Trying to play it safe

[pb4uski]

Or, maybe they are locking in "gains"??

Over the last x number of years, my stocks have gone up well over 100%. I sold some yesterday that are down around 5% YTD. Have I locked in losses of 5% or locked in gains of 95+%? More than one way to look at things. ...

+1 I don't have a single purchase lot in my taxable account that has a loss... in fact, the lowest gain is 14% for the international equity funds in our taxable account... most of the others are a 50% gain or more.

That said, I'm staying the course and not doing anything.

 

[Go-NoGo]

Out of curiosity, when people talk about cash reserves for two+ years, are they talking just CDs & MM, or do they include bonds in that figure?

Personally - I am counting only cash in banks or CD's that do not have withdrawal penalties.

 

[capjak]

Nothing wrong with selling some equity and immediate purchasing something in same industry.....Tax Loss Harvesting. I own mostly index funds so I try to tax loss harvest index to index (different index to avoid wash rules).

 

[lem1955]

So far my Actual AA is 2% under my target for equity. If/When it gets to 5% under target I will sell bonds and buy stock. Otherwise, I sit tight and keep sanitizing and elbow bumping.

 

[CRLLS]

I plan on staying put. I did so while unemployed during the 2008-2009 event. OP is wise to be thinking both sides of the curve. If you do sell now, when will you get back in? This is the #1 problem with market timing. That is assuming you want the higher AA long term. If you are adjusting your long term AA, then sell some now and don't look back.

 

[gooddog]

If you have $ in taxable accounts, and the equities in those accounts have a significant loss, it may be worth selling those to reap capital gains loss for write-off purposes going forward. You can then shift the $ from the sale into something else that you believe is just as worthy an investment. Remember to avoid 'wash' sales. As an example, selling something for a capital gains loss would come in handy when you decide to sell a rental that has capital gains. The loss offsets taxes $ for $, and depending on what tax bracket you are in that can be (with state taxes) as much as 50 cents on the dollar. Realized capital gain losses can be a valuable tool going forward if used correctly. JMO

 

[kgtest]

I will sell equities in 129 more months. Until then, business as usual...BUY BUY BUY!

Even if we have a 10 year recovery... I will have been buying lower in that situation more than I would higher on average most of my accumulation phase.

Best thing to do right now is the same thing you do in any squall, button down the hatches, reef the main, and hang on for the ride!

 

[coach02116]

Are you half-glass full or half-glass empty?

I've asked myself this question repeatedly since the melt-down began. More times than not, my answer comes up as half-glass empty -meaning that I believe that there is still plenty of fear out there to continue to drive the market in a general downward direction.

The daily bad news on the virus continues and based on negative information and projections by Fauci, the CDC, hospital leaders, WHO, etc., I believe we still have a long way to go on this before any form of optimism returns.

I put Stop/Sells in on all my IRA individual equities last week, and a number of them have executed over the past two days. I did this to preserve capital -not to try and time the market.

 

[jollystomper]

There is not much tax loss harvesting I can do, as most of my equities I have held so long that I am still at a profit with them.

I am just biting the bullet and doing nothing. Pension + enough in cash/bonds to likely not have to touch equities for 10+ years (except for Roth conversions and future RMDs should I live that long) means I will just stay the course.

With almost all of our travel/entertainment options limited, I might dollar cost average that money back into the market.

 

[sengsational]

Agree, I have some perverse sense of satisfaction in the drop, if I can ride it out I'm in a way proving I can handle it. I feel like I've talked a big game, and due to my chosen allocation of 100% equities have basically commited to walking the walk, now just need to live up to the plan.

If it goes down more, I'll be able to take 30 years off my age!

Because I have a hard time with a completely set and forget system, I decided that I'd adjust my allocation depending on the CAPE ratio. So that plan had me adding 20 years to my age, then another 10. By being older, that reduced my equity percentage. So basically I sold on the way up. I didn't get everything I would have if I stayed with my younger person allocation, but good enough. Now, if the CAPE goes low enough to trigger my system, I can take 30 years off my age, and be back to normal. Something to "look forward to", as bizarre as that seems.

 

[Dogpeace]

I rode out the 2008 recession... I resolved to just not look at my accounts, and told myself "I don't care how low it goes, I refuse to sell"...

It worked out fine because I was 12 years further from retirement and actively contributing from my paycheck, so at some point I was buying at the bottom.

It mattered none if it took 10 years to recover losses... the gains from the new money going in more than made up for that.

This approach may not work so well for people already retired, or very near to retirement. This time, I took a very different approach. I have been defensive for the last 18 months, missing out on some gains but still earning a little. Once the virus got into the news I went 100% cash and missed this terrible decline entirely. Not the recommended approach (100% cash) but it seemed so obvious that the bull market was coming to an end soon.

 

[johnhkc]

Playing it safe after playing it not so safe

About a week ago, I sold enough stocks/ETFs for 18 months of expenses. Other than that, I've done nothing.

What I did during the Great Recession was a lot less pretty. Initially, I sold all equities and equity mutual funds and moved everything into bonds. Then about 3 months later, I tried to time the market and bought back in to equities. This, of course, was a very bad idea. After the huuuuuuge drop, I listened to my dad's advice (for the first time ever). He decided to get even more aggressive (sort of a what-the-hell-it-cant-go-much-lower strategy). I invested 100% in 2x and 3x ultra long ETFs. I made it all back and then some.

I'm thinking about taking a small slice of cash to do the ultra ETF thing again but I think I'll wait until late May to see how bad this COVID thing gets.

One other thing I did was to convert my 401k and IRA to Roth IRA near the very bottom. That saved a huge boatload on taxes!

 

[kannon]

I'm tying to stay the course but it's hard. We're at about 35% equities in our retirement accounts so the cash and bonds have helped cushion things. The problem I am having is, and it does assume a bad scenario that I see on the TV, businesses/people seem like they will be almost in suspended animation for a few months until we get a handle on this virus. So seemed not a bad idea to cut losses now and sit on the side for a bit until things stabilize. I know this is timing the market and we are not suppose to do this, but is this different that the 2008 recession or other times, it just looks like we will be stagnant at best but probable get worse for a good number of months.

FYI - we don't need to touch our retirement accts till RMD in 5 yrs.

Appreciate your calming feedback.

 

[capjak]

I rode out the 2008 recession... I resolved to just not look at my accounts, and told myself "I don't care how low it goes, I refuse to sell"...

It worked out fine because I was 12 years further from retirement and actively contributing from my paycheck, so at some point I was buying at the bottom.

It mattered none if it took 10 years to recover losses... the gains from the new money going in more than made up for that.

This approach may not work so well for people already retired, or very near to retirement. This time, I took a very different approach. I have been defensive for the last 18 months, missing out on some gains but still earning a little. Once the virus got into the news I went 100% cash and missed this terrible decline entirely. Not the recommended approach (100% cash) but it seemed so obvious that the bull market was coming to an end soon.

Sounds like you had great timing. Now please tell me when you get back in....

 

[REWahoo]

kannon, take a deep breath.

I'm tying to stay the course but it's hard. We're at about 35% equities in our retirement accounts so the cash and bonds have helped cushion things. The problem I am having is, and it does assume a bad scenario that I see on the TV, businesses/people seem like they will be almost in suspended animation for a few months until we get a handle on this virus. So seemed not a bad idea to cut losses now and sit on the side for a bit until things stabilize. I know this is timing the market and we are not suppose to do this, but is this different that the 2008 recession or other times, it just looks like we will be stagnant at best but probable get worse for a good number of months.

FYI - we don't need to touch our retirement accts till RMD in 5 yrs.

Appreciate your calming feedback.

This latest financial/medical kerfluffle will run its course, but none of us know when. The spread of the virus will peak, then decline. Drug companies will find or create drugs to treat the virus. Eventually, hopefully soon, a vaccine will be developed. All those things will cause the market to go up, maybe dramatically or maybe at a more measured pace. When that starts to happen I want to be in the market not out of it - and so do you.

With 5 years to go before you touch your nest egg, you are in a good position to wait out the ugly part we are currently experiencing and enjoy the turnaround that's coming at some point in the future.

Hang in there...

 

[RenoJay]

In the past 20 years we’ve had two roughly 50% draw downs in equity values. During The Great Depression the drawdown was above 80%, as was the NASDAQ bubble burst in 2000-2002. I suggest envisioning those type of outcomes and figure out if you really have the stomach for them. If so, ride it out. If not, better to know today than a month from now.