When and how would you get back to the stock market

[moneytaichi]

In anticipating a major down market, I re-allocated our investment portfolio at Feb. 1 and reduced our stocks and increased money market, cash and bonds. Most of them are in tax-deferred accounts so no tax implication. Now the market has tanked quit a bit, and I am thinking about when and how to get back to the stock market.

Since nobody knows if stocks will fall or rise for the next phase, I am thinking about to buy Vanguard Total Stock Market ETF (VTI) using a phased approach. For example, I'd divide the money into 10 pieces and buy stocks when they are at certain prices. That way, I'd distribute risks over time. The worst scenario would be that I sit with a pile of cash etc. while stocks rise up sharply. I already decided it's OK since it doesn't impact our finance, and stocks will eventually fall at some point.

If you were me, when and how would you get back to the stock market? Thanks so much for your inputs!

[bwall]

Today (Thursday) was a horrible day in the market. I'd wait and see how tomorrow (Friday) is. At this point, I'd expect another down day, but perhaps there's a sucker's rally tomorrow. Time will tell.

I think the DOW will drop below 20k. Then it will drop below the level of Trump's inauguration, then below the level of where it was on election day. There will be a melt-down, lots of ink spilled, but the only way to fix the market is to implement a plan. Once we have a plan in place (or a vaccine), then you can begin buying. How soon a plan will be put in place is directly correlated with one's confidence in this administration.

[Bernard]

moneytaichi,

you've been trying to time the market, and you were right. You can do the same in Las Vegas, put your money on red or black, and you can be right or wrong. Not much difference. Now you are trying to time the market again, and you may get lucky, or not. I never got out of the market, even though I -- and pretty much everybody else on this planet -- knew that the market would go through another correction eventually. We just didn't know when, and neither did you.

I have no idea how low the market will go or when it will go up again. I have bought VTI (the ETF equivalent of VTSAX) once about every 10 days so far, everytime there was a bad day. Yes, I bought some today as well. Will the market continue to go down again tomorrow or up? If you know, kindly let me know, so that I can make some money here . . .

[Radagast]

In the face of uncertainty (which it always is), the best method I know is "value averaging." It is pretty simple: figure out how many weeks you think it will take to get to the bottom, perhaps with a little play. Divide the money you need to invest by that many weeks. Now, buy stocks enough to make it go up by that much every week.

For example, you have $100k and think the market will bottom within 10 weeks. Every week you will buy enough shares that your value rises $10k higher. Buy $10k tomorrow. Next Friday let's say it is 20% lower, so your first investment is down to $8k. You need to buy $12k to get to your target. Keep going like that and you will almost always get a lower cost basis than you would have by dollar cost averaging.

Otherwise, take your 27% relative gain and get back in ASAP.

[moneytaichi]

There will be a melt-down, lots of ink spilled, but the only way to fix the market is to implement a plan. Once we have a plan in place (or a vaccine), then you can begin buying. How soon a plan will be put in place is directly correlated with one's confidence in this administration.

I agree with you that the only way to stop a melt-down is to have a solid plan. And I have little confidence in US administration's ability to handle the mess. We are in serious denial. I also don't trust China has it under control as it claims since other countries have much higher spreading and death rates. So many unknowns... At of now, accumulated # for people with Corona Virus is around 54K, a sharp rise since 2/20 (3 weeks ago!)

[frugalnacho]

I would go all in immediately. I just threw $10k in. I can't put much more in because it's all already invested.  You got lucky once, and I would take your 20% gain by moving all in now and riding it out.  Maybe you'll get lucky again trying to time it, but I wouldn't push my luck.

[markbike528CBX]

I'm already back, never left.