Portfolio Makeover - Sold 2/3 on Friday, May 3

[bluztuzumab]

Market timing - pure and simple - and likely unwise...
Why Investors Fail

 

[photoguy]

Market timing - pure and simple - and likely unwise...
Why Investors Fail

Based on what the OP stated (he sold to clean up his positions in multiple funds) I would say this not market timing. Personally, I hate being out of the market and I would try to clean up my portfolio without liquidating everything. But I didn't see the OP state that he/she thought the market would go down and that's why he sold.

 

[Fermion]

didn't GS predict 2100 S&P500 by 2015? I think the OP could lose a lot more than 5 figures in potential missed earnings.

GS was quite correct about gold recently.

 

[karluk]

This is all Monday morning quarterbacking.

This comment was not directed at me, but to the extent that it applies to my criticism of OP and his market timing strategy, I feel obligated to point out that my criticism has been unchanged from my first post in this thread until my last. The problem is not that OP gambled tens of thousands of dollars and lost, but that he gambled at all and his FA stood by passively and let it happen. I pointed out the problems with OP's move into an all cash position on the morning of 5/7, so I think I should get credit for "early first quarter quarterbacking" at the very least, not "Monday morning quarterbacking". As I wrote on 5/7

I sincerely wish you the best of luck in your move to cash, but in all honesty this doesn't strike me as a good way to arrive at your new asset allocation. The mutual funds you've just sold will probably be up or down a percent or two while you are on the sidelines, just through normal market fluctuations. That means you are unnecessarily gambling tens of thousands of dollars on what is essentially a flip of the coin. You may win, or you may lose, but what you're doing is gambling, not investing.

You may have done all this selling without consulting your financial advisor, but if he/she knows about it (and approves), it also strikes me that your FA is being quite lazy and not earning the fee you're paying. A good financial plan should analyze your current investment compared to your target and offer a coherent plan to get to your goal without exposing yourself to the kind of unnecessary risk you're currently taking. How hard is it to analyze the holdings of FCNTX and coordinate selling it while simultaneously buying comparable DFA funds?

On the positive side, DFA has a sterling reputation, so by hiring this FA you are getting access to some of the best mutual funds in the market. Good luck and I hope it all works out for you and your DW.

 

[karluk]

karluk:
It was my call and not FA's. When did I say that FA gave me two week's tactics? It was all my thinking what I wanted to do. You've read in bits and peaces and drawn your own conclusion. I've already mentioned in this thread how much I'm paying to FA -- it's not % based or into thousands. I also mentioned how messed up and out of balance my previous portfolio was and I wanted to start fresh. I also mentioned that market could go either way when I buy back but who can time the market?

I find it highly admirable in you to stand up and take responsibility for this fiasco. It has always been clear that you were the prime mover in this move to an all cash position, and that your FA's role was limited to standing passively by and letting it happen.

As far as your oft repeated excuse for liquidating a messed up portfolio and starting fresh, quite frankly that just reinforces my low opinion of your FA. It's certainly understandable that you, as a client, should feel overwhelmed by an overly complicated portfolio with dozens of holdings, but your FA advisor should not have felt the same way. He handles investments for a living and should be competent enough to figure out a way to get from your previous investments into a 65/35 allocation (which you indicated was your target) without this highly risky and completely unnecessary detour into all cash.

 

[bluztuzumab]

Based on what the OP stated (he sold to clean up his positions in multiple funds) I would say this not market timing. Personally, I hate being out of the market and I would try to clean up my portfolio without liquidating everything. But I didn't see the OP state that he/she thought the market would go down and that's why he sold.

You are correct, the OP didn't state the the intent was to sell high then buy low (time the market). However it has a similar affect if the plan was to clean-up the portfolio via redistribution. In this case (as you mentioned) it would have probably been neutral if first deciding on what instruments to redistribute to, then sell and invest in these as a single event. But that is not what was done - so therefore essentially equilvalent to market timing (which turned out not to be the best choice in hindsight if invested in general stock market during the last 3 weeks). IMO

 

[CH]

I sold about 150k around the same time to get my AA in line with my goals. Cost me about 4500 bucks so far. In theory, anyone who rebalanced in the past few years made a similar " blunder " as the OP.

Rebalancing is not a blunder. Rebalancing is following good investing discipline.

Taking yourself out of the market for 3 weeks for a portfolio makeover is a blunder. A makeover should be done in a day or at most a few days. I suspect the real motive for being out 3 weeks was market timing which backfired, as it often does.

 

[CH]

Looks like a market downdraft today. Could be a good entry point for those who are out and want in.