Sell anticipating correction or stay put ?

[CardsFan]

The only market timing I might do is make a mega Roth conversion if the market drops a lot.

Notice I said "might" and "a lot", which really means I am not likely to try to time the market.

 

[REWahoo]

That’s cool, a follow up question then when you plan to start buying again? Or will you ?

It appears you misunderstood my answer.

 

[Montecfo]

Stay the course....thousand points of light....

Stay the course.

 

[NW-Bound]

As always, I'll say "Sell".

But that means sell the OTM call option. Not the stock!

 

[Zathras]

Experts have anticipated 14 of the last 2 recessions.

 

[Graybeard]

I voted stay but I just saw the dreaded wheee, this could be TEOTWAWKI!

I am waiting to sell on a 10%+ pull back, sell some FI and buy some equities.

 

[Gumby]

I am currently buying, and have been since 1/4/21 - $30k per week.

 

[ERD50]

You must be new to this forum…

No, but still want to know

OK, if you are not new, then you haven't been paying attention.

It's a bit like asking that the next AA meeting be moved from the Church basement to the local tavern.

And if you still don't get it, "stay". Various posters have been suggesting to get out before the next correction for many, many years. Those who did get out have missed out on more gains that any likely future correction could take back (and that's assuming they don't wait that correction out).

-ERD50

 

[RobbieB]

Yes, sell!

No, stay.

 

[target2019]

Sell some so you're in balance and don't get too dizzy way up on the ladder's top step.
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[latexman]

4% < out of whack < 5%. Close enough, so initiated rebalance.

Definitely stay.

 

[Out of Steam]

We pulled back our stock allocation last year and have enough money out of the market (TIAA Traditional, inflation-linked bonds) to meet our income requirements.

We'll stay put.

 

[olyveoil]

Two things:

1.) I like it here and mostly agree with the underlying principles of this forum
2.) Part of my asset allocation is cash. I do keep 4-7% of cash in my portfolio for opportunity shopping. Am at 6% now.

Selling everything and thinking to 'get back in' at a low. requires you to find a peak AND to find the trough. Good luck with that.

 

[kgtest]

Gotta be right twice....when you sell and when to get back in. Are you that lucky or smart?

right. catch the falling knife twice...or otherwise KNOW what wall street doesn't which is when to sell and when to buy.

Sell what you need only when you need it. Otherwise, just buy or hold? Re-check your investment plan and determine if changes are worthy?

The only smart thing a person could really do is buy a dip anticipating gains will eventually come.

So maybe just save some liquidity for the buy on that next dip??

 

[joejetski]

I think it is a function of several things: risk tolerance, age before retirement, and investing confidence. First and perhaps most important is risk tolerance. This helps you to determine your baseline AA (% stocks, bonds, cash) and rules for modification (quarterly, annual rebalancing). When responders say “stay the course”, it may be from a very conservative AA reference point (e.g., 30% stock, 50% bond, 20% cash). They may be very comfortable with this AA, having recent experience in the Covid crash and 2008-2010 mortgage caused debacle. I would bet that very few here are above an overall AA OF 80:20 S:B. I would very interested in their thoughts now, particularly those in or near retirement.

Second is age before retirement. Personally, I am right outside my 5 year window, so I am sitting at 35% cash, and plan to transition +5% per year to my cash (or bond) allocation per year. YMMV depending on when you want to retire.
Some keep several years spending in cash so they can keep a high % in equities/have some dry powder for bargain hunting if the market goes south for a bit.

Third is investing confidence. How many ups and downs have you been through with this AA? How has it worked for you? Is it a SWAN portfolio, or do you need the Pepto?

 

[NW-Bound]

The only smart thing a person could really do is buy a dip anticipating gains will eventually come.

So maybe just save some liquidity for the buy on that next dip??

People who are still in accumulation mode can just keep on buying. In the long run, that has proven to work out.

For people who are already retired, where's the source for new fund to buy? You need cash or bonds to sell.

I am looking to reduce my stock AA now (77.6% at this moment). But that's hard to do for me, being a stock lover.

 

[Dash man]

I suggest buying…a good brand of scotch or Merlot, depending on your preference. The rest will work itself out over time.

 

[beernutzbob]

Nobody knows nothing.

 

[skyking1]

With questions like this I always see what Dunning and Kruger have to say about it. Those two are sharp.

 

[ERD50]

With questions like this I always see what Dunning and Kruger have to say about it. Those two are sharp.

I don't really know enough about Dunning and Kruger to have an opinion on that comment.

Hey, wait!

-ERD50

 

[Gumby]

I don't really know enough about Dunning and Kruger to have an opinion on that comment.

Hey, wait!

-ERD50

I'm certain I know everything about them.

 

[Hamlet]

I would say that all or nothing ideas are usually terrible. Selling everything is a bad idea in general.

That said, I do think the market is overvalued right now, so getting yourself in a position where you are comfortable when the market declines is probably best done while the market is high rather than after a correction has already started.

I've been trimming back my stock allocation from essentially 100% 5 years ago to about 66% now. That has cost me a lot of money, but I'm getting closer to retirement/FI and the dollar figures are big enough that I wouldn't want to go through a 2008/2009 scenario while fully invested again.

Basically, nowadays I look at my portfolio and say to myself-- What happens if the market goes down 50%, then What happens if the market goes up 50% ? Then I pick an allocation that lets me live with the outcome of both of those possibilities.

 

[wanaberetiree]

That has cost me a lot of money, but I'm getting closer to retirement/FI and the dollar figures are big enough that I wouldn't want to go through a 2008/2009 scenario while fully invested again.

I looked at my data for 2008 and my portfolio was flat/slightly down compared to 2007 and have done nothing. What was your dramatic experience related to 2008 crash?

 

[Hamlet]

I looked at my data for 2008 and my portfolio was flat/slightly down compared to 2007 and have done nothing. What was your dramatic experience related to 2008 crash?

I don't remember the exact dates, but at some point I was down about 40% from my peak portfolio level during that 2009 market drop. It wasn't a big deal then, because I was what I considered a long way off from retiring, and the dollar amounts were still amounts that I could imagine earning back via additional investing. So it wasn't hard to stay the course and keep dollar cost averaging through it.

Nowadays, our net worth is 6-7 times what it was at the peak in 2007-2008, and we are only 5-10 years away from potentially retiring. A 40-50% decline in our retirement assets would be feel catastrophic. Staying the course would be too difficult without my 33% bond/cash allocation, IMO.

 

[wanaberetiree]

A 40-50% decline in our retirement assets would be feel catastrophic.

Definitely it'd feel catastrophic.
But would it be indeed a catastrophe? In realty it was a flat year, short term correction.

I am just mumbling aloud. I am semi-retired and AA 70/30. The question is if 2008 kinda things happen tomorrow, and sooner or later they will happen, what do we do ?

Dunno ...