Is this bigger than a "don't try and time the market" event?

[LennStar]

btw. since the 2022 abortion bans, infant death in the US have risen by 7%, I read. Pro Life Win!

[MustacheAndaHalf]

btw. since the 2022 abortion bans, infant death in the US have risen by 7%, I read. Pro Life Win!

Found articles agreeing with that 7% figure.  More detail:

"About 80% of those additional infant deaths could be attributed to congenital anomalies, which were higher than expected in six of the 18 months following the Dobbs decision, according to the new research"
https://edition.cnn.com/2024/10/21/health/infant-deaths-increase-post-dobbs-abortion-bans/index.html

[tooqk4u22]

Everyone keeps saying 4 years.....in 2 years the Trumpicans will lose the house and that will balance things out a bit.  Then 2 years later if it is still toxic, the presidency and senate will turnover to the Dumbacrats and they will over reach and go to far on their agenda...then 2 years after that the house will turnover to the Republicrumbs (hopefully no more Trumpicans) and the cycle will go on.

Divided government has been and will be our only hope.

[PeteD01]

btw. since the 2022 abortion bans, infant death in the US have risen by 7%, I read. Pro Life Win!

Found articles agreeing with that 7% figure.  More detail:

"About 80% of those additional infant deaths could be attributed to congenital anomalies, which were higher than expected in six of the 18 months following the Dobbs decision, according to the new research"
https://edition.cnn.com/2024/10/21/health/infant-deaths-increase-post-dobbs-abortion-bans/index.html

Hundreds of nonviable fetuses carried to term to die.

Pretty much every case must have been a tragedy for the pregnant person and family.

But cruelty is the point, I guess.

[FireLane]

btw. since the 2022 abortion bans, infant death in the US have risen by 7%, I read. Pro Life Win!

Found articles agreeing with that 7% figure.  More detail:

"About 80% of those additional infant deaths could be attributed to congenital anomalies, which were higher than expected in six of the 18 months following the Dobbs decision, according to the new research"
https://edition.cnn.com/2024/10/21/health/infant-deaths-increase-post-dobbs-abortion-bans/index.html

Hundreds of nonviable fetuses carried to term to die.

Pretty much every case must have been a tragedy for the pregnant person and family.

But cruelty is the point, I guess.

Don't worry, conservative politicians are swinging into action to deal with this problem. They're going to stop collecting data about deaths in pregnancy.

[theninthwall]

About the only thing the US consistently worships is the almighty dollar. I don't think even Trump will mess with the fortunes of the country's richest people. And their fortunes in the market are tied to yours.
About the only thing I worry about is something really left field, like Trump declaring some kind of cryptocurrency will supersede USD. And of course, he and his buddies would have the very currencies he orders the government to start using already in pocket.

[ChpBstrd]

About the only thing the US consistently worships is the almighty dollar. I don't think even Trump will mess with the fortunes of the country's richest people. And their fortunes in the market are tied to yours.

Does this reasoning apply to other post-democratic regimes, such as Russia? In the Russian example, a party of oligarchs seized power and living standards have gone straight down.

[Fru-Gal]

About the only thing the US consistently worships is the almighty dollar. I don't think even Trump will mess with the fortunes of the country's richest people. And their fortunes in the market are tied to yours.
About the only thing I worry about is something really left field, like Trump declaring some kind of cryptocurrency will supersede USD. And of course, he and his buddies would have the very currencies he orders the government to start using already in pocket.

He's already working on the "Strategic Bitcoin Reserve".

[Poundwise]

About the only thing the US consistently worships is the almighty dollar. I don't think even Trump will mess with the fortunes of the country's richest people. And their fortunes in the market are tied to yours.
About the only thing I worry about is something really left field, like Trump declaring some kind of cryptocurrency will supersede USD. And of course, he and his buddies would have the very currencies he orders the government to start using already in pocket.

Yes, I've been worried about this too. 

[aasdfadsf]

This craziness feels different than previous world events.  When SHOULD one pull out of the stock market? It feels like things could blow up really fast...
How confident are people here feeling about riding this wave specifically in terms of the stock market not crashing?

Nym checks out.

I'm increasingly worried about this too. Those who choose to stay the course aren't being crazy, it's probably the better strategy if you can't predict what President Lunatic is going to do, but I've been more conservative with my investment choices as a hedge, and the annoying thing is that I don't know what a safe haven is anymore. I've been putting new surplus money into money market funds as a defensive maneuver, but if that guy decides that he will default on US debt, which he has specifically said he might do, then that's not safe either. I'm increasingly of the opinion that shit will hit the fan at some point, it's just not clear what shit and what fan or how soon.   

[Fru-Gal]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

[aasdfadsf]

Thanks Fru-Gal. I have already rebalanced my portfolios in anticipation of something bad, but like I say, I don't know what the defensive maneuver really is, because if President Numbnuts won't honor the debt of the US, then all bets are off. It will be a bloodbath. There will be no investments that won't get clobbered.

Gold is an interesting hedge and I have spent my whole life dismissing it, but maybe now is the time to rethink that.

As for slashing my spending, hey, I do that already, I'm a mustachian!

I also understand that I'm a lucky person who is very privileged and won't be the one who really suffers if things go south. But I'd like to avoid that.

[jrhampt]

Ah good, this thread has talked me down a bit.  I was trying to figure out what alternative there was to the stock market if I wanted to put a large portion of it somewhere else and had concluded that there really isn't one.  That said, I do plan to focus on building some cash reserves this year to cover more than the 6 months of expenses that I would normally keep liquid.  I'm considering 3 years' worth but haven't settled on a total amount yet.

[HPstache]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

[sixwings]

Ah good, this thread has talked me down a bit.  I was trying to figure out what alternative there was to the stock market if I wanted to put a large portion of it somewhere else and had concluded that there really isn't one.  That said, I do plan to focus on building some cash reserves this year to cover more than the 6 months of expenses that I would normally keep liquid.  I'm considering 3 years' worth but haven't settled on a total amount yet.

Yes that's what I'm doing, I'm not buying more equities right now and focused on building cash and maybe some gold and taking a wait and see approach.

[bacchi]

Thanks Fru-Gal. I have already rebalanced my portfolios in anticipation of something bad, but like I say, I don't know what the defensive maneuver really is, because if President Numbnuts won't honor the debt of the US, then all bets are off. It will be a bloodbath. There will be no investments that won't get clobbered.

If he follows through with his "some of the Treasuries are fraudulent" line, even the spineless GOP Congresslings will revolt when the market takes a >25% dump in one day.

I think he misspoke but we are hurtling to the debt ceiling.

[bacchi]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

It's not. When the shit hits the fan, investors shouldn't panic. If they do, they have too much risk.

This would be the same as a 1987 crash. If a 22% one day crash keeps you up at night, then you have too much risk.

[Fru-Gal]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

Rebalancing is not a fancy way of saying “SELL SELL SELL,” as the the posters below my comment pointed out. Nor is it a fancy way of saying “time the market.” It means check your AA and rebalance at your desired interval.

[HPstache]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

It's not. When the shit hits the fan, investors shouldn't panic. If they do, they have too much risk.

This would be the same as a 1987 crash. If a 22% one day crash keeps you up at night, then you have too much risk.

I agree with that.  But if you are rebalancing due to hunches about the market, which is what this thread seems to be about, it just sounds like justifying an attempt to time the market.

[Omy]

Watching the series finale of the US in real time has fundamentally changed the amount of risk I can stomach. I'm doing what I need to do to sleep at night. I've been a "buy and hold" investor for 40 years. This feels very different and I'm adjusting my AA accordingly.

[Tasse]

Just to provide a counterbalance to the thread, I'm still putting over $3000 per month straight into stocks. I mentioned upthread that I pulled some cash out, but that was in December and based on our 2024 tax status. I have made zero changes to our plan since Trump took office.

I'm still in the market just in case things turn out okay. I'm getting involved (volunteering, protesting) in case they don't.

[bacchi]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

It's not. When the shit hits the fan, investors shouldn't panic. If they do, they have too much risk.

This would be the same as a 1987 crash. If a 22% one day crash keeps you up at night, then you have too much risk.

I agree with that.  But if you are rebalancing due to hunches about the market, which is what this thread seems to be about, it just sounds like justifying an attempt to time the market.

Agreed but it's hard to know your limit until it's tested.

A plan to sell when it looks troubling and then buy when the coast is clear is timing the market. A friend tried to do that with covid and missed out on years of gains.


What's more interesting is creating a plan about when to move money if the shit truly hits the fan. If Trump starts ignoring court orders and stacks the fed with TV hosts and uses government powers to take over businesses, then what do you do, if anything?

[HPstache]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

It's not. When the shit hits the fan, investors shouldn't panic. If they do, they have too much risk.

This would be the same as a 1987 crash. If a 22% one day crash keeps you up at night, then you have too much risk.

I agree with that.  But if you are rebalancing due to hunches about the market, which is what this thread seems to be about, it just sounds like justifying an attempt to time the market.

Agreed but it's hard to know your limit until it's tested.

A plan to sell when it looks troubling and then buy when the coast is clear is timing the market. A friend tried to do that with covid and missed out on years of gains.


What's more interesting is creating a plan about when to move money if the shit truly hits the fan. If Trump starts ignoring court orders and stacks the fed with TV hosts and uses government powers to take over businesses, then what do you do, if anything?

I think covid is the perfect example.  When people moved to safer investments when it became obvious that covid was going to be a big deal, did their risk tolerances change?  Or did they just suddenly become aware of a big risk and want to make a change in response?  Risk tolerance and presence of risk are not the same thing, and this case being discussed feels similar to me.  Many are suddenly aware that there is a big risk in the white house, and they want to suddenly change their "risk tolerance" to accommodate that.  I don't think that's what their doing... in reality they are just trying to time the market and trying to justify it.

[GuitarStv]

When Hitler came to power in 1933, Germany experienced nine more years of pretty fantastic growth.

[HPstache]

I just remembered that our friend junioroldtimer took his shot at VTSAX $68.18 on a similar premise:

https://forum.mrmoneymustache.com/investor-alley/welp-i'm-going-to-take-a-stab-at-timing-the-market/

[Scandium]

No. Like Elon Musk I don't plan to pull out

[ChpBstrd]

Ah good, this thread has talked me down a bit.  I was trying to figure out what alternative there was to the stock market if I wanted to put a large portion of it somewhere else and had concluded that there really isn't one.  That said, I do plan to focus on building some cash reserves this year to cover more than the 6 months of expenses that I would normally keep liquid.  I'm considering 3 years' worth but haven't settled on a total amount yet.

There is an alternative to taking the stock market's full risk, that also involves staying invested in the stock market:
https://forum.mrmoneymustache.com/investor-alley/how-my-collars-did-on-a-2-9-day-hedged-portfolio-illustration/

[dragoncar]

Ah good, this thread has talked me down a bit.  I was trying to figure out what alternative there was to the stock market if I wanted to put a large portion of it somewhere else and had concluded that there really isn't one.  That said, I do plan to focus on building some cash reserves this year to cover more than the 6 months of expenses that I would normally keep liquid.  I'm considering 3 years' worth but haven't settled on a total amount yet.

There is an alternative to taking the stock market's full risk, that also involves staying invested in the stock market:
https://forum.mrmoneymustache.com/investor-alley/how-my-collars-did-on-a-2-9-day-hedged-portfolio-illustration/

Thanks, I’ve been looking for something like this but my options experience is almost nonexistent.  I’d definitely like to give up some gains to avoid massive loss.  Still worried about counterparty risk in this scenario.

I had considered going to cash and then just buy calls but has tax implications

[Morning Glory]

When Hitler came to power in 1933, Germany experienced nine more years of pretty fantastic growth.

Not helpful.

One of the first things they did was make it so people who left forfeited their money. A lot of other countries at the time made it a requirement to have a bunch of cash to immigrate,  which resulted in anyone who didn't leave really early being trapped once the killing started.

Also not funny.  My kid is in one of the very first groups of people to have been killed if we'd been there at the time. I'm sure a bunch of people on the forum are also in groups who would have been murdered.

[jrhampt]

When Hitler came to power in 1933, Germany experienced nine more years of pretty fantastic growth.

Not helpful.

One of the first things they did was make it so people who left forfeited their money. A lot of other countries at the time made it a requirement to have a bunch of cash to immigrate,  which resulted in anyone who didn't leave really early being trapped once the killing started.

Also not funny.  My kid is in one of the very first groups of people to have been killed if we'd been there at the time. I'm sure a bunch of people on the forum are also in groups who would have been murdered.

That is the question...when to leave (and how to preserve the means to leave - cash) and where to go, who is willing to take you, and how far to go.  It's not great news to me that Trump is pretty popular in Canada (or at least was, before the tariffs), and that Canada has "maple MAGA". 

[Fru-Gal]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

It's not. When the shit hits the fan, investors shouldn't panic. If they do, they have too much risk.

This would be the same as a 1987 crash. If a 22% one day crash keeps you up at night, then you have too much risk.

I agree with that.  But if you are rebalancing due to hunches about the market, which is what this thread seems to be about, it just sounds like justifying an attempt to time the market.

Agreed but it's hard to know your limit until it's tested.

A plan to sell when it looks troubling and then buy when the coast is clear is timing the market. A friend tried to do that with covid and missed out on years of gains.


What's more interesting is creating a plan about when to move money if the shit truly hits the fan. If Trump starts ignoring court orders and stacks the fed with TV hosts and uses government powers to take over businesses, then what do you do, if anything?

I think covid is the perfect example.  When people moved to safer investments when it became obvious that covid was going to be a big deal, did their risk tolerances change?  Or did they just suddenly become aware of a big risk and want to make a change in response?  Risk tolerance and presence of risk are not the same thing, and this case being discussed feels similar to me.  Many are suddenly aware that there is a big risk in the white house, and they want to suddenly change their "risk tolerance" to accommodate that.  I don't think that's what their doing... in reality they are just trying to time the market and trying to justify it.

So your advice to someone already experiencing concerns because of their risk tolerance is to pretend that they aren’t feeling that way, do nothing to balance their portfolio (for example, ADDING hedges, taking some gains, buying some kind of fixed interest asset like CDs or T-bills) and then panic sell when the bottom falls out?

Because if humans didn’t get worried, then panic, we would never experience markets dropping. The entire stock market is an irrational, emotional experience and it’s foolish to pretend otherwise.

[tooqk4u22]

IF shit burns down here it won't matter if you have cash.  Markets will implode and the US dollar will destabilize as the rest of the world says F them....hello China. 

Physical gold may work to go to other countries.

[Ron Scott]

Straight white men who aren't farmers or government workers should be fine for a little while.

Women no longer have body autonomy in red states (which could be EOd out for women in blue states as well.) They're also considering going after birth control and no fault divorce so we can go back to the "great" days when women were property.

Transgender people no longer have the right to use their passport if it doesn't agree with their birth certificate and have lost their rights to related medical care before age 19.

Medicaid, Medicare, SS, and ACA are in their sights as well. When that happens the poor and middle income folks will be in trouble - even the white males.

Tariffs and deporting immigrants will increase the cost of just about everything. This will affect everybody who isn't wealthy. If the economy comes crashing down from their slash and burn tactics, it will affect all of us.

So just because your life hasn't changed for the worse in the first 3 weeks, you'd have to be pretty naive to think it won't change much in the next 4 years.

It shocks me how many people don’t see the loss of bodily autonomy as a hair-on-fire emergency.

Also it super pisses me off that so many of our noble, moral overlords (the Supreme Court) LIED in their confirmation hearings when asked if they would overturn RvW. RvW should not have been the only protection, and it won’t be.

The labels pro-choice and pro-life are marketing devices that have successfully confused some of the population and alienated others, but it seems more than 60% of Americans are in favor of permitting abortion in either all or most cases. This is not surprising. On many issues the media hypes as partisan the general population is in agreement, usually siding with common sense that considers right and wrong and leans toward protecting individual rights.

The question however is how to translate that into actions that affect law.

The current 2-party democratic system we have has proven incapable of doing this. Continuing the same behaviors and expecting different outcomes is…?

[Morning Glory]

When Hitler came to power in 1933, Germany experienced nine more years of pretty fantastic growth.

Not helpful.

One of the first things they did was make it so people who left forfeited their money. A lot of other countries at the time made it a requirement to have a bunch of cash to immigrate,  which resulted in anyone who didn't leave really early being trapped once the killing started.

Also not funny.  My kid is in one of the very first groups of people to have been killed if we'd been there at the time. I'm sure a bunch of people on the forum are also in groups who would have been murdered.

That is the question...when to leave (and how to preserve the means to leave - cash) and where to go, who is willing to take you, and how far to go.  It's not great news to me that Trump is pretty popular in Canada (or at least was, before the tariffs), and that Canada has "maple MAGA".

My brother is telling me to leave. I have dual citizenship with another country that I can claim for my kids but they don't do automatic residency permits for spouses and I have no relatives there any more. Also I keep getting articles popping up about how their education and health systems are underfunded so I might be better off staying here for now or maybe just going for a visit at first instead of disrupting the kids' educations.

I read Prophet Song by Paul Lynch last year which is about this question and it was like watching the lead character run up the stairs in a horror movie.  I don't know if it would be a good idea to read it now if you are already anxious about the situation.

[Morning Glory]

Straight white men who aren't farmers or government workers should be fine for a little while.

Women no longer have body autonomy in red states (which could be EOd out for women in blue states as well.) They're also considering going after birth control and no fault divorce so we can go back to the "great" days when women were property.

Transgender people no longer have the right to use their passport if it doesn't agree with their birth certificate and have lost their rights to related medical care before age 19.

Medicaid, Medicare, SS, and ACA are in their sights as well. When that happens the poor and middle income folks will be in trouble - even the white males.

Tariffs and deporting immigrants will increase the cost of just about everything. This will affect everybody who isn't wealthy. If the economy comes crashing down from their slash and burn tactics, it will affect all of us.

So just because your life hasn't changed for the worse in the first 3 weeks, you'd have to be pretty naive to think it won't change much in the next 4 years.

It shocks me how many people don’t see the loss of bodily autonomy as a hair-on-fire emergency.

Also it super pisses me off that so many of our noble, moral overlords (the Supreme Court) LIED in their confirmation hearings when asked if they would overturn RvW. RvW should not have been the only protection, and it won’t be.

The labels pro-choice and pro-life are marketing devices that have successfully confused some of the population and alienated others, but it seems more than 60% of Americans are in favor of permitting abortion in either all or most cases. This is not surprising. On many issues the media hypes as partisan the general population is in agreement, usually siding with common sense that considers right and wrong and leans toward protecting individual rights.

The question however is how to translate that into actions that affect law.

The current 2-party democratic system we have has proven incapable of doing this. Continuing the same behaviors and expecting different outcomes is…?

Banning gerrymandering would be a good start. A lot of state legislatures have a majority that is the opposite of their constituents because of gerrymandering.  Also ranked choice voting would get rid of the two party stranglehold by allowing people to vote for a third party without feeling like they're taking away from their preferred big 2 candidate.  I would also like to see more ballot measures where the people get to make a choice directly instead of going through their legislators.

[tooqk4u22]

When Hitler came to power in 1933, Germany experienced nine more years of pretty fantastic growth.

Not helpful.

One of the first things they did was make it so people who left forfeited their money. A lot of other countries at the time made it a requirement to have a bunch of cash to immigrate,  which resulted in anyone who didn't leave really early being trapped once the killing started.

Also not funny.  My kid is in one of the very first groups of people to have been killed if we'd been there at the time. I'm sure a bunch of people on the forum are also in groups who would have been murdered.

That is the question...when to leave (and how to preserve the means to leave - cash) and where to go, who is willing to take you, and how far to go.  It's not great news to me that Trump is pretty popular in Canada (or at least was, before the tariffs), and that Canada has "maple MAGA".

My brother is telling me to leave. I have dual citizenship with another country that I can claim for my kids but they don't do automatic residency permits for spouses and I have no relatives there any more. Also I keep getting articles popping up about how their education and health systems are underfunded so I might be better off staying here for now or maybe just going for a visit at first instead of disrupting the kids' educations.

I read Prophet Song by Paul Lynch last year which is about this question and it was like watching the lead character run up the stairs in a horror movie.  I don't know if it would be a good idea to read it now if you are already anxious about the situation.

Aside from American innovation the two main things that have provided us relatively safe physical and economical experience is two vast oceans and relative friendlies to the north and south (maybe not for long) and the US dollar being the global reserve currency (maybe not for long).

[ChpBstrd]

Ah good, this thread has talked me down a bit.  I was trying to figure out what alternative there was to the stock market if I wanted to put a large portion of it somewhere else and had concluded that there really isn't one.  That said, I do plan to focus on building some cash reserves this year to cover more than the 6 months of expenses that I would normally keep liquid.  I'm considering 3 years' worth but haven't settled on a total amount yet.

There is an alternative to taking the stock market's full risk, that also involves staying invested in the stock market:
https://forum.mrmoneymustache.com/investor-alley/how-my-collars-did-on-a-2-9-day-hedged-portfolio-illustration/

Thanks, I’ve been looking for something like this but my options experience is almost nonexistent.  I’d definitely like to give up some gains to avoid massive loss.  Still worried about counterparty risk in this scenario.

I had considered going to cash and then just buy calls but has tax implications

The education requirements are real, and there are no shortcuts. Reading and paper-trading are a must before setting up a hedged AA. Yet this learning is a good redirection for anxiety, because if you learn these tools you can set yourself up to thrive despite a 2000-2003 or 2007-2009 level event, to hold a bolder portfolio despite the risky macro factors, or to at least avoid selling into what seems like a worsening situation.

Some resources:
https://www.optionseducation.org/theoptionseducationcenter/occ-learning
https://optionalpha.com/courses
https://optionalpha.com/options-strategies

[Morning Glory]

When Hitler came to power in 1933, Germany experienced nine more years of pretty fantastic growth.

Not helpful.

One of the first things they did was make it so people who left forfeited their money. A lot of other countries at the time made it a requirement to have a bunch of cash to immigrate,  which resulted in anyone who didn't leave really early being trapped once the killing started.

Also not funny.  My kid is in one of the very first groups of people to have been killed if we'd been there at the time. I'm sure a bunch of people on the forum are also in groups who would have been murdered.

That is the question...when to leave (and how to preserve the means to leave - cash) and where to go, who is willing to take you, and how far to go.  It's not great news to me that Trump is pretty popular in Canada (or at least was, before the tariffs), and that Canada has "maple MAGA".

My brother is telling me to leave. I have dual citizenship with another country that I can claim for my kids but they don't do automatic residency permits for spouses and I have no relatives there any more. Also I keep getting articles popping up about how their education and health systems are underfunded so I might be better off staying here for now or maybe just going for a visit at first instead of disrupting the kids' educations.

I read Prophet Song by Paul Lynch last year which is about this question and it was like watching the lead character run up the stairs in a horror movie.  I don't know if it would be a good idea to read it now if you are already anxious about the situation.

Aside from American innovation the two main things that have provided us relatively safe physical and economical experience is two vast oceans and relative friendlies to the north and south (maybe not for long) and the US dollar being the global reserve currency (maybe not for long).

We've also been safe from dying  of some preventable disease because we've had clean water and public health measures like malaria control and mass vaccination.  I just popped over to look at the news and saw that Kennedy is confirmed which is a giant red flag for me.

It also worries me that health insurance companies can just decide not to cover things or delay care for conditions where timely treatment can mean whether the patient lives or dies. I know this isn't new but I just can't see the current administration doing anything about it.

[HPstache]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

It's not. When the shit hits the fan, investors shouldn't panic. If they do, they have too much risk.

This would be the same as a 1987 crash. If a 22% one day crash keeps you up at night, then you have too much risk.

I agree with that.  But if you are rebalancing due to hunches about the market, which is what this thread seems to be about, it just sounds like justifying an attempt to time the market.

Agreed but it's hard to know your limit until it's tested.

A plan to sell when it looks troubling and then buy when the coast is clear is timing the market. A friend tried to do that with covid and missed out on years of gains.


What's more interesting is creating a plan about when to move money if the shit truly hits the fan. If Trump starts ignoring court orders and stacks the fed with TV hosts and uses government powers to take over businesses, then what do you do, if anything?

I think covid is the perfect example.  When people moved to safer investments when it became obvious that covid was going to be a big deal, did their risk tolerances change?  Or did they just suddenly become aware of a big risk and want to make a change in response?  Risk tolerance and presence of risk are not the same thing, and this case being discussed feels similar to me.  Many are suddenly aware that there is a big risk in the white house, and they want to suddenly change their "risk tolerance" to accommodate that.  I don't think that's what their doing... in reality they are just trying to time the market and trying to justify it.

So your advice to someone already experiencing concerns because of their risk tolerance is to pretend that they aren’t feeling that way, do nothing to balance their portfolio (for example, ADDING hedges, taking some gains, buying some kind of fixed interest asset like CDs or T-bills) and then panic sell when the bottom falls out?

Because if humans didn’t get worried, then panic, we would never experience markets dropping. The entire stock market is an irrational, emotional experience and it’s foolish to pretend otherwise.

Yes, actually...  this is my advice and it's the mustachian way.  Don't let fears or politics change your ways.  Markets will go up and down, but if you're in it for the long haul there is no reason to try to time the market by doing all the things you mentioned.

[Tyson]

When you feel this way, you should rebalance your portfolio in accordance with your risk tolerance. Maybe in your case some physical gold makes sense (not any kind of index, actual collectible gold coins). Other hedges are additional income streams via side hustles, selling, or creating new businesses.

Also if you really felt freaked you could try to slash your spending and moderate your risk that way.

Personally I don’t have any options. I’m FIREd, I have a high risk tolerance and I’m gonna ride it out.

"Rebalance your portfolio in accordance with your risk tolerance" sounds like a fancy way of saying try and time the market in a situation like this.

It's not. When the shit hits the fan, investors shouldn't panic. If they do, they have too much risk.

This would be the same as a 1987 crash. If a 22% one day crash keeps you up at night, then you have too much risk.

I agree with that.  But if you are rebalancing due to hunches about the market, which is what this thread seems to be about, it just sounds like justifying an attempt to time the market.

Agreed but it's hard to know your limit until it's tested.

A plan to sell when it looks troubling and then buy when the coast is clear is timing the market. A friend tried to do that with covid and missed out on years of gains.


What's more interesting is creating a plan about when to move money if the shit truly hits the fan. If Trump starts ignoring court orders and stacks the fed with TV hosts and uses government powers to take over businesses, then what do you do, if anything?

I think covid is the perfect example.  When people moved to safer investments when it became obvious that covid was going to be a big deal, did their risk tolerances change?  Or did they just suddenly become aware of a big risk and want to make a change in response?  Risk tolerance and presence of risk are not the same thing, and this case being discussed feels similar to me.  Many are suddenly aware that there is a big risk in the white house, and they want to suddenly change their "risk tolerance" to accommodate that.  I don't think that's what their doing... in reality they are just trying to time the market and trying to justify it.

So your advice to someone already experiencing concerns because of their risk tolerance is to pretend that they aren’t feeling that way, do nothing to balance their portfolio (for example, ADDING hedges, taking some gains, buying some kind of fixed interest asset like CDs or T-bills) and then panic sell when the bottom falls out?

Because if humans didn’t get worried, then panic, we would never experience markets dropping. The entire stock market is an irrational, emotional experience and it’s foolish to pretend otherwise.

Yes, actually...  this is my advice and it's the mustachian way.  Don't let fears or politics change your ways.  Markets will go up and down, but if you're in it for the long haul there is no reason to try to time the market by doing all the things you mentioned.

This is the way.

[rocketpj]

As I mentioned upthread, for those of us who are NOT Americans, this has been a reminder to go in and rebalance our portfolios.  Given that the US has decided to (economically) attack my country I have consciously reduced my exposure to US assets.  It was a good time to do so, because of market runups I had become very overweighted to US equities in particular.

Because of the geopolitical situation where the US is seeking to crush the economy of my country for STUPID reasons, I chose to reduce my US Asset percentage in that rebalancing process.  If you guys are going to attack my country and drive my friends, family and neighbours out of work for stupid and self destructive reasons, you won't be doing it with my money.

[Fru-Gal]

The point is not that fears or politics should lead you to time the market. But it is simply bad investment advice to say that "rebalancing" is the same as "timing the market." They are two different things. Ideally you have 1-3 times a year where you make sure your AA is what you want it to be.

It's also bad investment advice to tell someone who's at the edge of panic that they should stay the course. They may heed your advice for a little while. Then they will do something drastic, along with everyone else. That's how the markets go down, really fast.

[Fru-Gal]

As I mentioned upthread, for those of us who are NOT Americans, this has been a reminder to go in and rebalance our portfolios.  Given that the US has decided to (economically) attack my country I have consciously reduced my exposure to US assets.  It was a good time to do so, because of market runups I had become very overweighted to US equities in particular.

Because of the geopolitical situation where the US is seeking to crush the economy of my country for STUPID reasons, I chose to reduce my US Asset percentage in that rebalancing process.  If you guys are going to attack my country and drive my friends, family and neighbours out of work for stupid and self destructive reasons, you won't be doing it with my money.

I'm so sorry about this. I hope this unacceptable aggression blows over but am glad you are taking action. Fear not, many of us are taking action too.

[Ron Scott]

Straight white men who aren't farmers or government workers should be fine for a little while.

Women no longer have body autonomy in red states (which could be EOd out for women in blue states as well.) They're also considering going after birth control and no fault divorce so we can go back to the "great" days when women were property.

Transgender people no longer have the right to use their passport if it doesn't agree with their birth certificate and have lost their rights to related medical care before age 19.

Medicaid, Medicare, SS, and ACA are in their sights as well. When that happens the poor and middle income folks will be in trouble - even the white males.

Tariffs and deporting immigrants will increase the cost of just about everything. This will affect everybody who isn't wealthy. If the economy comes crashing down from their slash and burn tactics, it will affect all of us.

So just because your life hasn't changed for the worse in the first 3 weeks, you'd have to be pretty naive to think it won't change much in the next 4 years.

It shocks me how many people don’t see the loss of bodily autonomy as a hair-on-fire emergency.

Also it super pisses me off that so many of our noble, moral overlords (the Supreme Court) LIED in their confirmation hearings when asked if they would overturn RvW. RvW should not have been the only protection, and it won’t be.

The labels pro-choice and pro-life are marketing devices that have successfully confused some of the population and alienated others, but it seems more than 60% of Americans are in favor of permitting abortion in either all or most cases. This is not surprising. On many issues the media hypes as partisan the general population is in agreement, usually siding with common sense that considers right and wrong and leans toward protecting individual rights.

The question however is how to translate that into actions that affect law.

The current 2-party democratic system we have has proven incapable of doing this. Continuing the same behaviors and expecting different outcomes is…?

Banning gerrymandering would be a good start. A lot of state legislatures have a majority that is the opposite of their constituents because of gerrymandering.  Also ranked choice voting would get rid of the two party stranglehold by allowing people to vote for a third party without feeling like they're taking away from their preferred big 2 candidate.  I would also like to see more ballot measures where the people get to make a choice directly instead of going through their legislators.

Agree, these would be great.

Reminds me however of the misguided attack on lobbyists that contends businesses have engaged in “legislative capture”. The fact is the RNC and DNC have captured our legislatures. (Just observe the amount of party-line voting to get an idea of what organizations our elected officials are obeying.) The lead party apparatchiks run a protection racket and demand payments from businesses “or else”. They then demand their elected officials vote for specific laws that benefit the paying marks or they will stop funding to their campaigns and run others against them in the next primary. Extremely effective!

Ridding us of this horror requires that we stop siding and identifying with one party over the other and demand change. This is unlikely however given how many people in America are fully convinced of the goodness of their party over the other. And the fact that each party has fully-functioning media propaganda outlets (Fox, CNN, MSNBC plus print and digital players) makes it even harder.

Gerrymandering is done by the parties and they won’t stop. And true ranked-choice voting—that can result in several members of a single party contending in federal elections—has been squashed by the parties too.

This is a tough slog. (See my salutation.) It is very difficult to find people who even understand the actual problem.

[Just Joe]

Banning gerrymandering would be a good start. A lot of state legislatures have a majority that is the opposite of their constituents because of gerrymandering.  Also ranked choice voting would get rid of the two party stranglehold by allowing people to vote for a third party without feeling like they're taking away from their preferred big 2 candidate.  I would also like to see more ballot measures where the people get to make a choice directly instead of going through their legislators.

In my part of the country this seemed difficult to imagine being ratified by our red state legislator. Now with Trump 2.0 upon us, I think there is a better chance of time travel than our state politicians doing something like this.

How does anyone foster change in this environment.

[Tyson]

Straight white men who aren't farmers or government workers should be fine for a little while.

Women no longer have body autonomy in red states (which could be EOd out for women in blue states as well.) They're also considering going after birth control and no fault divorce so we can go back to the "great" days when women were property.

Transgender people no longer have the right to use their passport if it doesn't agree with their birth certificate and have lost their rights to related medical care before age 19.

Medicaid, Medicare, SS, and ACA are in their sights as well. When that happens the poor and middle income folks will be in trouble - even the white males.

Tariffs and deporting immigrants will increase the cost of just about everything. This will affect everybody who isn't wealthy. If the economy comes crashing down from their slash and burn tactics, it will affect all of us.

So just because your life hasn't changed for the worse in the first 3 weeks, you'd have to be pretty naive to think it won't change much in the next 4 years.

It shocks me how many people don’t see the loss of bodily autonomy as a hair-on-fire emergency.

Also it super pisses me off that so many of our noble, moral overlords (the Supreme Court) LIED in their confirmation hearings when asked if they would overturn RvW. RvW should not have been the only protection, and it won’t be.

The labels pro-choice and pro-life are marketing devices that have successfully confused some of the population and alienated others, but it seems more than 60% of Americans are in favor of permitting abortion in either all or most cases. This is not surprising. On many issues the media hypes as partisan the general population is in agreement, usually siding with common sense that considers right and wrong and leans toward protecting individual rights.

The question however is how to translate that into actions that affect law.

The current 2-party democratic system we have has proven incapable of doing this. Continuing the same behaviors and expecting different outcomes is…?

Banning gerrymandering would be a good start. A lot of state legislatures have a majority that is the opposite of their constituents because of gerrymandering.  Also ranked choice voting would get rid of the two party stranglehold by allowing people to vote for a third party without feeling like they're taking away from their preferred big 2 candidate.  I would also like to see more ballot measures where the people get to make a choice directly instead of going through their legislators.

Agree, these would be great.

Reminds me however of the misguided attack on lobbyists that contends businesses have engaged in “legislative capture”. The fact is the RNC and DNC have captured our legislatures. (Just observe the amount of party-line voting to get an idea of what organizations our elected officials are obeying.) The lead party apparatchiks run a protection racket and demand payments from businesses “or else”. They then demand their elected officials vote for specific laws that benefit the paying marks or they will stop funding to their campaigns and run others against them in the next primary. Extremely effective!

Ridding us of this horror requires that we stop siding and identifying with one party over the other and demand change. This is unlikely however given how many people in America are fully convinced of the goodness of their party over the other. And the fact that each party has fully-functioning media propaganda outlets (Fox, CNN, MSNBC plus print and digital players) makes it even harder.

Gerrymandering is done by the parties and they won’t stop. And true ranked-choice voting—that can result in several members of a single party contending in federal elections—has been squashed by the parties too.

This is a tough slog. (See my salutation.) It is very difficult to find people who even understand the actual problem.

I agree with you.  Humans are hard wired to think in terms of in-group and out-group binary thinking.  So the 2 party system leverages that quirk in our code for maximizing power.  And they amp it up by playing on our negativity bias.

You can see it in what people call Elon Musk.  Most people say fascist or nazi.  But in truth he's closer to a techno anarchist.  That doesn't fit neatly in to the pre-existing roles defined by the 2 parties.

Edit to add - my personal journey is from being a republican in my 20's and 30's to being a democrat in my 40's and 50's.  I think Trump will do a fair bit of damage before he leaves office.  But it is certainly not 'the end of democracy'. 

[LennStar]

You can see it in what people call Elon Musk.  Most people say fascist or nazi.  But in truth he's closer to a techno anarchist.  That doesn't fit neatly in to the pre-existing roles defined by the 2 parties.

Most Anarchists would be angry if you tell them that.
He is a techno libertarian with racist or very classicist views. (It's often hard to differentiate the 2.) That is a near guarantee to get into Nazism/Fascism. If you think  99% of people are idiots and do not deserve anything...

But it is certainly not 'the end of democracy'. 

When, in your eyes, is the "end of democracy"? When they completely ignore all judges (they don't like) or replace them, as they have said they will? When they have kicked out all people who not swear allegiance to Mighty Leader Trump out of government, as they are doing right now? When they allow even less people to vote that have a different opinion, or when they fake elections? Or when the tanks roll?

When is for you the point that democracy ended?

[Tyson]

You can see it in what people call Elon Musk.  Most people say fascist or nazi.  But in truth he's closer to a techno anarchist.  That doesn't fit neatly in to the pre-existing roles defined by the 2 parties.

Most Anarchists would be angry if you tell them that.
He is a techno libertarian with racist or very classicist views. (It's often hard to differentiate the 2.) That is a near guarantee to get into Nazism/Fascism. If you think  99% of people are idiots and do not deserve anything...

But it is certainly not 'the end of democracy'. 

When, in your eyes, is the "end of democracy"? When they completely ignore all judges (they don't like) or replace them, as they have said they will? When they have kicked out all people who not swear allegiance to Mighty Leader Trump out of government, as they are doing right now? When they allow even less people to vote that have a different opinion, or when they fake elections? Or when the tanks roll?

When is for you the point that democracy ended?

You think this is the end of democracy in America, and I do not.  In 4 year's we'll know for sure.  Care to make a bet?

Trump, like it or not, was democratically elected.  Calling for his removal would do more to break democracy than anything Trump can do, IMO.

[bacchi]

You can see it in what people call Elon Musk.  Most people say fascist or nazi.  But in truth he's closer to a techno anarchist.  That doesn't fit neatly in to the pre-existing roles defined by the 2 parties.

Most Anarchists would be angry if you tell them that.
He is a techno libertarian with racist or very classicist views. (It's often hard to differentiate the 2.) That is a near guarantee to get into Nazism/Fascism. If you think  99% of people are idiots and do not deserve anything...

But it is certainly not 'the end of democracy'. 

When, in your eyes, is the "end of democracy"? When they completely ignore all judges (they don't like) or replace them, as they have said they will? When they have kicked out all people who not swear allegiance to Mighty Leader Trump out of government, as they are doing right now? When they allow even less people to vote that have a different opinion, or when they fake elections? Or when the tanks roll?

When is for you the point that democracy ended?

You think this is the end of democracy in America, and I do not.  In 4 year's we'll know for sure.  Care to make a bet?

Trump, like it or not, was democratically elected.  Calling for his removal would do more to break democracy than anything Trump can do, IMO.

It was a question that Lennstar asked. (bolded)

For you, when would you consider that US democracy has ended? We know that it's not now but when? As Lennstar wrote, would you consider democracy has ended when court rulings are routinely ignored? When US citizens are detained for political views? Where's the line in the sand?

It's something that everyone should ask themselves.

[Tyson]

You can see it in what people call Elon Musk.  Most people say fascist or nazi.  But in truth he's closer to a techno anarchist.  That doesn't fit neatly in to the pre-existing roles defined by the 2 parties.

Most Anarchists would be angry if you tell them that.
He is a techno libertarian with racist or very classicist views. (It's often hard to differentiate the 2.) That is a near guarantee to get into Nazism/Fascism. If you think  99% of people are idiots and do not deserve anything...

But it is certainly not 'the end of democracy'. 

When, in your eyes, is the "end of democracy"? When they completely ignore all judges (they don't like) or replace them, as they have said they will? When they have kicked out all people who not swear allegiance to Mighty Leader Trump out of government, as they are doing right now? When they allow even less people to vote that have a different opinion, or when they fake elections? Or when the tanks roll?

When is for you the point that democracy ended?

You think this is the end of democracy in America, and I do not.  In 4 year's we'll know for sure.  Care to make a bet?

Trump, like it or not, was democratically elected.  Calling for his removal would do more to break democracy than anything Trump can do, IMO.

It was a question that Lennstar asked. (bolded)

For you, when would you consider that US democracy has ended? We know that it's not now but when? As Lennstar wrote, would you consider democracy has ended when court rulings are routinely ignored? When US citizens are detained for political views? Where's the line in the sand?

It's something that everyone should ask themselves.

For me it's the transfer of power.  If/when we can't get the old people out and the new people in, then democracy has broken.