Author Topic: Are you planning on treating the possible debt default differently?  (Read 837 times)

caracarn

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So I was not planning to change the strategy, just keep loading funds into index funds as I have been.   However, given the "never before happened" situation we are staring down the barrel of, as Mustachians, FIRE aficionados, or whatever, is anyone going to make the case for getting out?  Not seeing this asked here, and it may be because we are all just staying the course, figuring it will get solved before it gets too bad or whatever.

secondcor521

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I could be wrong but obviously do not think I am.

I think it's overblown political rhetoric and theatrics amplified by media which has forgotten or never learned basic journalism.  Not worried in the slightest, watching with popcorn, and staying the course.

Staying the course, though, means maintaining my target AA.  If the stock market craters enough to move my AA out of whack enough, I would rebalance which would mean buying more stocks at that point.  I would also consider doing part of my targeted Roth conversion amount if the market cratered (where "cratered" in my case means S&P around 3600 or below, which is a ~10% drop from 1/1/2023).

But those two things are part of my standard plan, which I have no inclination or plans to modify.

Valley of Plenty

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So I was not planning to change the strategy, just keep loading funds into index funds as I have been.   However, given the "never before happened" situation we are staring down the barrel of, as Mustachians, FIRE aficionados, or whatever, is anyone going to make the case for getting out?  Not seeing this asked here, and it may be because we are all just staying the course, figuring it will get solved before it gets too bad or whatever.

Your quote in bold describes the catalyst for just about every major market crash in history. The very nature of a black swan event is that it isn't something that has happened before. Unprecedented catastrophic financial events, and the panic selling that they trigger, are part of the self cleansing cycle of the market.

Also, you say "getting out", but what would the next move be? Are you expecting a debt default to temporarily tank the market before everything recovers again, or are you expecting the bottom to fall out and the entire US economy to collapse upon itself? Because in the case of the latter pulling your money out isn't going to do you much good, unless you plan on buying up vast quantities of gold or ammo for some apocalyptical mad max scenario.

caracarn

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The answers thus far are what I expected but you know the assumption scenario, and not asking is just acting on my own assumption.

How will this be different than COVID,  that last "never happened before" event?   Who knows, but also in that situation or any other it would be market timing.  Sometimes it just helps to have validation from the community to help maintain our fortitude.

StarBright

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We are keeping everything where it is except for one account.

My work is rolling over 401ks to a new provider with a 30 day blackout window and the window should start sometime in the next couple of weeks but we haven't received the date yet.

I moved that money to cash within the 401k last week. It will buy into VTSAX and a couple of other funds when it rolls into the new account.

Since I didn't have a date, just a window "around the first week of June" and then a 30 day window to reinvest, it felt like a sell low/buy high scenario was more likely than usual.

I might lose on a percent or two if there is no sell off - but I'm not trying to time the market perfectly, just sidestep the potential instability around the 1st of June.

Michael in ABQ

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Nothing will happen. It's the same old political brinksmanship that has been happening for years. Even if there was a technical default it's not like the US dollar would suddenly collapse and we'd plunge into a global recession. It would just be a few days of "default" then back to normal once each side has made their point (and milked it for fundraising).

caracarn

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Nothing will happen. It's the same old political brinksmanship that has been happening for years. Even if there was a technical default it's not like the US dollar would suddenly collapse and we'd plunge into a global recession. It would just be a few days of "default" then back to normal once each side has made their point (and milked it for fundraising).

I'm not certain the crazies in the Rep party are not moving it from the "same old".    I'm thinking they are bat shit crazy enough to refuse to vote for anything as it seems there policy is to burn everything down.  I'd consider myself pretty rational and logical but the behavior of these folks seems far beyond political brinksmanship in their quest for unlimited power.

Valley of Plenty

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Nothing will happen. It's the same old political brinksmanship that has been happening for years. Even if there was a technical default it's not like the US dollar would suddenly collapse and we'd plunge into a global recession. It would just be a few days of "default" then back to normal once each side has made their point (and milked it for fundraising).

I'm not certain the crazies in the Rep party are not moving it from the "same old".    I'm thinking they are bat shit crazy enough to refuse to vote for anything as it seems there policy is to burn everything down.  I'd consider myself pretty rational and logical but the behavior of these folks seems far beyond political brinksmanship in their quest for unlimited power.

If you consider yourself pretty rational and logical then you should be able to see that the majority of both party members within Washington are corrupt to the core and interested in little beyond increasing their own power and wealth. Fortunately for us as investors, that means they will for the most part do whatever it takes to protect their corporate donors. A major market collapse would do the politicians no good, so it's not something that's likely to happen if they have anything to say about it.

 

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