then what you sold for because institution investors with billion of dollars had already beat you to it.

Mabey it's better just to keep 25%-30% in equities just to keep up with inflation.

 

[njhowie]

...because institution investors with billion of dollars had already beat you to it.

Disagree.

 

[gwraigty]

I haven't sold anything. I've just been a lot slower at putting new money to work.

 

[bolt]

Every well respected historically recognized economics professional/author's I've reads advocacies have always been never trade in extremes. All in and all out are extremes.

Good Luck!

 

[Montecfo]

My actions were related to what I see as a very overpriced market that in my opinion has no justification.

This may not be right for everyone, but selling due to valuation is certainly rational!

Not a criticism of you, Harllee, just an observation: market averages may seem high, but individual stocks/sectors are being valued differently than at start of year.

Banks, entertainment, travel and energy have taken huge hits, while cloud, certain tech, health care and digital transformation-type stocks have rallied. Whether anyone agrees with the pricing, investors are pricing shares based on relative prospects.

 

[audreyh1]

Banks, entertainment, travel and energy have taken huge hits, while cloud, certain tech, health care and digital transformation-type stocks have rallied. Whether anyone agrees with the pricing, investors are pricing shares based on relative prospects.

And counting on a giant US Government put!

 

[nwsteve]

OP here--by the way I am a "she" not a "he" but I guess it does not matter. Back on the issue of municipal bonds in my IRA--I don't have much experience with municipal bonds. One concern I have is that some cities may have to file bankruptcy--how do you tell which munis are safest?

I found this review of Muni from Fidelity's head of Fix Income, to be instructive in getting a foundational awareness of the risk/rewards of Muni
https://www.fidelity.com/learning-center/trading-investing/municipal-bond-market
BTW, just looked at futures for Monday's open and S&P is up 0.5% as of 8 pm pdt.---you may want to cancel your sale and watch how Mon trades. Easy to sell during the day

 

[pb4uski]

I am in my late 60s and I have been buying mutual funds for almost 40 years. I have had a stock fund/bond fund allocation that I have stayed with through thick and thin--through all the recessions, through 9/11, etc. But today I sold all my equities and moved the money to a money market fund for now (it was all in my IRA so no tax consequences). I have never been a market timer but there is something about the market now that just does not seem right to me. I recouped all most all my losses from March and April and just got out. I don't see anything good to come in the near future and at my age I just decided to not take any more risks.

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.

I sold my stocks already and like others mentioned I feel the market isn't right for me right now (65yr old).

I kinda got the feeling of a turkey being led by grain to the chopping block on Thanksgiving morning. I hope I'm wrong, but I'm glad to be out of stocks for now.

Similar story here... long term equities investor since 1980s... 64 1/2.... been 60/40 for last 10-15 years. Stayed the course through 1987 crash, the Great Recession, etc. Have been concerned about equity bubble for a year or so but only occasionally trimmed off excess back down to 60%.

This is unlike any crisis that we have seen in my life. My sense is that the economic fallout will be much worse than 2008/2009 but not as bad as the Great Depression... somewhat in-between. The trends in unemployment seems to suggest that as well.

The speed of the drop in March rattled me. While I could have easily held on and not imperiled our retirement (our WR after SS starts is ~1%)... as my portfolio declined towards what it was when I retired at the beginning of 2012 I decided to get out. I was able to liquidate at substantial gains but negligible tax cost due to 0% LTCG rate but effectively used LTCG instead of Roth conversions for 2020). But substantially lower than what I started the year at.

In 2019 and early 2020 I put a lot of money... currently 47% of total... into CDs with a weighted average APY of 3.13%... about 12% in a preferred portfolio yielding about 5.75% and the rest in cash/ST yielding about 1-2%.

I believe in American business and equities in the long run. At the same time, I'm very concerned that valuations diverge from underlying cash flows due to the Fed's easy money policy propping up equities and creating no great alternatives to stocks, traders doing thier trading thing, underappreciation of the impact of the crisis on the economy, etc.

I do plan to return to equities, but it will most likely be through purchasing long-dated LEAP call options on the SPY if the pricing of those LEAPs ever gets more sensible.

No regrets at all other than a small bit of FOMO.... but I'm convinced that eventually equities will fall back to earth. If not, I still have a very secure retirement (100% success rate in FIRECalc with 60% equities or 0% equities and all 5 year Treasuries).

 

[Shredder]

Similar story here... long term investor since 1980s... 64 1/2.... been 60/40 for last 10-15 years. Stayed the course through 1987 crash, the Great Recession, etc. Have been concerned about equity bubble for a year or so but only occasionally trimmed off excess back down to 60%.

This is unlike any crisis that we have seen in my life. My sense is that the economic fallout will be much worse than 2008/2009 but not as bad as the Great Depression... somewhat in-between.

The speed of the drop in March rattled me. While I could have easily held on and not imperiled our retirement (our WR after SS starts is less than 1%) as my portfolio declined towards what it was when I retired at the beginning of 2012 I decided to get out. I was able to liquidate at negligible tax cost due to 0% LTCG rate but effectively used LTCG instead of Roth conversions for 2020).

In 2019 and early 2020 I put a lot of money... currently 47% of total... into CDs with a weighted average APY of 3.13%... about 12% in a preferred portfolio yielding about 5.75% and the rest in cash/ST yielding about 1-2%.

I believe in American business and equities in the long run. At the same time, I'm very concerned that valuations diverge from underlying cash flows due to the Fed's easy money policy propping up equities and creating no great alternatives to stocks, traders doing thier trading thing, underappreciation of the impact of the crisis on the economy, etc.

I do plan to return to equities, but it will most likely be through purchasing long-dated LEAP call options on the SPY if the pricing of those LEAPs ever gets more sensible.

No regrets at all other than a small bit of FOMO.... but I'm convinced that eventually equities will fall back to earth. If not, I still have a very secure retirement (100% success rate in FIRECalc with 60% equities or 0% equties).

+1

Has there ever been a time with this bad of news, that the stock market didn't drop significantly? I can't remember any. I don't see how we come out of this if we first don't contain or whip this virus.

Although I was an investor in 87, I don't remember much other than dollar cost averaging through it. In 2000 I lost my rear end but learned a valuable lesson about asset allocation. I did a lot of reading after that to try to prevent another big loss. In 2008, and all ready retired, (04) I came though it pretty well with a modified coffeehouse 60/40 portfolio.

But now, for me at 65, retired since 04, with all this uncertainly I gratefully bailed during the (dead cat?) bounce. I got out down 3% in my ira.

I don't know if I did the right thing, but I feel I did what is right for me. I'll most likely get back in through dollar cost averaging into Wellesley/Wellington when I feel safer.

 

[Sunset]

OP here--by the way I am a "she" not a "he" but I guess it does not matter. ..

I suppose the now somewhat famous character name from suicide squad is the connection when people sound out your name:

 

[daylatedollarshort]

We sold most of what we had in stocks on one of the bounces, having already scaled back equities after 2008.

We have had a LBYMs lifestyle for expenses and a matching strategy for our investments for years. At a a 0% real return, our maximum safe withdrawal rate at our ages is 3.33% (100 / 30 years = 3.33%). When we retired 30 year TIPS were yielding inflation plus 2%, so a minimum 0% real return was not hard to achieve. Combined with our pensions and Social security, that was more than enough for us to live well and not have to worry about the stock market.

I'm not sure if we can keep at least a 0% real return going forward as some of our TIPS and other fixed income investments mature and have to be replaced at the lower current rates. But since we are planning on a 1% or less WR instead of 3.33% we should be okay even if we lose some ground to inflation.

 

[rayinpenn]

I was lucky I sold everything I could without tax consequence before the virus hit. I just looked at the years and years of gains and thought it’s enough. My target buy back is when the s&p hits 30% off all time highs. I believe it’s coming, but if it doesn’t that’s ok too.

 

[harllee]

I found this review of Muni from Fidelity's head of Fix Income, to be instructive in getting a foundational awareness of the risk/rewards of Muni
https://www.fidelity.com/learning-center/trading-investing/municipal-bond-market
BTW, just looked at futures for Monday's open and S&P is up 0.5% as of 8 pm pdt.---you may want to cancel your sale and watch how Mon trades. Easy to sell during the day

OP here, all the equities I sold were Vanguard mutual funds. The way I understand it is that the sale will be finalized by Vanguard at the end of the day today so I will get any gain or suffer any loss that occurs today.

 

[pb4uski]

That is correct... they will be sold at tonight's NAV. Futures suggest that the market will open slightly down, so while anything can happen between open and close, you should be fine.

 

[corn18]

I was lucky I sold everything I could without tax consequence before the virus hit. I just looked at the years and years of gains and thought it’s enough. My target buy back is when the s&p hits 30% off all time highs. I believe it’s coming, but if it doesn’t that’s ok too.

On 3/23 the S&P500 was off 34% from its all time highs. Did you buy back in then?

 

[tdv2]

I was watching some videos yesterday and I came across a Bernstein interview where he discussed his 4 rules to spot a bubble. I'm hearing quite a bit of "overvalued", "bubble" and other words to describe where we are lately. Thought I would share on what was conveyed:

1. First sign....Everybody is discussing getting rich in the asset......everybody meaning rich people, to hamburger flippers, to close friends at parties.
2. Second sign.....People quitting perfectly good careers (lawyers, Doctors, Engineers etc.) to get involved in the "bubble/opportunity"....recall day trading in the late 90's and mortgage brokers in the more recent financial crisis.
3. Third...When a discussion involves skepticism of the investment theme it is met with vehement reactions from the believers in the investment thesis.
4. Fourth....Extreme price predictions start to appear..2X, 5X the current price and more.

I'm not saying that these are all correct but I can see how they apply to events in my lifetime and the history I have read.

"this doesn't feel right"...Daniel Kahneman has written some great works on intuition and expert intuition. He points out that most of the time we can trust that our intuitions are correct....but in areas where there is no possibility to learn rules or have rapid feedback i.e., in a world that is not "regular" (random and uncertain), these intuitions are an illusion and should be avoided. Adding, just because someone has been "at it" a long time doesn't make his or her intuitions worth more or more accurate in the uncertain world. One of the statements I have heard him say a few times "If someone claims that they have a strong feeling about a financial event about to appear, the safe thing to do is not to believe them"

 

[target2019]

OP here, all the equities I sold were Vanguard mutual funds. The way I understand it is that the sale will be finalized by Vanguard at the end of the day today so I will get any gain or suffer any loss that occurs today.

Here's hoping the negative future numbers turn positive today, and you get out on a sunny day, so to speak.

 

[jollystomper]

I can understand the angst if one it totally dependent on continuing market highs to sustain their desired standard of living, or targeted retirement. Perhaps if I did not have a pension I would be tempted to do this as well.

I always try to be even keeled about the market since many know much more than I do. During market highs, when people are shouting "WEEEE!" and the sky's the limit, I take it all with a grain of salt. Likewise, during down times when folks are roaming the streets wearing "the end is near" signs and cats and dogs are living together, I look for a bit of optimism. And I try to tune my allocation in line with these views.

The simple exercise I did before retirement: look equities during market up times, especially when new highs are achieved. Now adjust your equities prices to half or less than half of what they are, and look at the impact to your portfolio value. Then consider: if my portfolio fell to that value, would I panic? If yes, in my opinion, one has too much in equities.

 

[BoodaGazelle]

I have enjoyed reading all of the replies to this post... I am about 50-50 AA, and have not changed that during this crisis. I did buy CVX at 59, and plan to sell those when it reaches 100 or so.

My only comment about this thread, which several people noted, is this. If you sell stocks, and *ever* plan to get back in, how do you know when? Even if you acknowledge that you do *not* want to try and time the market, you are really forced to... aren’t you?

 

[COcheesehead]

Time for another chart.

 

[tdv2]

It's a perfect sine wave too.... Maybe a little rounded at the top to be perfect on second thought.

 

[target2019]

I have enjoyed reading all of the replies to this post... I am about 50-50 AA, and have not changed that during this crisis. I did buy CVX at 59, and plan to sell those when it reaches 100 or so.

My only comment about this thread, which several people noted, is this. If you sell stocks, and *ever* plan to get back in, how do you know when? Even if you acknowledge that you do *not* want to try and time the market, you are really forced to... aren’t you?

One that tries this could get out at -10% and get back in at -20%. However, the market does not have to drop to -20%, so what then?

It makes more sense to me to drop the asset allcoation to a level where 50% drop in equities does not make you sick.

But others have reasonable approaches, and we all have different ways.

 

[ER Eddie]

Anyone else find themselves humming "the first time ever I sold my stocks" to the tune of "first time ever I saw your face"? Just me?

 

[tdv2]

Anyone else find themselves humming "the first time ever I sold my stocks" to the tune of "first time ever I saw your face"? Just me?

No. But lately can't get David Crosby's --"Almost cut my hair" out of my head.