For the first time ever I sold all my stocks

[tulak]

I will say if people wait for an all clear sign, good luck. Just think about what happened since 2009. Was it ever really safe? One mini crisis after another, elections, trade wars, taper tantrums....

In 2008/2009, I went to over 90%+ equities. I can take a regular recession/financial crisis anytime. And the other stuff is just noise. This is something different.

Will it end?

Sure. And things will return to normal, even if normal is slightly different than before. Personally, I'm more than happy to wait until this new normal emerges. I have an idea of what that means to me, and based on that, I'll redeploy my cash. Until that happens, I'm more than happy to stick with a conservative allocation and watch how this all unfolds.

 

[Dtail]

The VIX is interesting and I watch it. It rarely goes above 30-35 in bad times. It hit 59 in 2008. In the last two months, it hit 82. Think about that. That's crazy.

Today it sits at 27 after a steep drop back from those highs. Still high ish, but nowhere close to where it was.

I think it was around 40 just about a week ago. It is fairly volatile in these times.

 

[COcheesehead]

I think it was around 40 just about a week ago. It is fairly volatile in these times.

Volatile for sure, but it has been all downhill lately.

Stay tuned.

 

[OldShooter]

The VIX is interesting and I watch it. ...

I'm not even crystal clear on what it is. Some kind of derivative that reflects volatility I guess. I have no idea why a true investor would even be interested. Volatility is a given, but the point of investing is to let it average itself out. One of my favorite Buffett quotations: “The stock market is a device for transferring money from the impatient to the patient.”

 

[HI Bill]

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.

Harllee - to better help us understand your decision, I have several questions:

1) What is your 'withdrawal rate' on your investments?
2) What is your life expectancy (based on your health, birth year, exercise, diet, etc.)? Not the IRS 'average' life expectancy.
3) Do you have long term care insurance?
4) Do you have any debts?
5) What is your long-term goal for your $?

While your action may have been was emotional, rather than rational, it obviously helps you sleep at night.

If you have a withdrawal rate >3%, have a life expectancy of 30 years, and can't cut your spending if needed, then inflation will likely put you in a world of hurt in 20 years. On the other hand, if your withdrawal rate is <3%, your don't need the $, or you want to leave most of it to your heirs, and you can easily cut expenses while maintaining LTCI, then there's nothing wrong with exiting the market, even though it most likely means leaving less to heirs.


Just MHOs.

 

[tdv2]

Risk is rewarded. No risk, no reward.

Agree. I would go a little further and say that risk must be rewarded, otherwise nobody would take it.

 

[COcheesehead]

I'm not even crystal clear on what it is. Some kind of derivative that reflects volatility I guess. I have no idea why a true investor would even be interested. Volatility is a given, but the point of investing is to let it average itself out. One of my favorite Buffett quotations: “The stock market is a device for transferring money from the impatient to the patient.”

It’s known as the fear index.

 

[daylatedollarshort]

It is not just the odds part and expected return for me that is important. I don't have much fear of missing out on big gains. I'm happy to simply avoid big stock losses like in the Great Depression (or worse). That would hurt.

 

[ExFlyBoy5]

I'm more #3:
Those who would rather get out now - for whatever reason - and will get back in later. No matter if they are confident about it being lower or higher later or not. At some point once the storm has passed they will DCA back in.

Like others have mentioned, if I end up missing the start of the next bull run, so be it. I didn't pull money out with the expectation that I can make gains later. But I will get back in, I just needed a lower risk allocation...for now.

That's me. I don't have a specific time that I will jump back in. All I know is that the pool is rough right now, and I will let the kids play in the pool for now. Once I feel like the storm has passed, I will jump back in. Will I have left some $$$ on the table? Probably, but my life expectancy will be a few days longer since I will have slept a bit better being on the side of the pool.

 

[ExFlyBoy5]

One of my favorite Buffett quotations: “The stock market is a device for transferring money from the impatient to the patient.”

And his latest quote: "Airlines? Yeah, that's my bad."

 

[ExFlyBoy5]

It’s known as the fear index.

I disagree. Perhaps to the financial "newz" channels, but it's VOLATILITY, not fear. Semantics? Perhaps.

 

[tdv2]

It is not just the odds part and expected return for me that is important. I don't have much fear of missing out on big gains. I'm happy to simply avoid big stock losses like in the Great Depression (or worse). That would hurt.

Portfolio construction and diversification can help. Unfortunately on the equity side, systematic risk cannot be diversified away i.e. market crash. Short term U.S. treasuries are the only place to hide as they are considered the "risk free asset". Cash also works up to the FDIC limit.

 

[brewer12345]

I'm not even crystal clear on what it is. Some kind of derivative that reflects volatility I guess. I have no idea why a true investor would even be interested. Volatility is a given, but the point of investing is to let it average itself out. One of my favorite Buffett quotations: “The stock market is a device for transferring money from the impatient to the patient.”

It is a measure of implied volatility derived from put and call prices.

 

[tulak]

And his latest quote: "Airlines? Yeah, that's my bad."

Yeah. I’m pretty sure Buffett also believes that valuations matter. Definitely not the message you get here, but hey, quote away!

 

[Doribe]

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 am 63 and took similar action. I have a few equities, but funds and ETFs were sold. I just don't have the lifespan left to wait for it to come back if it drops like the depression.

Now, the worry really is future inflation.

 

[Sunset]

It is not just the odds part and expected return for me that is important. I don't have much fear of missing out on big gains. I'm happy to simply avoid big stock losses like in the Great Depression (or worse). That would hurt.

Same here, which is why I've lowered our HIGH stock allocation.

This way we will have enough to buy bread instead of lining up at the soup kitchens

It's the issue that the stock market from the Great Depression took 29 years to recover, I don't think I have that long....

 

[COcheesehead]

I disagree. Perhaps to the financial "newz" channels, but it's VOLATILITY, not fear. Semantics? Perhaps.

We’re on the same page. It’s a forward looking index for volatility a.k.a the fear index.

 

[OldShooter]

And his latest quote: "Airlines? Yeah, that's my bad."

Oh, I don't particularly revere him as an investor. I think his and Ben Graham's glory days have passed, to be replaced by the random market behavior we have seen for a few decades now. But he is a wonderful source of quotations. So I just cherry-pick them. A couple of others I like:

"I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two."

“The only value of stock forecasters is to make fortune-tellers look good."

 

[Dtail]

Great depression was ultimately over 80% loss. Hard to imagine it ever getting that bad, plus with a deflation economy at that time, the real losses were much less.

 

[pb4uski]

Tomato tomatoe its intervention and not free market.

It wasn't clear if you knew there was a difference from what your wrote... still a little murky.. but whatever. Carry on.

 

[brewer12345]

Great depression was ultimately over 80% loss. Hard to imagine it ever getting that bad, plus with a deflation economy at that time, the real losses were much less.

Hard to imagine for sure, but I guess not impossible. I am waiting to see what the fallout is from the second wave. If we end up with several more NYCs from it, things will be pretty bad.

 

[harllee]

Op here--so at the close today my sale of my Vanguard stock mutual fund was effective--it closed about even for today so it turned out today was a pretty good day for me to sale. Since I made the decision to sale I have been sleeping better and I am less anxious. Maybe what I did was an emotional decision--but with so many things to be anxious about now I did not want the safety of my investments to be making me anxious.

Posters above asked when will I know to get back in the market? That is a good question--I have to figure that out. I need to have much more confidence in our economy and our leadership than I have today. Maybe that will never happen but I think it will. Whenever I get back in I am going to limit my equity holdings to 30% (the old 100-age formula).

Thanks for listening. It is good to know that many others have been feeling the same as me.

 

[clobber]

It is a measure of implied volatility derived from put and call prices.

And I think in even more basic terms, it is a measure of how much people are charging to insure S&P 500 stocks. If they are not charging much, there must not be much chance of the stock price going down. If they are charging a lot, there is more risk and people are scared decreases will happen (i.e., they are afraid! FEAR).

 

[daylatedollarshort]

Great depression was ultimately over 80% loss. Hard to imagine it ever getting that bad, plus with a deflation economy at that time, the real losses were much less.

We have unemployment in the same magnitude right now, 25% Great Depression vs. estimate of up to 32% now. It is not hard for me to imagine.

In other countries people are getting up to 90% of their salaries or at least $1 to $2K a month to pay their bills and keep the economy going. In the U.S. average workers might be getting a $1.2K one time payment, and some get unemployment, but many either do not qualify for unemployment or even if they qualify are not getting through the application process. I just don't see this ending well in the U.S. any time soon.

Here is how other countries compare:
https://www.newsweek.com/heres-how-...compares-other-countries-around-world-1497360

 

[Pointby2]

I just got done doing the same thing. There is so much uncertainty, and I just can't see the upside right now. If they can cure/fix corona virus and the economy takes off, I might miss a 5-10% upside. But I see a 40-50% downside if things stay the way they are or get worse.