Author Topic: At what level of market drop would you invest "extraordinary" funds?  (Read 1574 times)

CrankAddict

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The correct answer here of course requires a crystal ball, but I'm just trying to get a sense of what others perceive as "too good of a price to pass up".  Obviously the plan is to keep going with the scheduled monthly contributions and get those "discounts" either way.  But I'm talking about above and beyond that.  For example, what does VTSAX have to get to where you'd put money on a HELOC, or buy with your cash reserves, or exchange your bonds for it?  This assumes being employed and not needing to live off of any of this money for at least 5 years.

Papa bear

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At what level of market drop would you invest "extraordinary" funds?
« Reply #1 on: March 12, 2020, 10:01:30 AM »
S&P 500 at 2400 and Iíll put some cash in that normally is waiting for real estate deals.  Not all. Probably DCA 1/2 of it into vtsax over a month or so. 


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« Last Edit: March 12, 2020, 10:03:10 AM by Papa bear »

CrankAddict

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #2 on: March 12, 2020, 10:16:36 AM »
S&P 500 at 2400 and Iíll put some cash in that normally is waiting for real estate deals.  Not all. Probably DCA 1/2 of it into vtsax over a month or so. 

That could be just hours away (at 2500 currently), better get ready :)

ixtap

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #3 on: March 12, 2020, 10:17:38 AM »
S&P 500 at 2400 and Iíll put some cash in that normally is waiting for real estate deals.  Not all. Probably DCA 1/2 of it into vtsax over a month or so. 


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So, tomorrow?

If we enter a recession, few jobs are stable. I will keep my cash reserves as is, and continue to invest new monies as they come available.

Papa bear

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Yeah. Already moved cash from bank to vanguard account.

Havenít bought a rental in a year and a half. Nothing has looked good enough.  I picked that as my line in the sand months ago.


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Papa bear

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At what level of market drop would you invest "extraordinary" funds?
« Reply #5 on: March 16, 2020, 07:54:04 AM »
First order of VTI executed this AM. Just to keep this updated.

And the put order I out through on Friday night, yeah, thatís not going to execute now, itís already in the money if i had it. Should have pulled the trigger during trading hours.  Damn.


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« Last Edit: March 16, 2020, 08:30:56 AM by Papa bear »

gmdv

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Initially I was going for 25-30% down from the top,  but given the way this event is unfolding,  I've revised my target to 35-50% down.

GuitarStv

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #7 on: March 16, 2020, 08:38:53 AM »
I don't think it's a great idea to try to time the market.  If you have funds to add, invest them in the asset allocations that you've decided upon in your investment plan.  Throwing the plan out the window because you've decided that this new scheme will get you rich quick doesn't seem like a good idea.

DK

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #8 on: March 16, 2020, 09:05:53 AM »
>30%

Buffaloski Boris

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #9 on: March 16, 2020, 09:36:18 AM »
It depends. Overseas markets, soon. SP 500, probably around 2100. Iíd have to look at the CAPE ratio. Under 20 I think is fair.

vand

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #10 on: March 16, 2020, 11:54:08 AM »
I consider Dow 18k to be a key level. There is a lot of chart support around there, and it is the level from which the market began its blowoff phase the night Trump won the election, so if the rout gets that extreme I will swap my bonds for equities.

If it falls below that to I'll serious consider borrowing half a year's salary or so to invest more. Dow 15k would be a level I'd consider that an option.

dougules

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #11 on: March 16, 2020, 11:59:24 AM »
If you're investing "extraordinary" funds now, why did you have them lying around in the first place?

ctuser1

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #12 on: March 16, 2020, 12:08:44 PM »
I had $4000 in cash in my "roof" fund. I dumped that into the market last week.

I also did some spreadsheet-crunching and I *think* I can safely set aside $500/paycheck for putting into the market. I have started doing that, starting with the 3/15 paycheck.

I don't expect to be able to time the market, or call the bottom. However, I am going to invest in my 401ks, and DW's 401ks, and these regular $500/paycheck right through the bottom.

Of course, if we lose our jobs then all bets are off.

MoneyGoatee

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #13 on: March 17, 2020, 08:34:44 AM »
If this recession has enough depth and duration (both very likely), then you can be a little more patient and use the 100-day average, or 200-day average if you are conservative, to help you decide when to buy.  You won't catch the market at the lowest point, but you'll be near it.  I did the same thing in 2008-2009 when I was early in my investment with only $200k.  Now that I'm retired with $900k, I'll do the same thing.  Below is Dow during the 2008 crash, and the 100-day average (smooth black line) started to turn up during Apr 09 and Jul 09.  That was when I started buying.  I didn't catch Dow at the lowest point of 6k, but I caught it at 7k to 9k, which was still pretty good.  The people at Bogleheads suggested me this strategy at the time, and now I'm suggesting it to you.


norajean

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #14 on: March 17, 2020, 09:59:34 AM »
10% is a pretty good drop and starting point to invest a portion of your cash (or convert bonds).  Keep enough dry for additional drops up to a total worst case of say 75% drop.

aperture

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #15 on: March 17, 2020, 10:05:44 AM »
If this recession has enough depth and duration (both very likely), then you can be a little more patient and use the 100-day average, or 200-day average

If I understand you, you are suggesting looking for the signal that the index moves from being below the 100-day moving average to being equal to or greater then the 100-day moving average as a signal that we have hit the inflection point?

bwall

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #16 on: March 17, 2020, 10:18:11 AM »
If this recession has enough depth and duration (both very likely), then you can be a little more patient and use the 100-day average, or 200-day average if you are conservative, to help you decide when to buy.  You won't catch the market at the lowest point, but you'll be near it.  I did the same thing in 2008-2009 when I was early in my investment with only $200k.  Now that I'm retired with $900k, I'll do the same thing.  Below is Dow during the 2008 crash, and the 100-day average (smooth black line) started to turn up during Apr 09 and Jul 09.  That was when I started buying.  I didn't catch Dow at the lowest point of 6k, but I caught it at 7k to 9k, which was still pretty good.  The people at Bogleheads suggested me this strategy at the time, and now I'm suggesting it to you.

Thanks you for posting. Looks pretty solid. You'll never going to catch the exact bottom, but you also won't get eviscerated. I'd take that trade every day of the week and twice on Sunday. 

MoneyGoatee

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #17 on: March 17, 2020, 10:40:17 AM »
If this recession has enough depth and duration (both very likely), then you can be a little more patient and use the 100-day average, or 200-day average

If I understand you, you are suggesting looking for the signal that the index moves from being below the 100-day moving average to being equal to or greater then the 100-day moving average as a signal that we have hit the inflection point?

I'm suggesting looking ONLY at the 100-day curve and see how it behaves.  To see a distinctive downturn for the 100-day, you need a recession that lasts long enough and market indices fall deep enough.  And this is increasingly becoming the likely scenario based on recent news.  Right now the 100-day average for Dow is just starting to fall.  This is in keeping with the medical experts saying we are only seeing the beginning of the pandemic.  So right now I'm just waiting.  If you buy now, you are likely going to be catching falling knives. 

Dow would have to fall to 13k to approach the severity of the 2008-2009 collapse.  I'm not wishing for it, but I said, it is increasingly likely.  When the entire world or much of the world goes to "sleep mode" till August or beyond, it is a mathematical certainty what will happen to all the market indices.

EDIT: And this is why we have bonds.  My $300k bonds have only dropped 2% this month and are still up for the year.  But my $600k stock funds have dropped 25% to $450.

EDIT 2: This is also why I don't put all stocks in traditional IRA.  If you are a retiree who is REQUIRED to withdraw from funds that will be in free fall in the coming months, you'll be in big trouble.
« Last Edit: March 17, 2020, 10:56:01 AM by MoneyGoatee »

vand

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #18 on: March 17, 2020, 10:51:42 AM »
Didn't take long for all the doomsday downside forecasts to start appearing, did it?
And you didn't even put up much of a fight.


Seriously, things may feel bad now and they may get worse.. probably will get worse.. but always remember:

The Market Is A Future Discounting Mechanism

it tends to top well in advance of peak economic activity, and then bottom well before the storm is over.

With 1/3rd wiped of global stocks, it is arguable that they have now done much of their forward readjustment in anticipation of bad outcomes, so even if the CV situation worsens greatly, it may not have much further downside impact on the markets.

MoneyGoatee

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #19 on: March 17, 2020, 11:17:13 AM »
Didn't take long for all the doomsday downside forecasts to start appearing, did it?
And you didn't even put up much of a fight.


Seriously, things may feel bad now and they may get worse.. probably will get worse.. but always remember:

The Market Is A Future Discounting Mechanism

it tends to top well in advance of peak economic activity, and then bottom well before the storm is over.

With 1/3rd wiped of global stocks, it is arguable that they have now done much of their forward readjustment in anticipation of bad outcomes, so even if the CV situation worsens greatly, it may not have much further downside impact on the markets.

Better a downside forecaster than the reverse, especially in a potentially historic recession like this.  I've lived through 2008-2009 and am now retired, so I've actually proven that my method works.  Using words like "well in advance," "well before," "arguable," "may not have," etc., you sound REALLY certain yourself, so go ahead and buy.  We've read plenty of threads from people here who bought early.  Those who bought when Dow was at 25K caught falling knives already, so did those who bought at 23k.  I bought nothing yet and caught no falling knife.  I get that some of you want to retire early by being more aggressive, but use some common sense.  This could be the first major collapse some of you millennials would face, and your methodology could be the fine line between whether you would come out ahead or have it blow up in your face.

John Galt incarnate!

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #20 on: March 17, 2020, 12:01:05 PM »
The correct answer here of course requires a crystal ball, but I'm just trying to get a sense of what others perceive as "too good of a price to pass up". Obviously the plan is to keep going with the scheduled monthly contributions and get those "discounts" either way.  But I'm talking about above and beyond that.  For example, what does VTSAX have to get to where you'd put money on a HELOC, or buy with your cash reserves, or exchange your bonds for it?  This assumes being employed and not needing to live off of any of this money for at least 5 years.

A stock market that plunges 50% is ON SALE.

The  fixed-income allocation of my portfolio ("safe money") generates ~5.7X annual living expenses + extra $ for anything I want so I don't need any money from my investments in stocks.


If DJIA /NASDAQ /S&P 500 sink  to ~50% of their  recent highs I will sell 65% of my fixed-income portfolio to buy stocks.

As stock prices rise I'll sell some and add to my fixed-income position.

I have continued my monthly purchase of stocks during the current market chaos.

« Last Edit: March 17, 2020, 12:12:33 PM by John Galt incarnate! »

vand

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Re: At what level of market drop would you invest "extraordinary" funds?
« Reply #21 on: March 17, 2020, 12:04:29 PM »
Didn't take long for all the doomsday downside forecasts to start appearing, did it?
And you didn't even put up much of a fight.


Seriously, things may feel bad now and they may get worse.. probably will get worse.. but always remember:

The Market Is A Future Discounting Mechanism

it tends to top well in advance of peak economic activity, and then bottom well before the storm is over.

With 1/3rd wiped of global stocks, it is arguable that they have now done much of their forward readjustment in anticipation of bad outcomes, so even if the CV situation worsens greatly, it may not have much further downside impact on the markets.

Better a downside forecaster than the reverse, especially in a potentially historic recession like this.  I've lived through 2008-2009 and am now retired, so I've actually proven that my method works.  Using words like "well in advance," "well before," "arguable," "may not have," etc., you sound REALLY certain yourself, so go ahead and buy.  We've read plenty of threads from people here who bought early.  Those who bought when Dow was at 25K caught falling knives already, so did those who bought at 23k.  I bought nothing yet and caught no falling knife.  I get that some of you want to retire early by being more aggressive, but use some common sense.  This could be the first major collapse some of you millennials would face, and your methodology could be the fine line between whether you would come out ahead or have it blow up in your face.

I have been arguing that the market was expensive and due for a reality check for most of the last 12 months.
All I got was the usual "time in the market" crap.
I think that has proven to be a good call.

Now I'm saying that this is the crash the market sorely needed to reset sentiment. While I can't say exactly where the bottom will be, valuations have returned to a more sensible level and it is a better time to buy.

Buy Low, Sell High. I mean, it doesn't really get any simpler than that. And yet, unless you can control you emotions then it can also be the hardest thing in the world.