How much do you invest when the market is down?

[NW-Bound]

I just move 1.5% of portfolio from money market to stock and bond today. Tired of watching the quotes going up/down, and took a midday nap.

Woke up to see that made some money right at the close when the announcement was made about the coronavirus rescue plan.

Good timing? Nah, only time will tell if the market will stay or drop again next week when more cases are announced, as they certainly will.

 

[Lawrencewendall]

LW,

Wow - some kind of dividend on NEWT ... how’d you isolate it from the herd?

Follow SA every day (3 hour commute the last 8 years, now RE). Been watching NEWT but it has always been over priced. With the craziness going on now, seems be reasonable.

EDIT: Did push 3.5k into NEWT yesterday. Waiting on the tax returns to push more over.

 

[Winemaker]

I purchased a bunch of hotel REITS that were slammed this week. When the Fed and the gov't are going to loan $ to those who might be hurt by travel curtailment, I'll back up the truck to get 15% on my money when they're gonna borrow it for 1% or less.

 

[Lawrencewendall]

I purchased a bunch of hotel REITS that were slammed this week. When the Fed and the gov't are going to loan $ to those who might be hurt by travel curtailment, I'll back up the truck to get 15% on my money when they're gonna borrow it for 1% or less.

May want to look at
American Capital Agency Corp (AGNC, 15.99%),
Cornerstone Strategic Value Fund (CLM, 26.24%),
Colony Credit Real Estate Inc (CLNC, 16.25%),
New Residential (NRZ, 16.54%)
Oxford Lane Capital Corp (OXCL, 26.47%)
Prospect Capital Corp (PSEC, 14.4%)


No guarantee going forward but all are dividend payers(monthly and quarterly). Dividends may go down in the future but locking in at today's prices seem to be sound. Just my .02.

 

[pc95]

I'm already in the market, but am definitely feeling like it has much farther to fall. I'm gonna have to stomach it - in for a penny, in for a pound. Even if the virus doesn't go full bore, a recession is a near certainty now, and the chances of depression with a negative feeding potential has now awoken from a long slumber. People are going bonkers at grocery stores.....I have never seen this in my mid-aged life. Today at grocery stores (not even Costco), carts were lined with 80 or 100 people waiting and 5 or 6 registers. I stepped inside Safeway and left immediately left. Ralphs was only a little better. Even if its only months its effects will last probably a good deal longer, and that's probably one of the better scenarios

 

[NW-Bound]

I keep my equity exposure to 55%. I sell when they reach 60% and buy when they drop to 50%.

But even after yesterday’s big drop, I was still at 52%. At the market high I was at 56%. I still can’t figure out how we could we having such big swings in the market and my exposure has only moved by 4% from high to low.

Does that make sense to anyone?

It actually checks out.

From the high of 2/19 to 3/10, the date of your post, the market dropped 15%.

On 2/19, out of $100, you had $56 in stocks, and $44 in bonds.

On 3/10, you had $47.6 in stocks, and $44 in bonds, assuming bonds did not drop. Your stock AA is 47.6/91.6 = 52%. Right on!

What is misleading is that the 15% loss not only reduces the stock value, but also the portfolio. A 15% drop of stock causes only a 4% drop in AA.

PS. Around 50/50 AA, a 1% change in value of stock causes the AA to change by only 0.25%.

 

[BeachOrCity]

The answer to THE QUESTION ASKED is enough to get to my target AA.

But I think the more important question is WHEN?
Does one blindly follow their bands?
or
Does one try to time the bottom to an extent?

I am not a fan of market timing, but I strongly feel we are solidly in falling knife times right now.

 

[pjigar]

I think is this is a rather philosophical question.
a. If you believe that markets are inefficient then YOU know the answer already.
b. If you believe markets are efficient then you should have no money left to invest to begin with.
c. If you are somewhere in the middle who buys (no pun intended) into "buy low sell high" pitch then may god help you.

Having said that, I just invested annual IRA contributions on March 12 which we were going to invest anyway sometime before April 2021. This (regular recurring contributions) is the only type of money I would use to invest on dips.

 

[NW-Bound]

The answer to THE QUESTION ASKED is enough to get to my target AA.

But I think the more important question is WHEN?
Does one blindly follow their bands?
or
Does one try to time the bottom to an extent?

I am not a fan of market timing, but I strongly feel we are solidly in falling knife times right now.

I got a call from my brother yesterday, asking for an idea how he should reinvest his cash. It turned out that late last year, he did not like how the market kept going up into the overvaluation zone, and moved quite a bit to cash. He did not say, and I did not ask how much cash he raised. I myself lowered my stock AA from 80% down to 60%.

I told him what I would be doing. That is, I will redeploy my cash slowly, and not all at once. The virus crisis is still developing. Many businesses have not known the impact to the bottom line yet, or if they do they are not admitting to it.

I thought I would wait a bit, but as I mentioned in an earlier post I did transfer 1.5% of my portfolio from cash to stock+bond yesterday. The motivation came from seeing bonds getting dumped in recent days, indicating either a cash crunch or a panic.

This virus is spreading a lot faster than the financial malaise during the Great Recession. That time, it took more than 1 year from some subprime lenders going bankrupt until the bigger banks also succumbed. Still, as you said I don't think this thing has played itself out, and more shoes will drop.

I don't have to get back to my usual 80% stock AA right at the yet unknown bottom. If I buy back at any lower price than when I sold, that's success in my book. I don't follow any doctrine, and am not religious either, let alone treating investing the same as practicing a religion.

 

[Perryinva]

I increased my equity percentage from 8% before the drop to 38% as of today. Didn’t remotely catch the bottom (so far) on everything, (but did on a few) but compared to what I was thinking of buying before the drop, it is plenty low for me.