Author Topic: Buying back in to the market  (Read 3863 times)

frugalnacho

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Re: Buying back in to the market
« Reply #50 on: February 28, 2020, 07:25:17 AM »
Seriously doubt any of you guys advising to go "all in" right now would do so if you were in that position.

You might be inured to the daily ups and downs by virtue of already having a fully invested portfolio. OP isn't in that position right now.

How would you go buying $1m of VTSAX in the morning and watching $30,000 evaporate by mid afternoon? How would you tell your wives that at the dinner table?

@frugaldrummer - do what makes you sleep at night. I get it, I understand this is not an easy emotional call. Everyone says ignore emotion and follow the maths, but not everyone can act like a robot on every decision.

Perhaps a strategy to buy back in 10% per month will do. You may come out ahead, you may not. Who cares at the end of the day, you won't be waking up in cold sweats.

Dude I am literally "all in" right now.  I have the option to sell any/all of my stocks and I haven't done so because I would rather own those shares than have the cash.   Not selling is the same decision to buy.  If I had $600k cash right now and no investments, would I invest it all?  If not, then why would I continue to hold $600k in investments when I have the option to sell and convert it to cash?  I hold my investments precisely because I prefer that to cash.

Dude, you totally missed the point of my post. I said people like you fully invested are inured to the ups and downs. But if you have a very large pot of cash, your psychology about that pot of cash will most definitely change, especially if you see the value of it suddenly drop by $10,000 per hour the moment after you hit the buy button. You will question your decision, your sanity and your life choices - its basic human nature.

I agree that not selling is the same as buying, but most people are not going to see it that way when their finger hovers over the buy button.

I don't know, I've had large pots of cash before and never had the psychological hesitation you are describing.  I just plowed it in according to my IPS, knowing full well it could immediately go up or down (but statistically it will increase over my investment time frame).  But my intention was to invest according to my IPS all along and just roll with the ups and downs, and that's what I've done.  I can't control the market, I can just make the most optimal decision with the information at hand, and I believe that the most optimal decision at any given point in time is to invest that money and not worry about how it's going to perform in the short term.

HamsterStache

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Re: Buying back in to the market
« Reply #51 on: February 28, 2020, 07:38:13 AM »
While it did feel a little scary to do so, knowing the value could drop drastically by the end of the day, I did just throw $1,000 of tax refund money into my retirement account today. I still have a 30 year horizon on that, so I know I will come out ahead in the end, and if I didn't think that was the case, I shouldn't even have a retirement fund invested in the market no matter what the market was currently doing, so...

charis

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Re: Buying back in to the market
« Reply #52 on: February 28, 2020, 08:05:08 AM »
While it did feel a little scary to do so, knowing the value could drop drastically by the end of the day, I did just throw $1,000 of tax refund money into my retirement account today. I still have a 30 year horizon on that, so I know I will come out ahead in the end, and if I didn't think that was the case, I shouldn't even have a retirement fund invested in the market no matter what the market was currently doing, so...

I did the same thing on Wednesday, "lost" about 5% of that the following day and looks to be similar today.  Luckily, 1K isn't that much money, but it turns out that throwing extra cash into the market during a downturn is just an attempt at market timing. I'll be sticking to my weekly payroll deposits from here on out.

HamsterStache

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Re: Buying back in to the market
« Reply #53 on: February 28, 2020, 09:00:09 AM »
While it did feel a little scary to do so, knowing the value could drop drastically by the end of the day, I did just throw $1,000 of tax refund money into my retirement account today. I still have a 30 year horizon on that, so I know I will come out ahead in the end, and if I didn't think that was the case, I shouldn't even have a retirement fund invested in the market no matter what the market was currently doing, so...

I did the same thing on Wednesday, "lost" about 5% of that the following day and looks to be similar today.  Luckily, 1K isn't that much money, but it turns out that throwing extra cash into the market during a downturn is just an attempt at market timing. I'll be sticking to my weekly payroll deposits from here on out.

I'm still at the stage where $1K is not insignificant, but not a critical amount that I should be keeping on hand. I wasn't trying to time the market - refund literally came through this morning and it was always the plan to add $1K of it into retirement fund. It just so happened that the market is rather...interesting...at the moment.

frugaldrummer

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Re: Buying back in to the market
« Reply #54 on: March 09, 2020, 05:29:24 PM »
Well I haven't bought back in yet, and it's continue to fall in the last 9-10 days. I actually still think it has more distance to fall, as the reality of this hasn't quite hit the average Joe yet, and many stocks are still overpriced (AAPL still has a P/E of 21 or some such). But I'm aware of the difficulties of hitting at the exact bottom, may start putting it back in bit by bit soon as the Dow is already down 20% from when I sold.

dougules

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Re: Buying back in to the market
« Reply #55 on: March 11, 2020, 03:57:16 PM »
Well I haven't bought back in yet, and it's continue to fall in the last 9-10 days. I actually still think it has more distance to fall, as the reality of this hasn't quite hit the average Joe yet, and many stocks are still overpriced (AAPL still has a P/E of 21 or some such). But I'm aware of the difficulties of hitting at the exact bottom, may start putting it back in bit by bit soon as the Dow is already down 20% from when I sold.

Good luck.  I'm not going to bet against the house. 

ice_beard

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Re: Buying back in to the market
« Reply #56 on: March 11, 2020, 04:53:03 PM »

I think the market was pretty frothy in the first place, and figure average Joe investors will panic sell once quarantines start in the US.

If California's response is any indication, don't expect significant quarantines. 

Sacramento, Yolo and Placer County today switched from containment strategies to mitigation (thank goodness).  https://www.npr.org/sections/health-shots/2020/03/10/813990993/coronavirus-sacramento-county-gives-up-on-automatic-14-day-quarantines

This virus is in the communities already.  The best we can do is be smart.  If you're old or immuno-compromised, you might want to "self quarantine". 

I'm buying on the way down and the way up. 

ChpBstrd

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Re: Buying back in to the market
« Reply #57 on: March 11, 2020, 07:08:42 PM »
@frugaldrummer congrats on your prescient timing so far! However you have experienced no gains yet, and your opportunity to increase the number of shares owned could evaporate in a short period of time. Plus you are up against the psychological barrier of having to (in public?) reverse a decision that has worked splendidly - probably resulting in humiliating losses for a while.

Now you must manage the pressure to pick the exact bottom and instead accept a “good enough” outperformance of the market. Today that number is close to 18%, but next week it could be 25% or just 5%. In late December 2018, when everyone was predicting a market collapse and recession, lots of people were calling it a bear trap as the markets rallied, and rallied, and continued rallying. All that was despite the worst case scenario that triggered the correction coming to fruition- Trump’s trade war. It is possible that COVID-19 could start killing tens of thousands in the US and markets could simultaneously rally. Stocks have been unbothered by HIV and tens of thousands of deaths from regular flu for decades now.

One way to lock in gains but remain insulated from losing too much money would be to buy call options. You will probably lose a little bit of money this way, but more importantly you’ll protect yourself from a scenario where the market runs away without you.


waltworks

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Re: Buying back in to the market
« Reply #58 on: March 11, 2020, 07:15:52 PM »
Yeah, for crap's sake - you can buy back in, take a 20% gain, and brag about it here and I'll publicly high-five you.

Ok, maybe foot-bump, or something.

But still... you just managed the almost impossible. Quit while you're ahead...

-W