LordosisParticipantStatus: PhysicianPosts: 2222Joined: 02/11/2019MPMDParticipantStatus: PhysicianPosts: 2608Joined: 05/01/2017
Darn that yield curve horoscope!!! I don’t think either the US or China will back off any time soon.
Still sticking to deleveraging over new market investments at this time until the “horoscopes” tell me differently.
Remember HUGE sell off means HUGE sale for the patiently unemotional market investor.Click to expand…
i’m not sure that patient unemotional investors respond in any way to daily fluctuations.
I just had a funny conversation. Guy walks into my office to say, in effect, the sky is falling and now is the time to move to 100% cash. (He wasn’t kidding. I happen to know he is in 100% cash.) I asked when I would get back into the market if I did that, and he said when the market is down 50%. I asked what would happen if the market only went down 30%? Well, he said, then I could get back in then. What could I do but smile and wish him well with his investments.fatlittlepigParticipantStatus: PhysicianPosts: 1313Joined: 01/26/2017
I just had a funny conversation. Guy walks into my office to say, in effect, the sky is falling and now is the time to move to 100% cash. (He wasn’t kidding. I happen to know he is in 100% cash.) I asked when I would get back into the market if I did that, and he said when the market is down 50%. I asked what would happen if the market only went down 30%? Well, he said, then I could get back in then. What could I do but smile and wish him well with his investments.Click to expand…
There was this one guy who claimed to own a mutual fund that returned 30% a year for the past 10 years, the only problem was turned out he bought it a year ago 😂
I know people love to poke fun at market timing and I have years of posts admonishing folks for saying similar. However, you’d have to be a bit crazy to just brush off world economic momentum and escalation in trade war rhetoric. That is a beast of a different nature, not to mention that employment numbers that have been looking good all year were just revised DOWN 500,000 jobs. That is a lot and means growth was not nearly as strong as suspected. Trump basically just had a stroke on twitter, and ofc is not helping in this time of crisis of his own making. The fed, is doing fed stuff. While they will have to respond it seems they will be on the too little too late train even though its ahead of where it usually (hiking us into a recession).
Obviously as things change it bounces things from bad to worse to neutral or good even. Trump could cave (was my primary assumption as he wants to be elected, but he flopped this today), fed could intervene massively (they should, but appear to want to look neutral which is stupid), world data could turn around as it did in 2016, etc…each new data point bounces the ball from one side to the other.
But, a bit flippant to dismiss real concerns. Volatility of this nature is not a good sign for markets, though seasonally its kind of that time of year.xraygogglesParticipantStatus: PhysicianPosts: 113Joined: 10/26/2018
Serious question: if there is a recession in the coming months, is that a good time to deleverage (expedite debt payments?), or stop making extra debt payments and buy VTI instead?August 23, 2019 at 4:31 pm MST #241132TanglerParticipantStatus: PhysicianPosts: 405Joined: 08/23/2018
Agree with Zaphod. I do think the elevated Shiller-cape ratio, crazy Trump-china stuff, high corporate debt, and a bunch of other variables that i don’t care to spend ATP trying to understand, all point to lower 10 year equity returns . The important thing is this: I have no clue how this will happen. Will it rise for a few more years and then suddenly drop like a stone? Will it drop like a stone foe the next 6 months then start to rise again? Will it bounce all over but end up with a flat average annual return of 1-5% for the next 10 years?
No one knows.
My AA is becoming more bond heavy through buying more bonds, because my need to take great risk is low. and growing lower.
For the next 6 months, I do wonder what Mr Market will do, but that psychopath is unpredictable in the short term. Football starts soon and the fish are biting, so ……………gonna buy bonds and ignore the noise!August 23, 2019 at 4:41 pm MST #241133TanglerParticipantStatus: PhysicianPosts: 405Joined: 08/23/2018
Xraygoggles, i would kill the debt, but it also depends on your interest rate on the debt. Debt = risk, and the debt is a guaranteed return while investments are often not.
I am paying my mortgage down and increasing my bond AA currently and i feel good about both.August 23, 2019 at 4:47 pm MST #241136
Of course the market is going to react. The problem is that it reacts in unpredictable ways. I don’t see anything wrong with adjusting your AA to your expectations as long as you don’t kid yourself that you are going to sell high and buy low. Take a look at the linked chart. Which of the events would you have sold or bought into? I’ll pick one for those of you worried about a trade war. Look at the 1997 Asian financial crisis. If you sold then you would have missed a huge run. Be honest with yourself and admit you don’t know now either, set your diversified AA to your expectations, and keep investing through DCA.
I did this recently. I have a three year window to retirement, and I have to cash my 457f when I retire. To avoid the possibility of that potential forced loss in a down market I have shifted that account to bonds, and adjusted elsewhere to keep 60:40 overall. Bottom line, I am now comfortable to whether any stock down turn. And I am not going to try to make Market moves because I have suddenly discerned market direction in the daily macroeconomic news.
Just want to clarify that I am not calling for a recession, but there are some notable headwinds that should be taken seriously. Those can be politicked or growthed away of course, info and data changes and so should your assumptions. Just about risk tolerance and reasonableness of discussion. You dont have to and shouldnt change your AA even, unless you’re in a mighty risky position you might not feel comfy with of course.
Its all about how much more upside vs. how much downside there is. If data and rhetoric keep up, we have loads of downside ahead. Even if rhetoric cools on one side, we have temporary reprieve and await data (it happens slower). Im not interested in being a hero, just happier with a lot more bonds in my portfolio lately.
I have been focusing on debt lately, but less to do with market and more with goals. If the market indeed starts to turn sour, I will reverse course and pump it into the market instead.
Just want to clarify that I am not calling for a recession, but there are some notable headwinds that should be taken seriously. Those can be politicked or growthed away of course, info and data changes and so should your assumptions.Click to expand…
I understand. And to a certain extent I agree with you. I’ve seen this movie since I started investing in 1982. The problem is that it is completely unclear what to do about the headwinds. Look at it from a binary perspective. In one case you get concerned about the various worrisome news and go all to cash. If the market takes a serious and sustained dive, you have the opportunity for a big upside, assuming you time it right to get back in. If you can make that call, go for it. But what if the Market goes up instead? You miss say three years of gain in one relatively short period. You just don’t know. Or, flip side, you stick with whatever AA you have now, which was presumably selected as an AA you would be comfortable with in a downturn. Market goes down, you don’t care because you planned for it. Keep buying while stocks are on sale and make your money later. Hey, you’re young. Market goes up, even better because you are along for the ride. Pretty soon you have enough shares to retire off the dividends…
I know, I know, many reasonable steps to take in between. Still, I think the most reasonable risk adjusted approach, given the unpredictability of the market, is if you don’t like AA then change it to one you can stick with in a down market and keep buying. DCA consistently into a diversified AA will make you rich more slowly that macro driven big move, but with less risk that you will make a bad call if you let what appear to be trends drive your investments.
Still, I think the most reasonable risk adjusted approach, given the unpredictability of the market, is if you don’t like AA then change it to one you can stick with in a down market and keep buying. DCA consistently into a diversified AA will make you rich more slowly that macro driven big move, but with less risk that you will make a bad call if you let what appear to be trends drive your investments.Click to expand…
Which is what I have currently. A lot of bonds where there was once none. Going to cash or trying to exactly time a swing one way or the other is foolish.EntrepreneurMDParticipantStatus: PhysicianPosts: 407Joined: 06/10/2019
Serious question: if there is a recession in the coming months, is that a good time to deleverage (expedite debt payments?), or stop making extra debt payments and buy VTI instead?Click to expand…
VTI is a total stock market index fund ETF. You’re not going to buy that if you are expecting a recession to come, maybe after the recession completes. VTI is no higher today than it was January 2018. It’s expected to drop if you’re considering a recession.
I’m focused on deleveraging, investing in my own growing business, and funded 3% CD’s (you may prefer bonds) to mobilize back in after the recession completes. Current market data, what others here call horoscopes, argue market risk off for now until and unless better data comes in. Have largely stuck with this plan for over a year now. Data just hasn’t improved since, weakening to the contrary. US and China can’t get beyond ego’s. Nationalism causing the world economies to slow. Goldilocks has left the building.August 23, 2019 at 7:25 pm MST #241186LordosisParticipantStatus: PhysicianPosts: 2222Joined: 02/11/2019
You might look at my portfolio as 100% equity. However I cannot help but see it as 10%. The other 90% is human capital. If the market falls 50% yes my equity falls all 50% with it but is is a drop in the bucket for my lifetime investments.
I would love a giant drop right now. I have yet to make the majority of my money.
@larryragman that chart is gold. Fantastic. It really drives home the point that there are too many variables and you just need to tune out the noise. It reminds me of this JLC post.
“Never let your sense of morals prevent you from doing what is right.”jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 2465Joined: 03/01/2018I’m focused on deleveraging, investing in my own growing business, and funded 3% CD’sClick to expand…
you can’t really do all 3 of these things. Having cash equivalents and a bunch of debt is really a choice to borrow cash; you’re choosing not to pay debt. “Investing” in the business by carrying debt is just financing the business.
Not saying all cash should go to debt tomorrow, or that all debt is bad. Just saying don’t pretend you can “focus” on all those things.
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA