Anyone else hoping for a market plunge?

[RobbieB]

Nope, I'm fully committed -

I have made my adjustment a couple months ago and bought all the stupid bonds I'll ever need. They just sit there like a lump. But I guess that's what they're supposed to do.

Meanwhile, back in the market, my stocks keep getting better and pay me lots of qualified dividends which I happily blow!

 

[aja8888]

Nope, I'm fully committed -

I have made my adjustment a couple months ago and bought all the stupid bonds I'll ever need. They just sit there like a lump. But I guess that's what they're supposed to do.

Meanwhile, back in the market, my stocks keep getting better and pay me lots of qualified dividends which I happily blow!

Bonds spin off dividends also. That's why we buy them along with providing ballast to the portfolio.

 

[RenoJay]

RESPONDING TO QUESTIONS FROM ANOTHER POSTER:

I don't know what indicators you refer to, but most experts who forecast the financial future are proven to be wrong. OTOH, if you are saying we will have a stock market plunge at some unknown point in time, you are right.

Some questions:
1) Are you working and still putting money in regularly?

MY INCOME FROM W*RK IS FAIRLY INSIGNIFICANT TO MY OVERALL PORTFOLIO, AND I INTEND TO STOP W*RKING IN THE NEXT YEAR OR TWO.

2) Are you not fully invested in stocks/bonds etc and do you still have a lot of cash waiting on the sidelines to be invested when the market goes down?

I'VE VASTLY REDUCED MY STOCK EXPOSURE (FROM ABOUT 85% IN 2009 TO AROUND 30% TODAY, HAVE PUT A LOT INTO PRIVATE LENDING (HARD MONEY LOANS) AND ALSO HAVE A LOT OF SIDELINE CASH. AS THE MARKET HAS GOTTEN MORE EXPENSIVE PER MANY METRICS, I'VE REALLOCATED. I GUESS THIS EXPLAINS WHY I'M AT ODDS WITH MOST OF THOSE WHO'VE RESPONDED....BECAUSE I'M SITTING ON CASH WAITING FOR BETTER OPPORTUNITIES WHEREAS IT SEEMS MOST PEOPLE ARE FULLY INVESTED.

 

[Oz investor]

I don't get that at all. You can't just write down lower numbers in your spreadsheet and take a day or a week to decide what you'd do if that drop really happens? Why would it have to be real time? Will you also set your house on fire to see if you're carrying enough insurance?

having tangled with uncontrolled fire a few times , it always helps to know what you can save and what does not need saving

i do remember reading AIG being bailed out ( in the GFC ) when some realized the US banks had little insurance if AIG imploded ( yes even insurers can fail .. when you need them the most .)


indeed a spreadsheet will not be accurate in a major downturn , but you can count on divs being withheld or trimmed ( to conserve cash for various reasons ) and the whole point of my strategy is to provide income in good times and tragic ones .

BTW the insurance does NOT pay instantly ( and might not pay at all )

real time is when mindset and experience counts , what i have not got is real time experience ( apart from the correction in 2011 )

what i can do in advance of a meltdown is have a priority shopping list of places to look at early ( and have some liquidity available )

 

[FIREd]

I am not hoping for a market plunge - at least not right now. That being said, I am almost all cash (for reasons unrelated to the market) and it won't matter much to me what the market does in the next 1-2 years. But then I will eventually rebuild my portfolio and so it would be nice if the next bear market could hold on until 2019 or 2020.

 

[DEC-1982]

RESPONDING TO QUESTIONS FROM ANOTHER POSTER:

2) Are you not fully invested in stocks/bonds etc and do you still have a lot of cash waiting on the sidelines to be invested when the market goes down?

I'VE VASTLY REDUCED MY STOCK EXPOSURE (FROM ABOUT 85% IN 2009 TO AROUND 30% TODAY, HAVE PUT A LOT INTO PRIVATE LENDING (HARD MONEY LOANS) AND ALSO HAVE A LOT OF SIDELINE CASH. AS THE MARKET HAS GOTTEN MORE EXPENSIVE PER MANY METRICS, I'VE REALLOCATED. I GUESS THIS EXPLAINS WHY I'M AT ODDS WITH MOST OF THOSE WHO'VE RESPONDED....BECAUSE I'M SITTING ON CASH WAITING FOR BETTER OPPORTUNITIES WHEREAS IT SEEMS MOST PEOPLE ARE FULLY INVESTED.

Your wish for a drop/plunge makes sense, given that you have money waiting to be invested. The market does look overpriced but I thought that in Jan 2017 too.

 

[RunningBum]

having tangled with uncontrolled fire a few times , it always helps to know what you can save and what does not need saving

i do remember reading AIG being bailed out ( in the GFC ) when some realized the US banks had little insurance if AIG imploded ( yes even insurers can fail .. when you need them the most .)


indeed a spreadsheet will not be accurate in a major downturn , but you can count on divs being withheld or trimmed ( to conserve cash for various reasons ) and the whole point of my strategy is to provide income in good times and tragic ones .

BTW the insurance does NOT pay instantly ( and might not pay at all )

real time is when mindset and experience counts , what i have not got is real time experience ( apart from the correction in 2011 )

what i can do in advance of a meltdown is have a priority shopping list of places to look at early ( and have some liquidity available )

Regarding my fire analogy, I live in a place where a wildfire, while unlikely, could quickly put me in danger as I live on a mountain. I have a plan, a good one IMO, of what to make sure I take, how to escape, and where to go, if one happens. I don't need a real fire to test it out, and I sure as heck don't want one! I could even physically test out my plan anytime if I want to.

For financials, you may or may not get your stress test in the next few years.

And you may or may not get another one in your later years.

The only thing I can guarantee is that the two won't be identical. One plunge is not the same as another. If only real time experience can guide you, what you learn the first time may not apply to help you the second time.

That's the advantage of simulating--you can make happen whatever you want, on paper.

 

[Lawrencewendall]

No, not sure why anyone would be HOPING for a plunge. It will happen and could last many years when it does.

For me not a good thing to hope for, there will be a bear market at sometime and I'm ready but many may not be.

Your time to invest when it heads south will come soon enough.

I'm hoping. 3 years from FIRE. Based on historical data, the bear market would have recovered by then so I would avoid the sequence of returns and retire into a new bull.

 

[Mdlerth]

If I had a nickel for every time the market dropped five cents...

I do NOT want a market plunge.

It has nothing to do with its effect on me. As we say in process safety management, I've got multiple "Layers of Protection". I'd survive it.

But I expect that a large, fast, market retreat would generate panic. It would be hyped and exploited for mischief just like it was ten years ago. Anybody else remember the phrase "Never let a crisis go to waste"?

I've seen it time and again. Unscrupulous people seize upon minor disasters to justify an awful lot of dishonest and counter-productive actions. I don't want to give them extra ammunition.

 

[HFWR]

...an awful lot of dishonest and counter-productive actions...

I thought that was the cause of the ‘08 debacle, not the result...

 

[bloom2708]

Nope. This is Pleasantville. The kids are smart and handsome. Stocks always go up.

 

[Andre1969]

Well, I just settled on a house on Friday, and with it comes a ~$2900/month mortgage. AND, I still want to be able to retire in 2020-21. So, I'll have to vote NO on that market drop!

Actually, if it's a quick drop and recovery like the Great Recession was for me, I might not mind it, but if it's a long, drawn out pain like 2000-2002, I'll pass.

 

[razztazz]

Originally Posted by Mdlerth View Post
...an awful lot of dishonest and counter-productive actions...

I thought that was the cause of the ‘08 debacle, not the result...

Actually it's the free market if you listen to the most virulent free-marketeers. The free market obviates and eliminates any and all bad behavior. Only attempts to police bad behavior cause bad behavior and distort market functions and lead to bad outcomes.

 

[GrayHare]

The only thing a plunge will do for me would be to enable a greater percentage of my IRA to be converted to a Roth

This. I bulk converted to Roth shortly after the last plunge, and haven't looked back.

 

[TwoByFour]

I have seen other threads like this in various forums, in which someone "hopes" for this or that to happen in the equities or even the bond markets. But really, your portfolio should be constructed in such a way that it does not depend on specific market events. If it does, it is going to lead to disappointment. Sound investing requires a lot of patience; you just have to not get trapped into hovering over the markets and your portfolio.

 

[audreyh1]

When I retired I deliberately picked an investment style that meant I did not have to watch my portfolio and that I could check it only once a year if I chose.

 

[Fedup]

Hey, what’s the fun in that. The stock market is what makes me get up everyday, so I can watch CNBC, otherwise I might sleep later than 8AM. When I travel, there is no CNBC, no watching the market, therefore I park my portfolio in auto mode.

 

[YVRRocketSurgery]

As described earlier in the thread, various things seem to be at odds depending if you are in accumulation mode or decumulation mode.

I have my eye on a couple of toys that will be affordable in the next recession.

This!
A market plunge obviously is not the same as a recession but boy did we find a lot of (travel) deals during the during the turmoil of 08-09. Need to structure my cash flow during retirement to be able to take advantage of the deals.

 

[38Chevy454]

The only thing a plunge will do for me would be to enable a greater percentage of my IRA to be converted to a Roth

Same for me, as well as several previous replies quoting this same.


For OP's question, I think it is not wise to ever hope for something bad. I do think a correction can occur, they are normal and part of the market. A large downturn causes too many people too much pain and that is not good; even if it might benefit those still in accumulation mode.

 

[oneill225]

Nah.

No. Only those who are mostly out of the market in fear of a correction would want that to happen. That being said, I never have more than 50% of my investments at risk at any one time. The economy is very hot and getting hotter, so any true "correction" is at least a year or two out.

 

[dtbach]

They happen but I really don't "wish" for a plunge.

 

[gcgang]

For my spouse and I, I would love a major drop. We have a low seven figures in capital gains. I really want to sell our individual stocks and move it all to stock index funds. Plus I would love to move a roll over IRA to a Roth IRA.

For most other people, a drop would probably not be a good thing, so I don't wish it for them.

I'm not sure I understand.

I, too, have large unrealized gains in individual stocks. But if I wanted to switch to indexes I wouldn't be hoping the gains evaporate. Better taking gains and paying tax than waiting for value to decline.

I don't need the risk I'm taking to achieve my goals. I'm just having a hard time modifying my behavior from letting winners run and deferring tax (avoiding tax for heirs), to adopting a more conservative AA.

Writing calls and letting a few shares get called away isn't putting a dent in my equity allocation. Please convince me to reduce risk by significant selling and "paying 'the man' his money" in capital gains tax, if you think I should.

I probably should reduce like the OP, but from 65% down to maybe 35%, and it would probably allow me to smile through a big decline.

 

[audreyh1]

I'm not sure I understand.

I, too, have large unrealized gains in individual stocks. But if I wanted to switch to indexes I wouldn't be hoping the gains evaporate. Better taking gains and paying tax than waiting for value to decline.

The idea is that you make the switch when your unrealized gains are low, or even losses, buy also lower index funds, and then see the recovery on the index funds.

 

[38Chevy454]

The idea is that you make the switch when your unrealized gains are low, or even losses, buy also lower index funds, and then see the recovery on the index funds.

But wouldn't you still have the subsequent gains in the index funds become a capital gain tax issue later? So in effect you are just delaying the payment of taxes.

 

[audreyh1]

But wouldn't you still have the subsequent gains in the index funds become a capital gain tax issue later? So in effect you are just delaying the payment of taxes.

But those can be unrealized indefinitely.

The idea is that you wish to make a change in your investments. It is better tax-wise to make that change when you do not have to realize large capital gains, since you plan to turn around and reinvest immediately.

I have the same problem. I wish to change to more tax-efficient index funds. For me the best time to do so tax-wise is during a major market downturn.