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HUGE sell off today!

Home The Lounge HUGE sell off today!

  • fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 1313
    Joined: 01/26/2017

    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?

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    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.

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    Yep once you get that banner notification on your phone that the recession is over you can start investing again. Or something like that…

    #241198 Reply
    Liked by Tangler
    Avatar EntrepreneurMD 
    Participant
    Status: Physician
    Posts: 407
    Joined: 06/10/2019
    I’m focused on deleveraging, investing in my own growing business, and funded 3% CD’s 

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    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.

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    My (good) dilemma is the growing accumulation of reserves that has recently accelerated. Since everyone feels my cash equivalents are too much of a drag on my real returns, I am trying to figure out how to invest new reserves given my apprehension with the current market outlook. I will likely fully deleverage all debt by the end of the year with growing savings (except the commercial loan), perhaps renewing the CD’s hopefully before the Fed cuts rates too much. It’s true I’m holding off on new CD reserves until I make a serious dent in debt. I suspect all debt will be gone in the next 3 years. I’ve also entertained the idea of more real estate but haven’t found anything. Reinvestment into the business is ongoing, with “growth spurts” when adding new services or providers. Considering mammography, DEXA and x-ray as you suggested. Point is deleverage and business investment over an uncertain market over the short term. You are correct, all CD and savings cash equivalents (for emergency and post recession ammunition) I want are already in place at least until debt is paid off.

    #241214 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 989
    Joined: 11/21/2017

    I guess everyone will have a different situation.
    I regularly see stuff I want to buy.
    But I also like the cash I have.
    Having 5% cash is very different to being 50% cash.
    I’m probably missing out on return but I’m ok with that.
    I still tend to think there is time for a late stage melt up.

    I never made anything from macro calls on indexes or the general economy. I think a macro level application to micro situations (such as long term fundamental drivers on specific property and buying from distressed developers in certain areas) has been profitable for me. But maybe I was just lucky there. Then again, I am confident I would be able to beat the market if I did it again. But I could be wrong.

    #241219 Reply
    Avatar burritos 
    Participant
    Status: Physician
    Posts: 536
    Joined: 04/23/2018

    Anyone rooting for a correction? I’m not, but for anyone who is still DCAing, it’d be beneficial.

    #241220 Reply
    Avatar adventure 
    Participant
    Status: Spouse
    Posts: 1207
    Joined: 10/24/2016

    Anyone rooting for a correction? I’m not, but for anyone who is still DCAing, it’d be beneficial.

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    Yep. We get paid once a month, and every month the 401ks grow a little bit… so having the market low for some years would be ideal!!

    #241228 Reply
    Liked by Lordosis
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 3073
    Joined: 01/03/2017

    Anyone rooting for a correction? I’m not, but for anyone who is still DCAing, it’d be beneficial.

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    I am but it’s for selfish reasons.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #241233 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8366
    Joined: 01/09/2016

    Anyone rooting for a correction? I’m not, but for anyone who is still DCAing, it’d be beneficial.

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    Always. Why would an accumulator hope for anything besides?

    Johanna Fox Turner, CPA, CFP: I am not your financial advisor; any responses are for general purposes only
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #241239 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2465
    Joined: 03/01/2018

    was down on my knees 4 times a day praying for a 50% equities drop but that really made my old partners mad so know I just pray silently while standing at my desk, but I did increase to 6 times a day

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #241245 Reply
    Avatar rdo 
    Participant
    Status: Physician
    Posts: 191
    Joined: 03/12/2017

    There are lots of markers signalling recession. PMI is negative for the first time in 9 years.  Gold and bonds and currencies have reacted already.  Equities is always the last to react. It will be a game of musical chairs when the time comes.  Good to have a plan and stick with it.  The problem with a correction is it goes very fast.  Not a lot of people can react to it.  It can wipe out 5, 10 years of returns.  I am more cautious since we are in a different territory. this is something global.  I know I sound like chicken little but it will be a mess for a lot of people.  I do not pray for a recession, I just know it is bound to happen.  It does worry me and how it will impact my patients and it can impact my career, no matter how stable my job is.

    #241251 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8366
    Joined: 01/09/2016
    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. https://www.marketwatch.com/story/the-dows-tumultuous-120-year-history-in-one-chart-2017-03-23

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    Many thanks for posting this link. Unless you need to use the money in your investments and/or think you can beat the long-term averages of the market, why would an individual’s personal predictions of a recession affect their investment allocation? If you will need that $$ in the next 5 yrs, otoh, why would you have it in the market?

    @Larry_Ragman, just wondering – does the fact that you need to liquidate your 457f change your plan? Iow, if you happened to be 100% equity in a well-balanced portfolio and had to liquidate when the market was down 30%, wouldn’t it work both ways? Meaning that if your plan doesn’t require you to spend that $$ when you liquidate it, wouldn’t you simply take advantage of the same low prices and reinvest?

    Johanna Fox Turner, CPA, CFP: I am not your financial advisor; any responses are for general purposes only
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #241253 Reply
    Avatar Perry Ict 
    Participant
    Status: Physician
    Posts: 61
    Joined: 01/20/2019

    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.

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    I agree with your general line of thinking (re: perceived upside vs downside). I don’t think it has a lot to do with rhetoric though, much less tweets as a lot of the headlines love to imply, but rather the data that suggests that we are at the end of an economic cycle.  With that, I think it is reasonable to make a projection as to what the stock market might do over the course of the next few years and invest accordingly.  On the other hand, I’m very skeptical of anybody who claims they can predict what the stock market will do on any given day or week based on events or headlines.

    Right now, my view is that there is more downside than upside in the stock market, so I’m being extra careful (I’m going to forgo the attempt to squeeze out an extra 10-20 percent because I suspect downside could be upwards of 50%).

    #241282 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6339
    Joined: 01/12/2016

    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.

    Click to expand…

    I agree with your general line of thinking (re: perceived upside vs downside). I don’t think it has a lot to do with rhetoric though, much less tweets as a lot of the headlines love to imply, but rather the data that suggests that we are at the end of an economic cycle.  With that, I think it is reasonable to make a projection as to what the stock market might do over the course of the next few years and invest accordingly.  On the other hand, I’m very skeptical of anybody who claims they can predict what the stock market will do on any given day or week based on events or headlines.

    Right now, my view is that there is more downside than upside in the stock market, so I’m being extra careful (I’m going to forgo the attempt to squeeze out an extra 10-20 percent because I suspect downside could be upwards of 50%).

    Click to expand…

    It certainly is the tweets though, its just more sensitive due to where we are in the cycle. I mean you can just go watch the second trump says something crazy and see the straight line down in the market, no doubt about the origin.

    I’d be careful about assuming some percentage of downside as a kind of target, it all depends on actions taken and when. There have only ever been 3 crashes approaching that level of damage. While HFT, algos and liquidity issues make me think there are technical and plumbing reasons why things may go further than conditions mandate, its a dangerous position to hold firm (ie, not invest unless greater than).

    Basically, when a draw down gets into 20+% territory the upside is incredibly tilted in your favor and you have to at least start thinking about rebalancing or why you arent starting to accumulate.

    #241285 Reply
    Liked by Perry Ict
    MPMD MPMD 
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    Status: Physician
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    Joined: 05/01/2017
    Earnest refinancing bonus

    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.

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    I agree with all of this.

    One of things we are admonished to do is to not say “this time is different.”

    This time is different though. Not acknowledging that is ignorance masquerading as a deeper understanding of the game.

     

    #241288 Reply
    Liked by Zaphod
    Avatar Perry Ict 
    Participant
    Status: Physician
    Posts: 61
    Joined: 01/20/2019

    Zaphod, re: the percentages, I agree with you, I was more saying that it could drop up to 50% and that is the potential downside, but I certainly wouldn’t stay on the sidelines waiting until it’s down by that much.

    #241289 Reply
    Liked by Zaphod
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6339
    Joined: 01/12/2016

    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.

    Click to expand…

    I agree with all of this.

    One of things we are admonished to do is to not say “this time is different.”

    This time is different though. Not acknowledging that is ignorance masquerading as a deeper understanding of the game.

     

    Click to expand…

    I tweeted something in this regard yesterday to all those saying “this will be the most called recession ever”=no recession…etc…heuristics. Its always different, you just dont know what form that will come in.

    One of the points I cited was at the time of the start of the last recession there was 20% of the world with internet access. Its now 67%. Thats nuts that the majority of the world has connection to one another. Just like how people thought there wasnt much crime in the past when it was actually higher, just because they were ignorant of it. This is going to have all kinds of knock on effects. There are large groups of people out there sharing, assessing and debating things in the world that will have some very cool outcomes eventually.

    Also, there are going to be loads of people that appear to be nostradamus and will have perfectly predicted the conditions and timing of the next downturn, there are simply too many people opining on it for that not to be statistically true. Doesnt meant they actually have any great knowledge or insight (some will for this particular one only) but its just about guaranteed given the raw numbers.

    #241294 Reply

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