[2020] A little stock market sense

[CO skier]

Yikes, I guess I can consider myself fortunate. My wife (75 YO) is in a Memory Care facility at $257 a day. A lot less than 11K a month.

Yikes! $257 a day is A LOT -- $8,250/month, not exactly on a relative basis, "A lot less than $11k a month."

 

[CO skier]

Dow Jones hits an all-time high as investors cheer progress on inflation​

https://www.washingtonpost.com/business/2023/12/13/dow-jones-stock-market-record-high-economy-interest-rates/

I hope everyone hasn't had a bunch of money sitting on the side waiting for the big drop!

Kurt

I have made a killing in the stock market (up and down) over the past 20 years. It is time to lock-in those profits, and buy hi-yield corporate bonds to hold until maturity. Day-to-day fluctations, in the stock or bond markets, do not matter that way; and leave a pile of money for my heirs.

 

[CO skier]

Dow Jones hits an all-time high as investors cheer progress on inflation​

https://www.washingtonpost.com/business/2023/12/13/dow-jones-stock-market-record-high-economy-interest-rates/

I hope everyone hasn't had a bunch of money sitting on the side waiting for the big drop!

Kurt

... and let us not forget the Dow Jones closed at an all-time high on October 9, 2007 before plunging 54% to a close of 6469.95 on March 6, 2009. Not to say a repeat is in the tea leaves, but s..t happens in the stock market. I, for one, do not intend to get splattered in my retirement years.

 

[VacationForever]

We are in the buy and hold camp. Since we mainly live off dividends in taxable account and RMD, ups and downs are just paper gains and losses. It sure feels good when we look at our accounts in the bull market. When it goes down, I don't even log in to check.

 

[CalGalTraveler]

In addition to from taking some winnings off of the table, I am considering trailing stop losses for the remaining stock portions of our portfolio so we lock in a base amount of gain should the market plunge again. I view this as insurance for these recent gains and an alternative to cashing out into bonds. Trailing stop-losses offer the potential of market upside without the downside stock market risk.

What do you consider a reasonable percentage drop or trigger percentage for cash out to set for a stop-loss for an S&P 500 or Total Stock Market Index ETF? Has anyone analyzed the volatility of these indices to determine an optimal percentage?

Another option is to ladder our stop-losses at different price percentages but still need to set good trigger prices. Not all retirement plans will allow trailing stop-losses to be set but will do so in plans like Schwab where we can apply them.

 

[jorcus]

In addition to from taking some winnings off of the table, I am considering trailing stop losses for the remaining stock portions of our portfolio so we lock in a base amount of gain should the market plunge again. I view this as insurance for these recent gains and an alternative to cashing out into bonds. Trailing stop-losses offer the potential of market upside without the downside stock market risk.

What do you consider a reasonable percentage drop or trigger percentage for cash out to set for a stop-loss for an S&P 500 or Total Stock Market Index ETF? Has anyone analyzed the volatility of these indices to determine an optimal percentage?

Another option is to ladder our stop-losses at different price percentages but still need to set good trigger prices. Not all retirement plans will allow trailing stop-losses to be set but will do so in plans like Schwab where we can apply them.

I tend to view stop losses as a way to protect money you need in the short term. I assume by your post the money you are protecting is within a tax deferred account. If that is the case at least there is not an immediate tax consequence to an unexpected sell off of assets. I encourage consideration tax burden on any asset move as I have spoken to a number of family or friends who have gotten tax shocks by moving a pile of money to investment advisors or cashing out Ira / 401ks all at once.

Another thing to consider is that a market collapses in 2 ways, suddenly or overtime. The two most recent examples were onset of covid and post covid interest rate normalization. During the onset of covid March 2020 there was sudden market drop but there was a sharp rebound. It only took a few weeks to recover and the market went way up after that. If you sold all your positions at that time due to stop losses it would not have been a good thing.

Then in Jan 2022 as interest rates started to climb we went though a more orderly decline but we are just getting back to the highs now. So having stop losses in this scenario may have been helpful.

To sum it up I would suggest making a normal budget, make a disaster budget (unexpected health care costs etc.). Now determining what you need plan accordingly for the next segments of your life. If you need to portion out some accounts to meet those needs for the next 3 or 4 years and feel comfortable having the protection of stop losses it's certainly an option. I would avoid doing this to your whole portfolio so it is not an all or nothing scenario.

 

[CalGalTraveler]

I tend to view stop losses as a way to protect money you need in the short term. I assume by your post the money you are protecting is within a tax deferred account. If that is the case at least there is not an immediate tax consequence to an unexpected sell off of assets. I encourage consideration tax burden on any asset move as I have spoken to a number of family or friends who have gotten tax shocks by moving a pile of money to investment advisors or cashing out Ira / 401ks all at once.

Another thing to consider is that a market collapses in 2 ways, suddenly or overtime. The two most recent examples were onset of covid and post covid interest rate normalization. During the onset of covid March 2020 there was sudden market drop but there was a sharp rebound. It only took a few weeks to recover and the market went way up after that. If you sold all your positions at that time due to stop losses it would not have been a good thing.

Then in Jan 2022 as interest rates started to climb we went though a more orderly decline but we are just getting back to the highs now. So having stop losses in this scenario may have been helpful.

To sum it up I would suggest making a normal budget, make a disaster budget (unexpected health care costs etc.). Now determining what you need plan accordingly for the next segments of your life. If you need to portion out some accounts to meet those needs for the next 3 or 4 years and feel comfortable having the protection of stop losses it's certainly an option. I would avoid doing this to your whole portfolio so it is not an all or nothing scenario.

Yes, these are retirement account so no tax consequences.

Good point about Covid sharp drop and then rebound. Covid is a once in a century event IMHO.

Good thought on budgeting and setting stop losses to protect only what is needed for next 3 - 5 years.. We have about 45% of portfolio in fixed bond, CD and money market investments so we could live on those if the market dropped.

I find that one of the challenges with investing is not to let the pursuit of perfection be the enemy of good enough.

 

[artringwald]

I have 5 broad based mutual funds in a retirement account, with equal amounts in each fund. If one goes up by 5% or more, I sell enough to get it back to the starting point. If it goes down by 5% or more, I buy enough to get it back to the starting point. It's called couch potato investing. It's only useful for money you won't need in the short term.

For money I might need sooner, I put it all in a money market fund. Of course, right now they're paying around 5%.

I also put a small amount of money into a brokerage account for my impulsive purchases of individual stocks. Sometimes I make good decisions, and sometimes I don't, but I don't want to risk much.

 

[MULTIZ321]

Bonds are back, and higher rates are the 'single best development' for investors in the last 20
years, Vanguard says

Bonds are back, and higher rates are the 'single best development' for investors in the last 20 years, Vanguard says

Higher interest payments offset declines in bond prices, and Vanguard says investors should remember "short-term pain can lead to long-term gain."

markets.businessinsider.com

Richard

 

[CO skier]

Another "S&P 500 Dividend Aristocrat" (companies that have raised their dividend for at least 25 consecutive years) bites the dust.

Walgreeens (WBA) raised its dividend for 47 consecutive years. It recently slashed its dividend by almost half. It is a member of the Dow 30 Industrials Average, but probably not for much longer.

Walgreens delivered negative total returns over the past 1-, 3-, 5- and 10-year periods.

 

[Brett]

Dow, S&P 500 hit record highs as tech stocks soar​

https://finance.yahoo.com/news/stoc...cord-highs-as-tech-stocks-soar-192209321.html

 

[Tia]

I made the decision when I retired. My answer was zero. Foregoing appreciation was immaterial. Avoiding the mental anguish from market gyrations was paramount. I am still happy with my decision...

I miss this posters posts, my computer took me back to the first posts when I clicked to read this morning

 

[Brett]

401(k) millionaire ranks grew 11.5% in 2023. They are ‘poster children for staying the course​

https://www.cnbc.com/2024/02/27/401...rage-balances-rose-in-2023-fidelity-says.html

 

[jorcus]

401(k) millionaire ranks grew 11.5% in 2023. They are ‘poster children for staying the course​

https://www.cnbc.com/2024/02/27/401...rage-balances-rose-in-2023-fidelity-says.html

As far as I can tell when they make this statement it is for 401k's that actually have a million dollars in them. Many people have more than one 401k or 401k plus IRA's that may add up to 1 million. Of course they grew a lot in 2023 because of the big market rally.

 

[letsgobobby]

"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.

this didn't age well. neither did the OP or lots of the replies which followed.

buy and hold forever. 75% stocks. low cost index funds. has worked well for us, I've been investing since the 80s . If you can time the market and see the fiture good for you. 99.9% of people can't do that and no one needs to do that.

After 27 pages of predictions almost everyone reading this thread would have been better off on March 11 just holding on. S&P500 has basically doubled since then, 100% gain. Great four years.

 

[rapmarks]

this didn't age well. neither did the OP or lots of the replies which followed.

buy and hold forever. 75% stocks. low cost index funds. has worked well for us, I've been investing since the 80s . If you can time the market and see the fiture good for you. 99.9% of people can't do that and no one needs to do that.

After 27 pages of predictions almost everyone reading this thread would have been better off on March 11 just holding on. S&P500 has basically doubled since then, 100% gain. Great four years.

When I opened this thread, it went to the first page. I said what? Why is he selling? Then I saw the date.
I am in the buy and hold camp also.
in June, I will have been retired 25 years. I did not get rid of equities when I retired. My account is now worth 13 times what it was when I retired. I have made changes, but I still Have big holdings in equities. I don’t need income, so I invest for growth.

 

[PigsDad]

When I opened this thread, it went to the first page. I said what? Why is he selling? Then I saw the date.
I am in the buy and hold camp also.
in June, I will have been retired 25 years. I did not get rid of equities when I retired. My account is now worth 13 times what it was when I retired. I have made changes, but I still Have big holdings in equities. I don’t need income, so I invest for growth.

Fantastic job! Congratulations!!

Kurt

 

[CO skier]

After 27 pages of predictions almost everyone reading this thread would have been better off on March 11 just holding on. S&P500 has basically doubled since then, 100% gain. Great four years.

Hindsight is 20/20. Anyone can do that.

 

[letsgobobby]

Hindsight is 20/20. Anyone can do that.

trying to predict the future is a fool's errand, There are hundreds of studies showing the wisdom of passive investing, modern portfolio theory/diversification, the efficient market hypothesis, and low cost index funds. 20/20 hindsight is not necessary.

 

[easyrider]

Hindsight is 20/20. Anyone can do that.

Many large investment groups, politicians and billionaires have been dumping in the past couple of weeks. It's because they know, imo.

Bill

 

[MULTIZ321]

6 Dividend Kings To Buy Now For Secure Dividend Growth

6 Dividend Kings To Buy Now For Secure Dividend Growth

Investors love dividend stocks, especially the ultra-yield variety because they provide a significant income stream and give investors a great opportunity for massive total returns. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words...

247wallst.com

Richard

 

[Tia]

Hindsight is 20/20. Anyone can do that.

Yep I'm wishing I'd kept my Exxon XOM stock , didn't have that much but bought at $34 now over $100. Dang

 

[MULTIZ321]

Billionaires' best-kept secret: The stock that's doubling every year

Billionaires' best-kept secret: The stock that's doubling every year

Explore the stock that has been doubling every year and discover the innovative solutions and cutting-edge technology behind its success.

finbold.com

Richard

 

[easyrider]

Things are lining up for a possible crash tomorrow. It might be that the expectation of tomorrows bad pce inflation report is why. It probably looks like consumers are tapped out.

Bill

 

[PigsDad]

Things are lining up for a possible crash tomorrow. It might be that the expectation of tomorrows bad pce inflation report is why. It probably looks like consumers are tapped out.

Bill

I guess not (at least not today).

Kurt