[2020] A little stock market sense

[CO skier]

Got it. I thought you were advocating to 'sell out of stocks and never return'.

"Sell now to protect your retirement and reinvest at much lower levels. " That is an important point that I included in my original post.

You can dollar cost average over two days? What is the frequency of buys when you do that? Can you cancel out of your remaining buys if things turn south (or north as the case may be). You must have been pretty confident of a continued drop.

I have three accounts. The bulk of my retirement savings is in a self-directed IRA rollover of various employer 401Ks over the years; a Roth IRA; a basic brokerage account. When the Nasdaq 100 crossed below the 10-day average on February 21, I sold them all at 3 p.m. Mountain Time, when it looked like it would close below the 10-day average. I invested 50% of the rollover IRA into QID at 15:42:03 for $19.9999/share.

On February 25 at 11:22:32, my QID limit order for the other 50% of the rollover account filled at $22.0999. I entered the order because it looked like there was legs to the downside. I was confident enough that the market was headed lower, but I know there are never guarantees.

I intended to buy more QID over the next and following day using the other two accounts, but the market moved too fast, and I did not want to chase it. They remained in cash the whole time.

So you do think the market could bounce back quickly.

The current market is waaaay overdue for a short-covering bounce, and especially from these support levels. Which is why I did not hesitate to sell into the oversold conditions of a one-day, 10% sell off (20% gain for me). Plus, a 39% gain in a few weeks is a once in a lifetime trade; it will only happen to the downside. I am a firm believer in the old Wall Street adage that, "Bulls make money, Bears make money; Pigs get slaughtered."

A 10% bounce happened yesterday (Friday), but it looked like a hit job in the last hour from the Plunge Protection Team. I have no confidence in the sustainability. It looked like a gift to sell out for those who were burned by the Thursday sell off.

Bounce back to new highs? Not for years.


We are living through unprecedented times. There were no grocery store buying panics in the 2008 financial crisis. I think we will see in this current bear market, a 14% sell off in one day that triggers a second-in-the-day timeout for stock trading. With the news feed over this weekend, it may happen on Monday. The US government is step-wise shutting down the American economy. If the Mexico and Canadian borders close, that would also likely trigger a massive sell off. This is no time to have any money at risk to the long side in the stock market, especially considering how overpriced it STILL is. jmo, and that is how I am protecting my retirement.

The economic impact and financial panic will be 1,000 times worse than the Corona virus disease.

 

[HitchHiker71]

I see what you are saying and agree that hedge funds and sharp investors can work around what you call a 'secular bear' market in ways that outperform the buy and hold strategy during those periods.

I have also read just about every book that Ken Fisher has written and tend to trust his thinking. He has 'debunked' the widely held and intuitive belief that low PE ratios are a value and buying stocks with high PE ratios is 'expensive'. He literally cannot find a correlation that says buying stocks (or in markets) with low PE ratios leads to higher returns than buying those with high PE ratios. He has also similarly 'debunked' the theory that there are secular bear markets. Also, he has shown evidence that investors who attempt to 'work the market' tend to earn on average a lower return than the market as a whole.

Interesting stuff.

Bob

I like some of Fisher’s work as well, and very much agree with what you’ve written here with respect to purchasing individual equities based upon either low or high PE ratios. I’m referring to the overall average PE ratio of the entire market - that is what secular market analytics are about. This can be easily observed by the metrics.

I would never recommend attempting to time the market as a general rule.


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[HitchHiker71]

Is Warren Buffet selling?

Warren Buffett does most of his buying and selling via Berkshire-Hathaway. BH is sitting on a huge pile of cash since there aren’t much worthwhile value investments out there. Here’s a chart that shows BH’s cash holdings up through 2016, it’s even higher now, purported to be over 130B as of late last year.

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[bluehende]

"Sell now to protect your retirement and reinvest at much lower levels. " That is an important point that I included in my original post.


I have three accounts. The bulk of my retirement savings is in a self-directed IRA rollover of various employer 401Ks over the years; a Roth IRA; a basic brokerage account. When the Nasdaq 100 crossed below the 10-day average on February 21, I sold them all at 3 p.m. Mountain Time, when it looked like it would close below the 10-day average. I invested 50% of the rollover IRA into QID at 15:42:03 for $19.9999/share.

On February 25 at 11:22:32, my QID limit order for the other 50% of the rollover account filled at $22.0999. I entered the order because it looked like there was legs to the downside. I was confident enough that the market was headed lower, but I know there are never guarantees.

I intended to buy more QID over the next and following day using the other two accounts, but the market moved too fast, and I did not want to chase it. They remained in cash the whole time.


The current market is waaaay overdue for a short-covering bounce, and especially from these support levels. Which is why I did not hesitate to sell into the oversold conditions of a one-day, 10% sell off (20% gain for me). Plus, a 39% gain in a few weeks is a once in a lifetime trade; it will only happen to the downside. I am a firm believer in the old Wall Street adage that, "Bulls make money, Bears make money; Pigs get slaughtered."

A 10% bounce happened yesterday (Friday), but it looked like a hit job in the last hour from the Plunge Protection Team. I have no confidence in the sustainability. It looked like a gift to sell out for those who were burned by the Thursday sell off.

Bounce back to new highs? Not for years.


We are living through unprecedented times. There were no grocery store buying panics in the 2008 financial crisis. I think we will see in this current bear market, a 14% sell off in one day that triggers a second-in-the-day timeout for stock trading. With the news feed over this weekend, it may happen on Monday. The US government is step-wise shutting down the American economy. If the Mexico and Canadian borders close, that would also likely trigger a massive sell off. This is no time to have any money at risk to the long side in the stock market, especially considering how overpriced it STILL is. jmo, and that is how I am protecting my retirement.

The economic impact and financial panic will be 1,000 times worse than the Corona virus disease.

I am with you on the action Friday and even made a small bet. With normal portfolio moves I went into this under invested in stocks. Twice in the last two weeks my thoughts of the market retracing half of a move has allowed me to buy and then sell at a 5 to 6 % profit. After fridays sell I am actually less invested than before the fall. I have this quandry of wanting to move money into the market while believing we still have quite a bit of downside to go. I know over the years I make good decisions but many times indecision has cost me much more than I make. The news is bound to be bad for a while but the markets are a leading indicator. If these decisions were easy we would all be a lot wealthier than we are.

 

[Big Matt]

Warren Buffett does most of his buying and selling via Berkshire-Hathaway. BH is sitting on a huge pile of cash since there aren’t much worthwhile value investments out there. Here’s a chart that shows BH’s cash holdings up through 2016, it’s even higher now, purported to be over 130B as of late last year.

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They were just offering to buy back shares when the B shares were at 227. I think he knows he owns a great portfolio right now. My only concern (and it is small) is that he's exposed a little in the airline industry.

 

[HitchHiker71]

They were just offering to buy back shares when the B shares were at 227. I think he knows he owns a great portfolio right now. My only concern (and it is small) is that he's exposed a little in the airline industry.

Warren is legendary for “buying on the dip” when the fundamentals look strong long term. I suspect that while we will probably see a cyclical business recession brought on by both the supply and resulting demand side shocks due to COVID-19, that looking longer term the airlines and travel industry will eventually recover - so if anything BH will acquire shares on the way down or somewhere close to the bottom and then enjoy the ride back up. BH has done the same thing several times when we have seen precipitous market drops like we are seeing now.


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[bluehende]

After the fed announcement the futures went limit down. At this point there is no way to know what the damage will be at at open. Does anybody but me think the FED looks panicked. Right now lower rates to borrow will not influence a whole lot of demand. I wish they had saved the bullets for when the enemy can be hit.

 

[Brett]

After the fed announcement the futures went limit down. At this point there is no way to know what the damage will be at at open. Does anybody but me think the FED looks panicked. Right now lower rates to borrow will not influence a whole lot of demand. I wish they had saved the bullets for when the enemy can be hit.

yes, there's only so much the Federal Reserve can do when interest rates are at 0%

 

[MULTIZ321]

Cash is King in The Time Of Coronavirus.

Cash Is King In The Time Of Coronavirus

Investors are rushing into money market funds and corporations have tapped their credit lines.

www.forbes.com

.


Richard

 

[Brett]

DOW soars past 30,000 - stocks are in record high territory

https://www.foxbusiness.com/markets/us-stocks-nov-24-2020

 

[PigsDad]

From a post on March 14, 2020:

Bounce back to new highs? Not for years.

Well, I for one am glad your prediction did not come to fruition.

I'm also glad I have been fully invested in the market.

This all just strengthens my belief that no one can really predict what the markets are going to do in the short or even medium term.

Kurt

 

[bbodb1]

From a post on March 14, 2020:

Well, I for one am glad your prediction did not come to fruition.

I'm also glad I have been fully invested in the market.

This all just strengthens my belief that no one can really predict what the markets are going to do in the short or even medium term.

Kurt

 

[jabberwocky]

This all just strengthens my belief that no one can really predict what the markets are going to do in the short or even medium term.

I predict they will go up and down. If you don't need the money from your investments in the near term and can sleep at night knowing you should be fine. Unless you are a pro, worrying about daily prices is a fool's game and will generally lead to overreactions.

As the saying goes, "Bulls make money, bears make money, pigs get slaughtered."

Sorry - just couldn't resist that one.

 

[VacationForever]

Our investments are professionally managed and we were watching what the company was doing with our investments during the Mar downturn period and we could see them shifting out of fixed income and into equities the whole time. Maybe they really knew what they were doing because they were the pros or maybe they got lucky but we never second guessed their actions.

 

[davidvel]

Our investments are professionally managed and we were watching what the company was doing with our investments during the Mar downturn period and we could see them shifting out of fixed income and into equities the whole time. Maybe they really knew what they were doing because they were the pros or maybe they got lucky but we never second guessed their actions.

It's no secret that when the market is down, and especially when it crashes big like in March, you pour money in if you want to make a lot of dough. Those that put all they had in at DOW 18,000-19,000 are feeling pretty good right now.

 

[Brett]

Our investments are professionally managed and we were watching what the company was doing with our investments during the Mar downturn period and we could see them shifting out of fixed income and into equities the whole time. Maybe they really knew what they were doing because they were the pros or maybe they got lucky but we never second guessed their actions.

maybe - but most "experts" have said a buy-and-hold strategy and not trying to time the market is best for investors

https://www.wsj.com/articles/dow-30000-covid-economy-market-buy-and-hold-11606238819

 

[davidvel]

maybe - but most "experts" have said a buy-and-hold strategy and not trying to time the market is best for investors

https://www.wsj.com/articles/dow-30000-covid-economy-market-buy-and-hold-11606238819

In general, that's true for the casual investor, but 11,000 point "dips" in the Dow have to be exploited. If it happens and you say "Nope, don't want to time the market, I'll just keep dollar cost averaging," you are a foolish investor.

 

[jabberwocky]

Even buy-and-hold investors should periodically rebalance. Just choose one or two random dates per year well in advance (For our retirement accounts that I don't manage, I use a random date +/- 10 days from both my birthday and my wife's which are around 6 months apart). This way you sell-high and buy-low without having to worry about timing the market.

 

[davidvel]

Even buy-and-hold investors should periodically rebalance. Just choose one or two random dates per year well in advance (For our retirement accounts that I don't manage, I use a random date +/- 10 days from both my birthday and my wife's which are around 6 months apart) [and do what?]. This way you sell-high and buy-low without having to worry about timing the market.

I'm lost. What do you do every 6 months to ensure you sell high and buy low? (The correct answer will make you a billionaire.)

 

[jabberwocky]

I'm lost. What do you do every 6 months to ensure you sell high and buy low? (The correct answer will make you a billionaire.)

A simple rebalance. My target in our retirement funds is 80% equities (split between three different ETFs) and 15% fixed income and 5% real estate (all ETFs). If the equity portion would rise, a portion would be sold and invested in areas that have not done as well. It essentially forces you to sell when things have gone up, and buy when they've gone down. You're not trying to time the market and get out at the peak or buy-in at the very bottom (and no - it won't make you a billionaire), but it does ensure things don't get out of wack.

 

[Brett]

In general, that's true for the casual investor, but 11,000 point "dips" in the Dow have to be exploited. If it happens and you say "Nope, don't want to time the market, I'll just keep dollar cost averaging," you are a foolish investor.

The Dow dropping 11,000 points is a serious drop!
But like the article indicates, the investor that doesn't try to time the market almost always does better

 

[Brett]

A simple rebalance. My target in our retirement funds is 80% equities (split between three different ETFs) and 15% fixed income and 5% real estate (all ETFs). If the equity portion would rise, a portion would be sold and invested in areas that have not done as well. It essentially forces you to sell when things have gone up, and buy when they've gone down. You're not trying to time the market and get out at the peak or buy-in at the very bottom (and no - it won't make you a billionaire), but it does ensure things don't get out of wack.

sounds like a good plan for tax deferred accounts (401k, IRA's etc) - along with age related adjustments
taxable accounts require a similar re-balancing

 

[geekette]

In general, that's true for the casual investor, but 11,000 point "dips" in the Dow have to be exploited. If it happens and you say "Nope, don't want to time the market, I'll just keep dollar cost averaging," you are a foolish investor.

It is foolish to assume that dollar cost averaging doesn't catch bottoms and that dca investors have the money available at drop time.

Just because you feel that something has to be exploited does not make it foolish not to. Dow is 30 stocks. Hardly a bellweather for me.

 

[geekette]

Even buy-and-hold investors should periodically rebalance. Just choose one or two random dates per year well in advance (For our retirement accounts that I don't manage, I use a random date +/- 10 days from both my birthday and my wife's which are around 6 months apart). This way you sell-high and buy-low without having to worry about timing the market.

I'm a no on this. Rebalancing is a concept born from brokers to benefit brokers. No way I am selling my winners twice a year. Definitely not a "should" for my portfolios, but others are free to churn theirs at will.

 

[TravelTime]

It is foolish to assume that dollar cost averaging doesn't catch bottoms and that dca investors have the money available at drop time.

Just because you feel that something has to be exploited does not make it foolish not to. Dow is 30 stocks. Hardly a bellweather for me.

Totally agree with you!