Author Topic: Buy VTSAX now while its this high or wait till a drop?  (Read 4266 times)

bpage12

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Buy VTSAX now while its this high or wait till a drop?
« on: April 24, 2019, 09:52:50 AM »
I have invested in VTSAX for 5-6 years in my Roth and my average buy in is like $56 or so right now.  It just seems so hard to put down a lump sum or even dollar cost average buy in when it is at almost $73.  Is it smart to wait a month or two and see if it drops or just go ahead now?

doingfine

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #1 on: April 24, 2019, 09:54:57 AM »
This is why the majority of your investments should be on auto-pilot and happening automatically. That way it removes you from the day to day concern about the price and forces the extremely important habit of investing regularly through both ups and downs.


I'm a red panda

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #3 on: April 24, 2019, 10:22:29 AM »
What if it goes up in a month or two? How long do you plan to wait after that?

ixtap

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #4 on: April 24, 2019, 10:31:31 AM »
What does your plan say? What makes you think you can do better than the plan?

MonkeyJenga

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bpage12

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #6 on: April 24, 2019, 10:45:13 AM »
I guess I would just have to invest in a month or two even if it went up.  I know you can't time the market but it is so high right now I just figured at some point soon it would take a small dip and I could invest a lump sum then!  My plan is to invest the max into my Roth every year for 30 + years!  Was just hoping it would drop below $70 sometime soon.  Thanks for your input!!!

JLee

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #7 on: April 24, 2019, 11:03:16 AM »
I guess I would just have to invest in a month or two even if it went up.  I know you can't time the market but it is so high right now I just figured at some point soon it would take a small dip and I could invest a lump sum then!  My plan is to invest the max into my Roth every year for 30 + years!  Was just hoping it would drop below $70 sometime soon.  Thanks for your input!!!

What if it dropped to $69.99, but then a month later it was $60?  And a month later it was $55?

What if it went up to $80 in a month, $90 two months later, and $100 in 8 months?

You can't predict it - if you could, you'd already be a billionaire. ;)

Andy R

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #8 on: April 24, 2019, 11:27:27 AM »
I guess I would just have to invest in a month or two even if it went up.  I know you can't time the market but it is so high right now I just figured at some point soon it would take a small dip and I could invest a lump sum then!  My plan is to invest the max into my Roth every year for 30 + years!  Was just hoping it would drop below $70 sometime soon.  Thanks for your input!!!

There are people who pulled out in 2013, 14, 15, 16, 17 because "the market is so high" and just figured it would take a dip soon for them to invest.

One is a couple who pulled out their life savings of $600,000 in 2014/15 and have missed out on $240,000.

Good luck with your plan to wait for a dip.

MDM

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #9 on: April 24, 2019, 02:54:25 PM »
Is it smart to wait a month or two and see if it drops or just go ahead now?
Can you do better than Bob?

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #10 on: April 24, 2019, 03:00:35 PM »
I guess I would just have to invest in a month or two even if it went up.  I know you can't time the market but it is so high right now I just figured at some point soon it would take a small dip and I could invest a lump sum then!  My plan is to invest the max into my Roth every year for 30 + years!  Was just hoping it would drop below $70 sometime soon.  Thanks for your input!!!

Waiting for the dip means you miss a lot of growth.  Just invest regularly. It evens out.

Buffalo Chip

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #11 on: April 24, 2019, 04:56:45 PM »
I guess I get to be the contrarian. And with that goes the caveat: don’t do what I do because I’m an obvious fool, sucker, dummy, and rube. And what’s the source of my problem? You see, I just don’t understand this advanced investment calculus that says that the Shiller PE ratio is twice it’s historic median and I’m going to somehow come out a winner if I invest in equities right now.  I don’t have the stomach for an investment that I can’t parse logically.

This is a very bubbly environment and even if cash and other investments available return me “only” 3-6%, I can live with that relatively small gain a lot easier than say a 20% drop during the same time. Sometimes sitting on the sidelines really is more rational. But again I caution you to not do what I do.

MDM

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #12 on: April 24, 2019, 05:11:10 PM »
You see, I just don’t understand this advanced investment calculus that says that the Shiller PE ratio is twice it’s historic median and I’m going to somehow come out a winner if I invest in equities right now.
You might be right.  Have you picked a specific Shiller PE ratio at which to buy equities?

Buffalo Chip

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #13 on: April 24, 2019, 05:47:26 PM »
You see, I just don’t understand this advanced investment calculus that says that the Shiller PE ratio is twice it’s historic median and I’m going to somehow come out a winner if I invest in equities right now.
You might be right.  Have you picked a specific Shiller PE ratio at which to buy equities?

I have been thinking about that. My plan is to rank investments and as we max them out, move down the list. Here is a tentative list:
1. 401ks up to the match.
2. 529s up to the VA deduction limit
3. Money saving expenditures, e.g. solar or more insulation.
4. Pay down mortgage.
5. If equities get down to low 20s Shiller PE, give those a go.

waltworks

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #14 on: April 24, 2019, 06:09:35 PM »
With a very brief exception, Shiller P/E hasn't been in the low 20s for 30 years, though. You might be waiting a LONG time.

-W

Indexer

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #15 on: April 24, 2019, 06:17:40 PM »
It's very high now compared to 10 years ago. It's very highly likely to be very low compared to 10 years from now.

10 years from now will you remember if this contribution was deposited in April.... May.... or 6 months from now after you get frustrated because the market didn't drop and you end up buying at an even higher price?

Brother Esau

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #16 on: April 24, 2019, 06:30:44 PM »
Last time I checked "Top is in". You'll be waiting for awhile.

D Bopp

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #17 on: April 24, 2019, 06:57:25 PM »
This might be the new low!

Buffalo Chip

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #18 on: April 24, 2019, 07:11:42 PM »
With a very brief exception, Shiller P/E hasn't been in the low 20s for 30 years, though. You might be waiting a LONG time.

-W

May well be. Equities are low on my list of priorities and I see several investment opportunities that are more appealing. I’m also thinking more about generational wealth these days. So it could well be 30 years before I get around to putting money into equities. Assuming I live that long.

Correct me if I’m wrong but the mean plus one SD for the Shiller PE ratio is somewhere in the 25 range. As of today the ratio is north of 30. That sure doesn’t scream “buying opportunity” to me. That said, in the end we’re doing is trying to predict human behavior which is notoriously fickle. Sad to say, my crystal ball is out for repairs.

ixtap

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #19 on: April 24, 2019, 07:31:53 PM »
With a very brief exception, Shiller P/E hasn't been in the low 20s for 30 years, though. You might be waiting a LONG time.

-W

May well be. Equities are low on my list of priorities and I see several investment opportunities that are more appealing. I’m also thinking more about generational wealth these days. So it could well be 30 years before I get around to putting money into equities. Assuming I live that long.

Correct me if I’m wrong but the mean plus one SD for the Shiller PE ratio is somewhere in the 25 range. As of today the ratio is north of 30. That sure doesn’t scream “buying opportunity” to me. That said, in the end we’re doing is trying to predict human behavior which is notoriously fickle. Sad to say, my crystal ball is out for repairs.

What are your 401k and 529s in?

Buffalo Chip

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #20 on: April 24, 2019, 07:34:46 PM »
Last time I checked "Top is in". You'll be waiting for awhile.

Yup. I may well be. Perhaps forever. And I’m reasonably content with that.

Ive heard the phrase “but this time is different!” in the face of a very pricey equities markets before. And you know what? It wasn’t any different.

I’m not against equities investments per se, and still own some that I haven’t gotten around to selling yet.  I just don’t think this is a particularly good time to be buying them. YMMV.

Buffalo Chip

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #21 on: April 24, 2019, 07:40:34 PM »
With a very brief exception, Shiller P/E hasn't been in the low 20s for 30 years, though. You might be waiting a LONG time.

-W

May well be. Equities are low on my list of priorities and I see several investment opportunities that are more appealing. I’m also thinking more about generational wealth these days. So it could well be 30 years before I get around to putting money into equities. Assuming I live that long.

Correct me if I’m wrong but the mean plus one SD for the Shiller PE ratio is somewhere in the 25 range. As of today the ratio is north of 30. That sure doesn’t scream “buying opportunity” to me. That said, in the end we’re doing is trying to predict human behavior which is notoriously fickle. Sad to say, my crystal ball is out for repairs.

What are your 401k and 529s in?

Treasuries, some bonds, REITs and minor exposure to equities.

waltworks

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #22 on: April 24, 2019, 07:53:23 PM »
Correct me if I’m wrong but the mean plus one SD for the Shiller PE ratio is somewhere in the 25 range. As of today the ratio is north of 30. That sure doesn’t scream “buying opportunity” to me. That said, in the end we’re doing is trying to predict human behavior which is notoriously fickle. Sad to say, my crystal ball is out for repairs.

That's probably about right, but remember that the 1990/2001 GAAP changes mean that the period before that isn't really comparable.

Companies also tend to do share buybacks over dividends which screws with Schiller P/E, and that is much more prevalent today than it was historically.

There's a decent article about that here:
https://www.philosophicaleconomics.com/2013/12/shiller/

If your time horizon is 30 years and you're thinking about intergenerational wealth, you're probably not doing yourself any favors by trying to market time. If you've got other irons in the fire (IMO basically everything else is just as expensive/overpriced as equities right now) maybe you can make an argument for not investing, but otherwise, I'd just start DCAing in.

-W
« Last Edit: April 24, 2019, 08:01:20 PM by waltworks »

Buffalo Chip

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #23 on: April 24, 2019, 08:27:41 PM »
:)

https://jlcollinsnh.com/2013/05/22/stocks-part-xviii-investing-in-a-raging-bull/

Good article, and I enjoyed the author’s perspective. I also got a chuckle out of the graphics. Not the unicorn, but the rather ironic graphic of stock market levels over time. I think what the author intended was to show that the stock market has increased over what a 120 or 130 year timeframe? And he’s absolutely correct. BUT the returns aren’t linear and there have been extended periods of time where the returns are flat. Perhaps worse than flat if the returns are adjusted for inflation.   E.g. the 1970s. That adds a wrinkle to this view that stocks are a rock solid investment based on historical prices. It depends on your timeframe. If you’re a 30 year old then sure, buying equities for a 50 year time frame does make sense. If your time frame is significantly shorter, the volatility matters.

Buffalo Chip

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #24 on: April 24, 2019, 08:35:18 PM »
Correct me if I’m wrong but the mean plus one SD for the Shiller PE ratio is somewhere in the 25 range. As of today the ratio is north of 30. That sure doesn’t scream “buying opportunity” to me. That said, in the end we’re doing is trying to predict human behavior which is notoriously fickle. Sad to say, my crystal ball is out for repairs.

That's probably about right, but remember that the 1990/2001 GAAP changes mean that the period before that isn't really comparable.

Companies also tend to do share buybacks over dividends which screws with Schiller P/E, and that is much more prevalent today than it was historically.

There's a decent article about that here:
https://www.philosophicaleconomics.com/2013/12/shiller/

If your time horizon is 30 years and you're thinking about intergenerational wealth, you're probably not doing yourself any favors by trying to market time. If you've got other irons in the fire (IMO basically everything else is just as expensive/overpriced as equities right now) maybe you can make an argument for not investing, but otherwise, I'd just start DCAing in.

-W

Thanks for the article. I will read it later. You make an excellent point regarding generational wealth. That does extend my time horizon beyond my life expectancy, does it not?  I’ll have to think about that.

Archipelago

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #25 on: April 24, 2019, 09:30:46 PM »
:)

https://jlcollinsnh.com/2013/05/22/stocks-part-xviii-investing-in-a-raging-bull/

Good article, and I enjoyed the author’s perspective. I also got a chuckle out of the graphics. Not the unicorn, but the rather ironic graphic of stock market levels over time. I think what the author intended was to show that the stock market has increased over what a 120 or 130 year timeframe? And he’s absolutely correct. BUT the returns aren’t linear and there have been extended periods of time where the returns are flat. Perhaps worse than flat if the returns are adjusted for inflation.   E.g. the 1970s. That adds a wrinkle to this view that stocks are a rock solid investment based on historical prices. It depends on your timeframe. If you’re a 30 year old then sure, buying equities for a 50 year time frame does make sense. If your time frame is significantly shorter, the volatility matters.

It would depend on how you define "significantly shorter". Even a 5-10 year holding period is advantageous. Hell, anything over 50% is advantageous I'd say.
« Last Edit: April 25, 2019, 06:34:11 AM by Archipelago »

JTColton

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #26 on: April 24, 2019, 11:40:16 PM »
Set up an automatic investment every paycheck or every month and forget about it.

Go for a walk or read a book instead of obsessing over the minutiae of day to day stock market fluctuations.

sol

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #27 on: April 24, 2019, 11:49:23 PM »
the returns aren’t linear and there have been extended periods of time where the returns are flat.

Last time I checked, there had never been a 20 year period when the stock market had negative returns.  If you intend to live at least 20 more years, stocks start to look like a sure bet.

Also, if you're considering waiting for a stock market correction so that you can buy back in, you might find it instructive to follow junioroldtimer's thread where he made the exact same decision.  He had an investing thesis about overvalued markets and impending political turmoil causing a near-term correction, and he sold out of VTSAX to hold cash until it arrived.  Thus far, that has been a terrible terrible decision.

You can't time the market, friends.  Buy every day if you can.
« Last Edit: April 24, 2019, 11:52:33 PM by sol »

Wintergreen78

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #28 on: April 25, 2019, 12:30:28 AM »
I have invested in VTSAX for 5-6 years in my Roth and my average buy in is like $56 or so right now.  It just seems so hard to put down a lump sum or even dollar cost average buy in when it is at almost $73.  Is it smart to wait a month or two and see if it drops or just go ahead now?

I think it is very smart to wait. I heard that the market might be at a top, which means it will definitely go down. I would actually take all of my money out of the bank and bury it in jars in my back yard. You don’t want to bury it in only one hole, just in case someone hops your fence in the middle of the night and digs up a jar.


RWD

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #29 on: April 25, 2019, 07:19:44 AM »
You're not alone in worrying about the market..... When will the top truly be in?


1/2013
https://forum.mrmoneymustache.com/investor-alley/is-now-a-bad-time-to-invest-in-stock-index-funds/
5/2013
https://forum.mrmoneymustache.com/investor-alley/starting-today!/
https://forum.mrmoneymustache.com/investor-alley/$80k-sitting-in-cash-bc-scared-of-high-flying-stock-mkt-punch-me/
10/2013
https://forum.mrmoneymustache.com/investor-alley/stock-market-expensive-now-alternatives/
5/2014
https://forum.mrmoneymustache.com/investor-alley/stock-market-is-high-am-i-too-late/
https://forum.mrmoneymustache.com/investor-alley/is-the-stock-market-too-expensive-to-get-back-in/
7/2014
https://forum.mrmoneymustache.com/investor-alley/current-market-has-me-scared-to-invest/
9/2014
https://forum.mrmoneymustache.com/investor-alley/is-it-a-good-time-to-invest-new-money/
10/2014
https://forum.mrmoneymustache.com/ask-a-mustachian/stock-market-would-you-buy-now-or-wait/
1/2015
https://forum.mrmoneymustache.com/investor-alley/stock-market-should-i-be-concerned/
3/2015
https://forum.mrmoneymustache.com/investor-alley/talk-me-out-of-timing-the-australian-market/
12/2015
https://forum.mrmoneymustache.com/ask-a-mustachian/where-to-put-a-large-windfall-with-stock-market-near-all-time-highs/
1/2016
https://forum.mrmoneymustache.com/investor-alley/about-to-sell-everything-talk-me-off-the-ledge-(or-push-me-off)-please!/
2/2017
https://forum.mrmoneymustache.com/investor-alley/does-anyone-think-we-are-in-a-bubble/
4/2017
https://forum.mrmoneymustache.com/investor-alley/top-is-in/
6/2017
https://forum.mrmoneymustache.com/continue-the-blog-conversation/recession-coming/
8/2017
https://forum.mrmoneymustache.com/investor-alley/getting-scared-of-stock-market/
1/2018
https://forum.mrmoneymustache.com/investor-alley/nervous-about-the-market/
3/2018
https://forum.mrmoneymustache.com/investor-alley/when-would-you-get-back-in/
5/2018
https://forum.mrmoneymustache.com/investor-alley/investing-in-a-bull-market/
6/2018
https://forum.mrmoneymustache.com/investor-alley/moving-to-cash-market-timing-can%27t-believe-it/
10/2018
https://forum.mrmoneymustache.com/welcome-to-the-forum/sell-index-funds-now-for-down-payment-during-recession/
2/2019
https://forum.mrmoneymustache.com/investor-alley/welp-i'm-going-to-take-a-stab-at-timing-the-market/
4/2019
https://forum.mrmoneymustache.com/investor-alley/buy-vtsax-now-while-its-this-high-or-wait-till-a-drop/

Miscellaneous
https://forum.mrmoneymustache.com/investor-alley/%27but-right-now-the-market-is-at-an-all-time-high-%27/
https://forum.mrmoneymustache.com/investor-alley/the-great-market-crash-of-2016!/
https://forum.mrmoneymustache.com/investor-alley/how-to-deal-with-losing-$117k-in-stock-market/
https://forum.mrmoneymustache.com/investor-alley/anyone-else-feeling-depressed-about-global-equities-10-year-outlook/
https://forum.mrmoneymustache.com/investor-alley/stocks-will-only-return-4-annually-for-next-decade-john-bogle/

fattest_foot

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #30 on: April 25, 2019, 09:04:47 AM »
We've had at least half a dozen people in this thread say that the market is "overpriced" or a "bubble." Can anyone explain to me why? Best I can see, the market just went through 7 months of being flat/down. We only just reached the level we were in back in September 2018.

If anything, I draw a trendline and the market seems undervalued.

I'm just curious what the metric is that I'm not looking at. We stopped just short of a 20% correction (otherwise known as a bear) at the end of last year, but it's still overpriced? At what point is the market value even? Does it require another 2008 recession?

Car Jack

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #31 on: April 25, 2019, 09:09:44 AM »
Set yourself a limit to buy.  Say $100.  That way, you get to kick yourself in the ass when it's at $100 and you've been waiting for it to drop.

DeniseNJ

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #32 on: April 25, 2019, 10:45:19 AM »
This is why the majority of your investments should be on auto-pilot and happening automatically. That way it removes you from the day to day concern about the price and forces the extremely important habit of investing regularly through both ups and downs.

I have a similar question to the OP but have read the responses and am starting to feel dumb.  I get it:  Jump in!  But my mom is giving my kids 10K a peice in a few days. I was going to dump it into their total market custodial accounts at vangaurd, but sheesh that DOW is through the roof.  I too wanted to wait a few weeks but after reading above, I know I should just disregard the numbers, esp since their timeline is like 30 years.  I invest on a regular basis for myself so I don't care what the top or bottom is but I'd hate to dump 20K in at these prices.

Should I just jump it or DCA over a few months or weeks?  How long to DCA?

JLee

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #33 on: April 25, 2019, 10:46:08 AM »
This is why the majority of your investments should be on auto-pilot and happening automatically. That way it removes you from the day to day concern about the price and forces the extremely important habit of investing regularly through both ups and downs.

I have a similar question to the OP but have read the responses and am starting to feel dumb.  I get it:  Jump in!  But my mom is giving my kids 10K a peice in a few days. I was going to dump it into their total market custodial accounts at vangaurd, but sheesh that DOW is through the roof.  I too wanted to wait a few weeks but after reading above, I know I should just disregard the numbers, esp since their timeline is like 30 years.  I invest on a regular basis for myself so I don't care what the top or bottom is but I'd hate to dump 20K in at these prices.

Should I just jump it or DCA over a few months or weeks?  How long to DCA?

If you didn't think the market was going to constantly go up over time, why are you investing at all?

If you do think the market is going to constantly go up over time, why are you hesitating?

RWD

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #34 on: April 25, 2019, 10:50:56 AM »
[...] but sheesh that DOW is through the roof.

It's lower than it was 7 months ago... Where is the roof, exactly?

DeniseNJ

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #35 on: April 25, 2019, 11:00:03 AM »
[...] but sheesh that DOW is through the roof.

It's lower than it was 7 months ago... Where is the roof, exactly?

I know, I know, I read The Top Is In.  It's just so high though.  I know that's just a perception but it's a feeling that's hard to shake when just a few months ago we were looking at 22 thousand and now it's over 26.  But I bow to the voices of reason.  I read the invester Bob article too, whcih really does help.

DeniseNJ

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #36 on: April 25, 2019, 11:05:10 AM »
This is why the majority of your investments should be on auto-pilot and happening automatically. That way it removes you from the day to day concern about the price and forces the extremely important habit of investing regularly through both ups and downs.

I have a similar question to the OP but have read the responses and am starting to feel dumb.  I get it:  Jump in!  But my mom is giving my kids 10K a peice in a few days. I was going to dump it into their total market custodial accounts at vangaurd, but sheesh that DOW is through the roof.  I too wanted to wait a few weeks but after reading above, I know I should just disregard the numbers, esp since their timeline is like 30 years.  I invest on a regular basis for myself so I don't care what the top or bottom is but I'd hate to dump 20K in at these prices.

Should I just jump it or DCA over a few months or weeks?  How long to DCA?

If you didn't think the market was going to constantly go up over time, why are you investing at all?

If you do think the market is going to constantly go up over time, why are you hesitating?

There'e a different phychology in my head there.  When it's high, I'm happy bc I have tons of money, and when it's low I'm happy bc I'm buying low at bargain rates.  For me it's a win-win.  But it feels different to dump my kids 20K onetime super gift from grandma into stocks.  It doesn't matter really and I'll likely buy as soon as I get the money, but I can't help feeling like the OP.  I'm heading over to re-read The Top Is In!

JLee

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #37 on: April 25, 2019, 11:20:28 AM »
[...] but sheesh that DOW is through the roof.

It's lower than it was 7 months ago... Where is the roof, exactly?

I know, I know, I read The Top Is In.  It's just so high though.  I know that's just a perception but it's a feeling that's hard to shake when just a few months ago we were looking at 22 thousand and now it's over 26.  But I bow to the voices of reason.  I read the invester Bob article too, whcih really does help.

And in 2013, it hit 15,000 for the first time :P

DeniseNJ

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #38 on: April 25, 2019, 11:23:28 AM »
[...] but sheesh that DOW is through the roof.

It's lower than it was 7 months ago... Where is the roof, exactly?

I know, I know, I read The Top Is In.  It's just so high though.  I know that's just a perception but it's a feeling that's hard to shake when just a few months ago we were looking at 22 thousand and now it's over 26.  But I bow to the voices of reason.  I read the invester Bob article too, whcih really does help.

And in 2013, it hit 15,000 for the first time :P

Wow--Read the JLCollins article in a link above.  OK, I'm all in!

Buffalo Chip

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #39 on: April 25, 2019, 02:11:00 PM »
Correct me if I’m wrong but the mean plus one SD for the Shiller PE ratio is somewhere in the 25 range. As of today the ratio is north of 30. That sure doesn’t scream “buying opportunity” to me. That said, in the end we’re doing is trying to predict human behavior which is notoriously fickle. Sad to say, my crystal ball is out for repairs.

That's probably about right, but remember that the 1990/2001 GAAP changes mean that the period before that isn't really comparable.

Companies also tend to do share buybacks over dividends which screws with Schiller P/E, and that is much more prevalent today than it was historically.

There's a decent article about that here:
https://www.philosophicaleconomics.com/2013/12/shiller/

If your time horizon is 30 years and you're thinking about intergenerational wealth, you're probably not doing yourself any favors by trying to market time. If you've got other irons in the fire (IMO basically everything else is just as expensive/overpriced as equities right now) maybe you can make an argument for not investing, but otherwise, I'd just start DCAing in.

-W

Walt: gotta give you some thanks. You pointed out the forehead slapping, glaring error in my logic. If one of my concerns is generational wealth, then obviously my time horizon is much longer.

I really like this forum.

Long haul

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #40 on: April 25, 2019, 05:42:18 PM »

What you need to do is lower the amount that you want to invest (each month?) to a point that is comfortable, or at least not painful. You considering investing too much in a lump sum. As far as the future, who knows, truly. Dollar cost averaging is your friend.

FIRE 20/20

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #41 on: April 25, 2019, 07:39:25 PM »
We've had at least half a dozen people in this thread say that the market is "overpriced" or a "bubble." Can anyone explain to me why? Best I can see, the market just went through 7 months of being flat/down. We only just reached the level we were in back in September 2018.

If anything, I draw a trendline and the market seems undervalued.

I'm just curious what the metric is that I'm not looking at. We stopped just short of a 20% correction (otherwise known as a bear) at the end of last year, but it's still overpriced? At what point is the market value even? Does it require another 2008 recession?

I can't speak for others, but most people who think that the markets are overvalued are looking at CAPE.  Look at this site: https://www.multpl.com/shiller-pe
I don't trust any CAPE values before the early 2000s because of the changes in the Generally Accepted Accounting Practices that changed how earnings are reported.  Because of that, I don't think we have enough data to know what an overvalued, fairly valued, or inexpensive CAPE looks like. 

John Galt incarnate!

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #42 on: April 26, 2019, 09:48:18 AM »
This is why the majority of your investments should be on auto-pilot and happening automatically. That way it removes you from the day to day concern about the price and forces the extremely important habit of investing regularly through both ups and downs.

I have a similar question to the OP but have read the responses and am starting to feel dumb.  I get it:  Jump in!  But my mom is giving my kids 10K a peice in a few days. I was going to dump it into their total market custodial accounts at vangaurd, but sheesh that DOW is through the roof.  I too wanted to wait a few weeks but after reading above, I know I should just disregard the numbers, esp since their timeline is like 30 years.  I invest on a regular basis for myself so I don't care what the top or bottom is but I'd hate to dump 20K in at these prices.

Should I just jump it or DCA over a few months or weeks?  How long to DCA?


https://irei.com/Drip-drop vs. big drop: An analysis of whether dollar-cost averaging or lump-sum investing offers better performance to investors
 By Greg Fisher February 1, 2019

^^^

This comparison of LS versus  DCA investing is the best I've ever read. Read it and you'll be well informed as to which is more rational for  you.



lowroller4111

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #43 on: April 26, 2019, 12:47:59 PM »
S&P500 forward PE is 17 now, not high at all.. for instance in mid 90s it was over 20 and market still went skyward for years.  Also the market has gone sideways since Jan 2018.. so that is a good amount of time consolidation.

Sent from my Pixel 3 XL using Tapatalk


2Birds1Stone

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #44 on: April 26, 2019, 01:37:55 PM »
I would wait till it goes up some more, and then but it.

MoneyTree

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #45 on: April 26, 2019, 03:17:58 PM »
You're not alone in worrying about the market..... When will the top truly be in?


Great list. I feel like there is at least 1 post per week asking some variation of this question, so I'm sure there are more. Maybe we should make a sticky post that aggregates all of these and add to it every time a new version of this question pops up.

Not saying this to shame anyone who has these feelings when markets are at highs (we've all been there), but it can be instructive and help people calm down.

Then again, the top is in thread is already kind of like a de-facto sticky post

use2betrix

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #46 on: April 26, 2019, 04:20:45 PM »
With the market this high I’m comfortable keeping my emergency fund higher in the event of a big drop. Even if my extra $50k misses out on 10% growth that’s $5000, or approximately 1/3 of what I’m saving each month right now. Sure worked out well when in December I told myself “if vtsax drops below $60/share I’m dropping $20k in.” So when I dropped $20k in on December 24, that ended up well. If it dropped down there again, I’d do it again.

I’ll take my chances right now and it’s also nice having the extra emergency fund with my volatile work. That being said, aside from my 401k contribution and match I currently have $5000 going into my taxable VTSAX at vanguard on the 5th and 20th of each month.
« Last Edit: April 26, 2019, 04:23:28 PM by use2betrix »

Travis

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #47 on: April 26, 2019, 09:17:15 PM »
I guess I would just have to invest in a month or two even if it went up.  I know you can't time the market but it is so high right now I just figured at some point soon it would take a small dip and I could invest a lump sum then!  My plan is to invest the max into my Roth every year for 30 + years!  Was just hoping it would drop below $70 sometime soon.  Thanks for your input!!!

You missed it then. The dip was six months ago. 

How much is a "small dip" to you?

FrugalSaver

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #48 on: April 27, 2019, 08:17:09 AM »
Correct me if I’m wrong but the mean plus one SD for the Shiller PE ratio is somewhere in the 25 range. As of today the ratio is north of 30. That sure doesn’t scream “buying opportunity” to me. That said, in the end we’re doing is trying to predict human behavior which is notoriously fickle. Sad to say, my crystal ball is out for repairs.

That's probably about right, but remember that the 1990/2001 GAAP changes mean that the period before that isn't really comparable.

Companies also tend to do share buybacks over dividends which screws with Schiller P/E, and that is much more prevalent today than it was historically.

There's a decent article about that here:
https://www.philosophicaleconomics.com/2013/12/shiller/

If your time horizon is 30 years and you're thinking about intergenerational wealth, you're probably not doing yourself any favors by trying to market time. If you've got other irons in the fire (IMO basically everything else is just as expensive/overpriced as equities right now) maybe you can make an argument for not investing, but otherwise, I'd just start DCAing in.

-W

Walt: gotta give you some thanks. You pointed out the forehead slapping, glaring error in my logic. If one of my concerns is generational wealth, then obviously my time horizon is much longer.

I really like this forum.

Did you plow a ton of money in on 12/24/18?  If you held the views then that you seemto now in this thread and didn’t act then aggressively,why not?

Sure you could have said maybe it’s going to go down 50% and not just 20% but you missed the rebound. This is how corrections are supposed to work. The correction under the last administration was the slowest in history for various reasons

Also, be careful where you get your news. The “media” is dying for a recession to happen for political reasons. That’s sad as so many people get hurt. Then they had it pushed in their face again with 3.2% GDP. That was in the face of a overly aggressive fed tightening rates too fast for the global economy while ECB is lowering etc.

When making investment choices I’d make sure to tune out the “media” as they aren’t looking out for you and many people missed a huge opportunity again just 4 months ago as things are just getting started.

What’s happening right now is generational

waltworks

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Re: Buy VTSAX now while its this high or wait till a drop?
« Reply #49 on: April 27, 2019, 09:01:42 AM »
https://www.multpl.com/s-p-500-earnings

If you want a positive story, take a look at per-share earnings. The 2009 earnings are (mostly) still on the CAPE10, which is why you can have an (IMO) reasonable P/E of 22 and a CAPE10 of 31 (crazy high).

It'll drop some over the next year or two just from poor earnings falling off the measure, even if stock prices continue to increase.

-W