For the first time ever I sold all my stocks

[OldShooter]

Time will tell whether it was selling into a correction or a depression my friend. Let's check back in 12-24 months and see. ...

That may be the disconnect. To me 12-24 months is a trader's horizon, not an investor's horizon. My investor's horizon starts at 5 years and that is what I tell students in my Adult-Ed classes.

The major risk I see is that inductive reasoning could fail. In 100+ years of investing history, it has never done so but at the same time there are no guarantees. Random noise, even extreme noise as we are now experiencing, will average out over 5-10 years. So it's a don't-care for DW and me. Also a don't-care for the nonprofits' portfolios that we are involved with. They have been designed with an investor's horizon.

For shorter periods, the name of the game for individuals IMO is to hold enough non-equity assets to pay your way. This largely finesses the SORR problem.

Market timing? BTDT in the Bad Old Days before I understood investing. IIRC it resulted more in missed opportunities for me than in wins. The "out" decision, which is what we are talking about here is IMO much easier than a subsequent "In" decision. 12-24 months may enough to tell the tale on that trading strategy. Again, from history, some will win but more will not.

 

[pb4uski]

Selling your positions in the face of a big downturn can be looked at as locking in your gains after the big run up. ...

Unfortunately, those gains totally wiped out my ability to do any Roth conversions in 2020.... the good part is that most of the gains will be at 0% tax.

 

[pb4uski]

That may be the disconnect. To me 12-24 months is a trader's horizon, not an investor's horizon. My investor's horizon starts at 5 years and that is what I tell students in my Adult-Ed classes. ....

There was no magic to the 12-24 months in my post to vipertom other than I think that we'll know a lot more about the impact of the contagion on the economy by in 12-24 months... 5 years is fine with me..... if the next 5 years looks anything like the 5 years from 2008-2012 then I think I'll be happy with my 3% CDs. And as I think I have made clear, I don't intend to be out of equities forever... just until the smoke clears and we have more info on the impact.

 

[MuirWannabe]

I’m starting to think if REW’s dreaded asteroid hit tomorrow, the markets would still rise on optimism that it’s unlikely to happen again anytime soon.

 

[Helen]

I’m starting to think if REW’s dreaded asteroid hit tomorrow, the markets would still rise on optimism that it’s unlikely to happen again anytime soon.

 

[PatrickA5]

I’m starting to think if REW’s dreaded asteroid hit tomorrow, the markets would still rise on optimism that it’s unlikely to happen again anytime soon.

No, that's not how it works. You see, the asteroid that is going to hit the market has already been "priced in".

 

[Shredder]

Besides, I don't see short selling as investing... to me investing is putting down money in the hopes that the company will have earnings and distribute it to shareholders in dividends or higher value... short selling is just a form of gambling. Just because someone is bearish doesn't necessarily mean they would sell short... they might just stand pat and buy low later on. For many of us it isn't all out making a buck like it seems to be for you. Good luck to you.

I got my start investing using drips, snail mailing in monthly checks, and reading money magazine for tips, lol. Pre internet or cable TV.

And apparently I haven't changed a lot. I have never shorted equities. Never sold all my equities either, until this year.

If I knew for sure the market is tanking I would short it, but I don't know where the market is going let alone why it's where it's at now.

Back when I bought stocks through drips I tried to look around at what people were using and liked. Now when I look around, it's not clear. A lot of uncertainty.

 

[Dtail]

No, that's not how it works. You see, the asteroid that is going to hit the market has already been "priced in".

Well that means it will hit around 6 months out.

 

[Sunset]

I’m starting to think if REW’s dreaded asteroid hit tomorrow, the markets would still rise on optimism that it’s unlikely to happen again anytime soon.

And of course, this is not a black SWAN event, as it's already been considered

 

[pb4uski]

I’m starting to think if REW’s dreaded asteroid hit tomorrow, the markets would still rise on optimism that it’s unlikely to happen again anytime soon.

+1 Funny!

 

[Chuckanut]

I’m starting to think if REW’s dreaded asteroid hit tomorrow, the markets would still rise on optimism that it’s unlikely to happen again anytime soon.

I think he figures the effects will pass up Texas. You know, because of its size, bbq, oil, and high property taxes.

 

[aja8888]

I think he figures the effects will pass up Texas. You know, because of its size, bbq, oil, and high property taxes.

It will probably a good thing it doesn't hit Texas as that may result in a future state income tax to clean up the mess too!

 

[rayinpenn]

Irrational markets?

I looked at the S&P yesterday, I rarely do but I thought the country is experiencing some extreme turbulence (understatement) and the s&p was up. Could I have read that right?

Call me a naysayer but yikes there is no understanding the markets.

Am I crazy? Probably.. but yikes.

 

[MichaelB]

Thread merged with an already active discussion on marketplace valuations.

 

[frayne]

I looked at the S&P yesterday, I rarely do but I thought the country is experiencing some extreme turbulence (understatement) and the s&p was up. Could I have read that right?

Call me a naysayer but yikes there is no understanding the markets.

Am I crazy? Probably.. but yikes.

When I think conditions are right for the markets to go up, it goes down and when I think it will go down, it goes up. It validates a fundamental fact that I have no idea what the market will do day to day and the reason why I'm a buy and hold index investor.

 

[target2019]

I looked at the S&P yesterday, I rarely do but I thought the country is experiencing some extreme turbulence (understatement) and the s&p was up. Could I have read that right?

Call me a naysayer but yikes there is no understanding the markets.

Am I crazy? Probably.. but yikes.

I posted a reply with link to a Fortune article called "The stock market has a long history of ignoring social upheaval". The article is out there if someone is interested.

 

[JustVisitingThisPlanet]

When I think conditions are right for the markets to go up, it goes down and when I think it will go down, it goes up. It validates a fundamental fact that I have no idea what the market will do day to day and the reason why I'm a buy and hold index investor.

^Wise way to play the market. Have been transitioning from market to higher risk/reward Private Equity very broadly last several years, pulled rest out of market in Jan. There's definitely risk and some may fail in these times but into investments that have reasonable mitigation plans in poor economy. An example is a couple loans for storage unit construction that are negotiated to be exclusive or one of a couple in high income towns that don't allow storage units unless they look like nearby office or apt buildings, and they can convert to those if it makes sense. One storage unit loan finished construction and leasing pretty well considering economy, expects to refinance later this year at lower rate, will get principal back. Nearly every investment I'm in has some kind of Plan B contingency plan that can be realistically triggered in relatively short time, or some other form of risk reduction like exclusivity or history of being very good at what they do.

Have anticipated 20% of investments could fail but can take a 50% hit. The largest PE I'm invested in (a pharma with existing drug that has other uses, so can jump to phase 3 trial quickly) is getting close to paying off nicely, magnitudes higher than my capital, which will significantly offset any others that might fail. My highest risk investments are also my smallest ones (about 3% or so of net cost basis), but potential 5-10X payoff. Went into those with expectation they could fail.

 

[tdv2]

When I think conditions are right for the markets to go up, it goes down and when I think it will go down, it goes up. It validates a fundamental fact that I have no idea what the market will do day to day and the reason why I'm a buy and hold index investor.

Well said. I'm glad I came to the conclusion that I don't have any idea what the market is going to do fairly early on in my investing career....I'm a buy and hold indexer as well.
Many, including myself are surprised what the market is doing, this is just another teachable moment....that I am fooled once again....not, IMO "I'll know what to do next time".

 

[BreathFree]

I’m starting to think if REW’s dreaded asteroid hit tomorrow, the markets would still rise on optimism that it’s unlikely to happen again anytime soon.

Unless it hits the Fed!

 

[fh2000]

I had to cancel 3 trips that will not be rescheduled any time soon--so about $10,000 in savings. I have also found I can cut my own hair just fine so I may never go back to the salon. We are also cleaning the house OK so maybe no more housekeeper for a while. I have also figured out DH is a pretty darn good cook on the grill so maybe no more expensive steaks in a restaurant ever. The virus will probably lower our spending permanently or at least for a long long time.

I never realize that the $5 bread in Costco is actually very expensive, since I now know a 25 lb bag of flour is just a little more than $6 or $7 dollars. That is a lot of bread.

 

[lucky penny]

Back to the original topic, here's my confession:

When the markets were in freefall, I held out for as long as I could - kept thinking of the cautionary comments on this site & all the times in previous crises when I panicked & sold stocks. One day, though, my anxiety got the better of me & I sold some VTSMX - not much, less than 5% my stock portfolio - & it felt good. It was my usual rationale: if stocks continue to drop, I'll feel a little bit better; if they rise, I'll still feel better because I still own a lot of stocks.

I didn't sell at the bottom, but close. In retrospect, not a wise move (& please, it's not necessary to point out how much that cost me). But I'm congratulating myself for behaving much better than during prior crises, & maybe the tiny amount of relief I felt at the time was worth it. See how well I can rationalize!

 

[Golden sunsets]

Foreign markets, Real Estate and Commodities have now joined the party. Yet another up day (so far) in the markets. This is a classic response of markets after Capitulation.

 

[Rianne]

I posted a reply with link to a Fortune article called "The stock market has a long history of ignoring social upheaval". The article is out there if someone is interested.

We have more than social upheaval. Unemployment, national debt, bankruptcies in many sectors...farming, small business, retail, restaurants, healthcare...many hospitals and clinics etc. Yet new sectors are rising. Missed the boat when Amazon was a book company. It doesn't make sense but I stayed in, did not change AA. Watching with bated breath.

 

[11522914]

I get back in at 3100, be interesting to see if we get there.

Well here we are. Crazy, uh? So do you plan on getting back in now?

What is your reason for 3100?

 

[RetiredAt55.5]

I didn't sell at the bottom, but close. In retrospect, not a wise move (& please, it's not necessary to point out how much how much that cost me).

Maybe it's just me, but I find those "ha ha, by selling then you already lost X percent" posts annoying.

It's all Monday morning armchair quarterbacking. The market could have kept going down then, and who's to say it still won't tumble in the not too distant future. Then, those that sold some stocks will look like a genius (for a period of time until the market recovers again).