Poll

Given the scenario what do you advise?

a) Sell at a big loss now
b) Sell off in chunks as(if) they rise
c) Hold and treat them as a valuable lesson on speculation. They do add diversity after all

Author Topic: I fucked up, please help -_-  (Read 16922 times)

2Birds1Stone

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I fucked up, please help -_-
« on: February 05, 2015, 01:45:36 PM »
Hey everyone, as per thegoblinchief's recommendation to start a separate thread on this topic outside my journal here it is.

He was skimming my log and dishing much deserved face punches. One thing he commented on was how heavy my portfolio tilts toward commodities. So I explained how I made a HUGE mistake 2 years ago that ultimately cost me a great deal of money.

So its winter 2013, QE has everyone talking about rampant inflation and how our financial system is doomed. I had just gotten into investing the previous year and was not as educated as I am now.  I have most of my net worth sitting in cash in an online bank account. I get convinced into dumping majority of it into gold and silver a month later, prices plunge. What do I do?? I buy more, thinking that I would lower my average cost and sell when its back up, fast forward a year later and it keeps dropping, I keep buying little by little till cash dries up. I am still investing into Roth IRA and 401k but suddenly half of my net worth is in precious metals. I stop buying at the end of 2013. Prices gyrate around their multi year lows and I keep stacking cash, stocks, and bonds.

Currently PM's make up ~30% of my investable assets. I am down -$9500 in unrealized losses. While I agree this is a stupid allocation to have, being so early in my accumulation phase I figure my best course of action is to refrain from selling at a loss, and stack up my other asset classes till PM's make up a marginal portion. If we do manage to shake these deflationary pressures then commodity prices should rebound. I would gladly unload some in case of a run up. But selling while being down 26% doesn't sit right.

With precious metals at multi year lows, and stocks at multi year highs, what would you do? My options are

a) Sell at a big loss now
b) Sell off in chunks as(if) they rise
c) Hold them and treat them as a valuable lesson on speculation. They do add diversity after all

Allen

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Re: I fucked up, please help -_-
« Reply #1 on: February 05, 2015, 01:52:40 PM »
DOH

I would recommend Choice A.

Also, I've made bigger and dumber mistakes, so don't feel bad!

RWD

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Re: I fucked up, please help -_-
« Reply #2 on: February 05, 2015, 02:00:37 PM »
You need to decide what you want your asset allocation to be, ignoring what you have now. Then rebalance to match that. Forget what you've already lost in the past and focus on what you should do with what you have now.

I personally don't believe that precious metals are worth holding as a reliable way to make money. Historically gold has barely beat inflation.

ioseftavi

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Re: I fucked up, please help -_-
« Reply #3 on: February 05, 2015, 02:00:47 PM »
A big part of being a successful investor is making logical choices that don't always feel very good emotionally.  But that's the job of an investor.  Whether you like picking individual stocks or not, Benjamin Graham has probably written the best words on investing: "The investor’s chief problem - and even his worst enemy - is likely to be himself.”

$10,000 bucks is nothing to a budding mustachian, and you're kicking ass at 27.  Reallocate the money, move on with your life, and consider it an extremely cheap education.  You learned a valuable lesson, and it cost you a painful amount of money that you'll recover from in less than a year - maybe less than 6 months. 

workathomedad

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Re: I fucked up, please help -_-
« Reply #4 on: February 05, 2015, 02:04:36 PM »
Most asset allocation strategies include 20-30% real assets like commodities. Depending on your designated asset allocation strategy, you may want to sell or buy more Gold (or other real assets) at your rebalance point. This is generally done yearly.

http://mebfaber.com/2013/07/31/asset-allocation-strategies-2/

I chose to always keep 20% of my portfolio in Gold and Silver, and buy or sell yearly based on whether it is above or below that allocation %.

Socmonkey

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Re: I fucked up, please help -_-
« Reply #5 on: February 05, 2015, 02:07:53 PM »
C:

I would keep them. They can serve as a reminder, and as you add to other investments they will continue to make up a smaller and smaller position. When there is another large crash, they might spike up like 2008-2011.

marty998

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Re: I fucked up, please help -_-
« Reply #6 on: February 05, 2015, 02:10:10 PM »
One day you'll realise $9,500 isn't a lot of money to lose sweat about.

I learned my trading lesson losing almost 8 times that amount.

Commodities will be down for a while yet. The Saudi's can keep flooding the world with cheap oil for as long as they want. Our Aussie miners BHP and RIO plus Brazil's Vale are trying to kill off all the small iron ore miner competition too.

Gold is a bit all over the shop, don't think anyone has ever made a gold price prediction that has remotely come anywhere near reality.

You will only know what's best with the benefit of hindsight. If I were you I'd draw a line in the sand, sell up and move on.

It took losing a bucket of cash for me (at 22) to figure out the whole investing thing. See it as money well spent, so you can now start investing properly.

Louisville

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Re: I fucked up, please help -_-
« Reply #7 on: February 05, 2015, 02:11:19 PM »
Most asset allocation strategies include 20-30% real assets like commodities.

They do? I haven't seen that.

tarheeldan

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Re: I fucked up, please help -_-
« Reply #8 on: February 05, 2015, 02:12:47 PM »
I agree with RWD in the sense that you should ignore your losses.

Would you buy PM's now? If so, then you might hold on to them or some of them.

If you do - and this is something I would suggest in the future for any individual stocks or spec plays - put a stop on. Your psychology will always get you buying high and selling low the way you did, and stops give you the discipline you need. Even your idea about selling as the prices come back up is an example of this. You should limit your losses but let your gains be unlimited, you can use trailing stops to do that.

DoubleDown

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Re: I fucked up, please help -_-
« Reply #9 on: February 05, 2015, 02:13:52 PM »
I wouldn't do anything until you determine what percentage (if any) you want precious metals to make up in your overall asset allocation. If you decide there's a place for them, then I'd do a combination of (B) and (C). That is, just sink your future contributions into other assets like stocks so that your amount of holdings in metals will go down (as a percentage of your overall assets) over time. If there's a point where metals recover in price along the way, you could decide to unload some or all to expedite the process of reducing your allocation there.

But as you essentially stated, right now the losses are "on paper" and you will lock in those losses by selling now. If you were talking about some speculative stock holdings that were on their way down I would advocate getting out now. But since we're talking about gold/silver that's likely to make some kind of rebound (eventually), I'd be inclined to wait it out and not guarantee myself losses right now.

And as others have said, $9500 won't be much in the scheme of things later on, so don't sweat it.

frugledoc

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Re: I fucked up, please help -_-
« Reply #10 on: February 05, 2015, 02:16:47 PM »
Don't beat yourself up too much.

I think a lot of investors lose a lot of money when they start due to inexperience and naivety.


I am probably down more than you as I bought heavily into gold mining equities and junior oil companies.  The junior mining fund I bought had doubled my money at one point and is now down about 70% or more.

I still hold them as a reminder to myself not to make stupid speculative punts.

skyrefuge

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Re: I fucked up, please help -_-
« Reply #11 on: February 05, 2015, 02:22:32 PM »
You need to decide what you want your asset allocation to be, ignoring what you have now. Then rebalance to match that. Forget what you've already lost in the past and focus on what you should do with what you have now.

+9500.

I would add a minor psychological reason to sell (assuming that's what your Investment Policy Statement tells you to do) rather than keeping it as some sort of mistake-reminder: you've already shown an inclination to be lured towards the shiny stuff. By keeping it around in your portfolio, at some point when it goes up, it could start singing its sweet siren song to you again. "2Birds1Stone...come to meee!" Or not, who knows; I'm not a psychologist, stop asking me these questions!!!!1!

antarestar

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Re: I fucked up, please help -_-
« Reply #12 on: February 05, 2015, 02:26:50 PM »
Pennies, nickels, quarters, dimes
    come to us while there’s still time.
Golden ducky ever bold
    look into our eyes of gold(Home)

https://www.youtube.com/watch?v=Fvmzc5siEpk

GGNoob

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Re: I fucked up, please help -_-
« Reply #13 on: February 05, 2015, 02:38:55 PM »
You need to decide what you want your asset allocation to be, ignoring what you have now. Then rebalance to match that. Forget what you've already lost in the past and focus on what you should do with what you have now.

This. Decide on your desired allocation and rebalance all funds to that new allocation, regardless of losses. I voted for A.

If these losses are in a taxable account, I'd assume you'd be able to claim them.

Cpa Cat

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Re: I fucked up, please help -_-
« Reply #14 on: February 05, 2015, 02:40:07 PM »
If it were me, I would dump it immediately. Too much opportunity cost - I'm missing out on good times elsewhere in order to hold it.

If it pained me too much to dump the precious metals immediately, I would choose to dump them as soon as I realized a gain elsewhere. I would certainly harvest $3,000 of that loss by year end for the capital loss deduction on my 1040.

In the future - remember not to speculate on commodities.

Financial.Velociraptor

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Re: I fucked up, please help -_-
« Reply #15 on: February 05, 2015, 03:29:57 PM »
I recently went from zip to roughly 4% gold allocation.  Twelve hundred bucks or so is the shut down point for the marginal producers so further downside is limited.  ECB and JCB are printing money like there is no tomorrow and the Chinese and Indians are still big buyers of gold.  I intend to sell half at 1600/ounce and put a trailing stop on the rest.  Admittedly, this is from the "macro speculation" portion of my portfolio that almost always underperforms the "buy/hold(Kingdom)" portion and "write options for income" portion.

Ninetyfivehunnit bux is not that much money in the grand scheme of things.  If you send me PM, I'll tell you a story of how I made 98,000 over five months and lost 118,000 over about 5 hours.  That's reckless speculation, friend.  Forrest Gump's mamma always said stupid is as stupid does; and the Lizard King says 'stupid is as stupid doesn't learn from its own mistakes.'

You have to make your own decision but I would remind you of this: the hardest and most important thing for investors to learn is patience.  So 1) you should never buy anything you aren't comfortable for holding at least 5 years 2) you should take a moment to examine your head whenever selling something held for less than 5 years.

My vote is hold and build out other areas of portfolio until your PM allocation gets into your long term desired range.  At 27 and stachian, it shouldn't take you long.

pillow

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Re: I fucked up, please help -_-
« Reply #16 on: February 05, 2015, 05:24:56 PM »
From a charts perspective, it appears that gold (GLD) has bottomed and is moving up.  I would hold at least until you recoop some of your losses.  Then reallocate.  If you sell now, it looks like to me you are selling at a bottom (or close to it).  Either that, or sell a portion and reallocate to oil??? - looks to me like that has bottomed and is on its way back.

goodrookie

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Re: I fucked up, please help -_-
« Reply #17 on: February 05, 2015, 05:37:01 PM »
@2Birds1Stone:
I am sorry for your loss. I will try give you practical advice rather than one size fits all explanation like some people are advocating. Please give us a bit more information.
1) How much is your yearly after-tax income and how much is your expenses? If you don't want to make this information public, give us a ratio.
2) How is your job security? (more like tenured teacher or more like car salesman?)
3) What are the underlying security symbols that are in questions? A chart is a thousand words.

2Birds1Stone

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Re: I fucked up, please help -_-
« Reply #18 on: February 05, 2015, 07:32:57 PM »
From a charts perspective, it appears that gold (GLD) has bottomed and is moving up.  I would hold at least until you recoop some of your losses.  Then reallocate.  If you sell now, it looks like to me you are selling at a bottom (or close to it).  Either that, or sell a portion and reallocate to oil??? - looks to me like that has bottomed and is on its way back.

I am not exactly sold on charting and past performance but I agree, there is more upside than downside at this point. Learned a valuable lesson about catching knives.

I recently went from zip to roughly 4% gold allocation.  Twelve hundred bucks or so is the shut down point for the marginal producers so further downside is limited.  ECB and JCB are printing money like there is no tomorrow and the Chinese and Indians are still big buyers of gold.  I intend to sell half at 1600/ounce and put a trailing stop on the rest.  Admittedly, this is from the "macro speculation" portion of my portfolio that almost always underperforms the "buy/hold(Kingdom)" portion and "write options for income" portion.

Ninetyfivehunnit bux is not that much money in the grand scheme of things.  If you send me PM, I'll tell you a story of how I made 98,000 over five months and lost 118,000 over about 5 hours.  That's reckless speculation, friend.  Forrest Gump's mamma always said stupid is as stupid does; and the Lizard King says 'stupid is as stupid doesn't learn from its own mistakes.'

You have to make your own decision but I would remind you of this: the hardest and most important thing for investors to learn is patience.  So 1) you should never buy anything you aren't comfortable for holding at least 5 years 2) you should take a moment to examine your head whenever selling something held for less than 5 years.

My vote is hold and build out other areas of portfolio until your PM allocation gets into your long term desired range.  At 27 and stachian, it shouldn't take you long.

Great advice, I learned my lesson. The thing about gold/silver is that I did plan on holding for a long time. I didn't however expect them to give me a nice haircut over the course of a year. Silver went from all time highs and plunged 70% to where its at now. Gold dropped a solid 35-40% Which is a big reason I don't think selling now is a good idea.

If it were me, I would dump it immediately. Too much opportunity cost - I'm missing out on good times elsewhere in order to hold it.

If it pained me too much to dump the precious metals immediately, I would choose to dump them as soon as I realized a gain elsewhere. I would certainly harvest $3,000 of that loss by year end for the capital loss deduction on my 1040.

In the future - remember not to speculate on commodities.

Lesson learned, however I think I will hold as I believe the upside potential is there. I will accumulate in other areas of my portfolio and make my PM position smaller.

You need to decide what you want your asset allocation to be, ignoring what you have now. Then rebalance to match that. Forget what you've already lost in the past and focus on what you should do with what you have now.

+9500.

I would add a minor psychological reason to sell (assuming that's what your Investment Policy Statement tells you to do) rather than keeping it as some sort of mistake-reminder: you've already shown an inclination to be lured towards the shiny stuff. By keeping it around in your portfolio, at some point when it goes up, it could start singing its sweet siren song to you again. "2Birds1Stone...come to meee!" Or not, who knows; I'm not a psychologist, stop asking me these questions!!!!1!

Trust me, if they rise I will be looking to sell, not accumulate more. I learned a valuable lesson.

Don't beat yourself up too much.

I think a lot of investors lose a lot of money when they start due to inexperience and naivety.


I am probably down more than you as I bought heavily into gold mining equities and junior oil companies.  The junior mining fund I bought had doubled my money at one point and is now down about 70% or more.

I still hold them as a reminder to myself not to make stupid speculative punts.

I purchased miners AFTER the huge drop in PM's and have made out pretty well so far. I have Vanguards PM & Mining fund, not a ton but about 5% of my overall portfolio.

I wouldn't do anything until you determine what percentage (if any) you want precious metals to make up in your overall asset allocation. If you decide there's a place for them, then I'd do a combination of (B) and (C). That is, just sink your future contributions into other assets like stocks so that your amount of holdings in metals will go down (as a percentage of your overall assets) over time. If there's a point where metals recover in price along the way, you could decide to unload some or all to expedite the process of reducing your allocation there.

But as you essentially stated, right now the losses are "on paper" and you will lock in those losses by selling now. If you were talking about some speculative stock holdings that were on their way down I would advocate getting out now. But since we're talking about gold/silver that's likely to make some kind of rebound (eventually), I'd be inclined to wait it out and not guarantee myself losses right now.

And as others have said, $9500 won't be much in the scheme of things later on, so don't sweat it.

Realistically I would like PM's to represent 10-15% of my overall portfolio. I know that sounds crazy to some here on the boards. It helps me sleep at night knowing that if there is a rush toward safe haven asset classes I am protected. My current 30% position does not bode well.

Most asset allocation strategies include 20-30% real assets like commodities. Depending on your designated asset allocation strategy, you may want to sell or buy more Gold (or other real assets) at your rebalance point. This is generally done yearly.

http://mebfaber.com/2013/07/31/asset-allocation-strategies-2/

I chose to always keep 20% of my portfolio in Gold and Silver, and buy or sell yearly based on whether it is above or below that allocation %.

I think 10-15% will be a good spot for me. I am in the very early stages of accumulation still. This will be a good lesson moving forward.

@2Birds1Stone:
I am sorry for your loss. I will try give you practical advice rather than one size fits all explanation like some people are advocating. Please give us a bit more information.
1) How much is your yearly after-tax income and how much is your expenses? If you don't want to make this information public, give us a ratio.
2) How is your job security? (more like tenured teacher or more like car salesman?)
3) What are the underlying security symbols that are in questions? A chart is a thousand words.

Current salary is $47k gross, next year it will be $70k+ with incentive comps. Current budget is ~$20k/yr Savings is ~$20k/yr
Job Security is unknown, I started a new career in IT sales and I have only been with the company for 2 months. I am learning a new industry, skill set, and honing my business acumen. I have a feeling that if things got shaky I will be in a good position to find work in business to business sales.
Security symbols are GLD/SLV

goodrookie

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Re: I fucked up, please help -_-
« Reply #19 on: February 05, 2015, 08:29:07 PM »
@2Birds1Stone: First of all, you have a good savings rate which is very impressive if you do live in NYC. Now onto business.

What many people do not understand is that you yourself is an asset. I.e. your skills = your investments as well and just like a stock/bond/real estate, etc. "you" can be a risky asset. Based on the information you provided, I think your job is not yet secured enough (only 2 months into and you are young). It would make it very costly and risky to sell those right away.

You should sell GLD soon. for SLV, I would wait 5-6 months. If you then feel completely secured about your job (you'll know), you should sell SLV.
« Last Edit: February 05, 2015, 08:49:06 PM by goodrookie »

dungoofed

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Re: I fucked up, please help -_-
« Reply #20 on: February 05, 2015, 11:21:30 PM »
From a charts perspective, it appears that gold (GLD) has bottomed and is moving up.  I would hold at least until you recoop some of your losses.  Then reallocate.  If you sell now, it looks like to me you are selling at a bottom (or close to it).  Either that, or sell a portion and reallocate to oil??? - looks to me like that has bottomed and is on its way back.

It's actually better than that. Gold is having a bull run against all currencies except USD. US is one painful revelation away from turning on the QE spigot again.


eyePod

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Re: I fucked up, please help -_-
« Reply #21 on: February 06, 2015, 06:28:47 AM »
At least you screwed up in commodities instead of screwing up in real estate! And 10k is harsh but you'll make it up quickly.

RichMoose

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Re: I fucked up, please help -_-
« Reply #22 on: February 06, 2015, 07:35:32 AM »
Is it in a taxable account? This is obviously an expensive lesson, but I would consider selling your GLD/SLV now and booking the loss. Use the money to buy Vanguards VGPMX so at least you diversify and are exposed to companies with good management that generate income. The same can't be said for theoretically holding a gold bar. I think it might be dumb to completely get out of it at this point, knowing full well that it doesn't have much more room to drop barring a complete disaster scenario. However, it could take a long time to go back up.

Don't invest any more into it thinking the knife has already fallen and hit the floor. Stick with the tried and true. Ten years from now the small portion of your portfolio in VGPMX might be a good reminder of your early mistakes. 

thesinecure

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Re: I fucked up, please help -_-
« Reply #23 on: February 09, 2015, 02:42:01 PM »
I'm going to suggest option D - just hold it.

It's unrealized losses at this point, so unless you want or need a tax deduction this year or you believe prices are imminently going lower, there's no real downside to just holding on.  As another poster mentioned, precious metals are getting more expensive in almost every other currency except USD.  There are a lot of really smart people out there who would tell you that can't last much longer.

If the stock market continues to chug higher, this holding becomes a smaller percentage of your overall investments anyway so it kind of rebalances itself in that way.  If the market doesn't continue higher, I suspect you'll be glad you have some of this stuff in your portfolio.

Ultimately, you need to decide why you own gold and silver, though.  Is it truly speculation?  Is it just allocation to another asset class?  Is it protection against money printing and loss of currency value?  Could be any other of a number of reasons, but you need to figure that out, set a plan and stick with it.

Bicycle_B

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Re: I fucked up, please help -_-
« Reply #24 on: February 09, 2015, 06:07:59 PM »
As Logan and Tuxedo pointed out, selling now entitles you a tax loss.  Last time I checked, you can deduct up to $3000 in losses from your normal income (job income).  In the $70k range, you'd save about 25% of that in taxes, recouping $750.  So here's one idea:  sell at least $3000.

FWIW, the logic you have been using is what I call "normal investor logic", which leads to thoughts like "I'll hold until it goes back up to even." Understandable, but...investing is a weird game because normal often doesn't work so well. 

One key thing to know is that if your emotions are normal, it helps to get the emotions out of the mix to the extent possible, and instead use some reliable system - preferably one that works with little effort.  I believe Mr. Money Mustache recommends 2/3 in low cost stock funds (eg, through Vanguard) and 1/3 bond funds (same), or similar accounts through Betterment.  Regardless of what system you adopt, the benefits come from sticking with it.  So I support the posts of the other commenters who suggested establishing a plan, Investment Policy, etc.

One final comment since you are new at this.  Metals vs stocks vs bonds vs cash vs real estate all have their day in the sun.  When they're hot, a host of "experts" will issue portfolio recommendations featuring a large portion of the era's hot asset class.  Then they drop off; after a while, only a small group advocates it heavily.  FWIW, I've been watching investments for 30 years and buying for 20 (oops! 10 year mistake!) and the eras when metals win seem few.  Regardless of your specific choice, I applaud your thrift, and the fact you are investing aggressively when young.  Mr. Money Mustache doesn't recommend precious metals as far as I can tell...but times can change and you call the shots.
 

KD

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Re: I fucked up, please help -_-
« Reply #25 on: February 09, 2015, 08:09:58 PM »
Stop listening to the Talking Heads that got you into this mess my friend!  They will have you 'Mexican Jumping Bean' every which way and a good 95-99% of the time they'll still manage to get in your back pocket. 

I'm assuming a day trader is not what you're after being?  ...and long term stability w/growth (don't lose the money but make it grow) is the outcome you are seeking???

You're going to need to study your own risk aversion, why you're investing and what do people recommend for a long term strategy for a beginner.  No need to dive in the deep end your first few days at the pool.  Read, read, read. 

2Birds1Stone

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Re: I fucked up, please help -_-
« Reply #26 on: February 13, 2015, 07:39:48 AM »
Thanks for all of the advice everyone.

Tyler

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Re: I fucked up, please help -_-
« Reply #27 on: February 13, 2015, 10:04:34 AM »
You need to decide what you want your asset allocation to be, ignoring what you have now. Then rebalance to match that. Forget what you've already lost in the past and focus on what you should do with what you have now.

This.

It's important to remember that if your instinct is to believe you made a massive mistake when something goes down and to yank all your money out and put it into recent performers, you're always going to be selling low and buying high. It's a very poor strategy regardless of what asset class you're holding.

On the plus side, you've already done a good job using stocks, bonds, and cash to diversify with new money. As part of your investment research I'd recommend reading about the Permanent Portfolio.  It holds stocks, bonds, gold, and cash and seems like it may be right up your alley.
« Last Edit: February 13, 2015, 10:18:26 AM by Tyler »

arebelspy

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Re: I fucked up, please help -_-
« Reply #28 on: February 14, 2015, 12:18:19 PM »
Think of the amount you need to save to hit FI.  9500 is a small percent of that.  This is a tiny speed bump, not a fuck up.

I lost over 10x that fucking up investing when I was in my early 20s.  I'm still on track to FIRE very quickly.

Sell, learn from it, and move on.  You'll be fine, and laugh about the lesson one day soon.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
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Jags4186

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Re: I fucked up, please help -_-
« Reply #29 on: February 14, 2015, 01:16:48 PM »
Yea I'd sell, take the $3000 loss on your taxes, then sell $6500 of winners (if you have) and harvest the gain.

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Re: I fucked up, please help -_-
« Reply #30 on: February 14, 2015, 03:23:38 PM »
Hey everyone, as per thegoblinchief's recommendation to start a separate thread on this topic outside my journal here it is.

He was skimming my log and dishing much deserved face punches. One thing he commented on was how heavy my portfolio tilts toward commodities. So I explained how I made a HUGE mistake 2 years ago that ultimately cost me a great deal of money.

So its winter 2013, QE has everyone talking about rampant inflation and how our financial system is doomed. I had just gotten into investing the previous year and was not as educated as I am now.  I have most of my net worth sitting in cash in an online bank account. I get convinced into dumping majority of it into gold and silver a month later, prices plunge. What do I do?? I buy more, thinking that I would lower my average cost and sell when its back up, fast forward a year later and it keeps dropping, I keep buying little by little till cash dries up. I am still investing into Roth IRA and 401k but suddenly half of my net worth is in precious metals. I stop buying at the end of 2013. Prices gyrate around their multi year lows and I keep stacking cash, stocks, and bonds.

Currently PM's make up ~30% of my investable assets. I am down -$9500 in unrealized losses. While I agree this is a stupid allocation to have, being so early in my accumulation phase I figure my best course of action is to refrain from selling at a loss, and stack up my other asset classes till PM's make up a marginal portion. If we do manage to shake these deflationary pressures then commodity prices should rebound. I would gladly unload some in case of a run up. But selling while being down 26% doesn't sit right.

With precious metals at multi year lows, and stocks at multi year highs, what would you do? My options are

a) Sell at a big loss now
b) Sell off in chunks as(if) they rise
c) Hold them and treat them as a valuable lesson on speculation. They do add diversity after all

Yeah, I bought 100 shares of SLV in 2013 @ $20/share to 'diversify' (it was after all around $40 six months prior to my buy). Then it went down to $18 and I bought another 100 shares. Then another 100 at $17 and yet another $100 @ $16. So, here I am w/400 shares.  Fortunately this only represents about 1% of my portfolio...so I'm riding it out.

Check with your accountant before cutting your losses. I think you can only claim $3000/year in losses on your tax return.

Me, I'm just going to hold. It'll go back up eventually. I don't need the money and just consider it a lesson learned. The End.

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Re: I fucked up, please help -_-
« Reply #31 on: February 14, 2015, 03:28:50 PM »
Yea I'd sell, take the $3000 loss on your taxes, then sell $6500 of winners (if you have) and harvest the gain.

Yeah, I bought 100 shares of SLV in 2013 @ $20/share to 'diversify' (it was after all around $40 six months prior to my buy). Then it went down to $18 and I bought another 100 shares. Then another 100 at $17 and yet another $100 @ $16. So, here I am w/400 shares.  Fortunately this only represents about 1% of my portfolio...so I'm riding it out.

Check with your accountant before cutting your losses. I think you can only claim $3000/year in losses on your tax return.

Me, I'm just going to hold. It'll go back up eventually. I don't need the money and just consider it a lesson learned. The End.
Think of the amount you need to save to hit FI.  9500 is a small percent of that.  This is a tiny speed bump, not a fuck up.

I lost over 10x that fucking up investing when I was in my early 20s.  I'm still on track to FIRE very quickly.

Sell, learn from it, and move on.  You'll be fine, and laugh about the lesson one day soon.

I purchased bullion, selling is out of the question as I lost it in a boating accident.

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Re: I fucked up, please help -_-
« Reply #32 on: February 14, 2015, 07:21:52 PM »
I don't care for alot of the "sell and take your lumps advice" IF you are indeed holding for the long term anyway. I don't think you are suffering opportunity costs if you are indeed investing to hold for the long term because you wouldn't be churning that capital anyway. If you are involved in options trading on margin and you subscribe to the methods of TastyTrade then you might have problems with tied up unusable buying power in your portfolio but this doesn't seem to be an issue. If precious metals are a small enough portion of your portfolio then it won't hurt to "let 'em ride" and just keep plugging away at your current strategy.


arebelspy

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Re: I fucked up, please help -_-
« Reply #33 on: February 14, 2015, 10:53:53 PM »
I purchased bullion, selling is out of the question as I lost it in a boating accident.

Huh?  What was the point of this thread and poll then?

I don't care for alot of the "sell and take your lumps advice" IF you are indeed holding for the long term anyway. I don't think you are suffering opportunity costs if you are indeed investing to hold for the long term because you wouldn't be churning that capital anyway.

Uhh, what?  If he can sell, of course there's opportunity costs.  If he is holding long term, he has the opportunity costs of that entire period.

For example, say he bought for 10k, it's worth 6.5k now.  Yes, eventually long term it'll go back up, and maybe it's doubled in 20 years (a 3.6% or so annual return) and is worth 13k..  But what if he sold it and invested in something that doubled twice in twenty years (7.2% return), so he has 26k instead?

Sure, holding long term will bail him out of the loss, but the thing to compare is what could he do with the money if he sold now.  If he got 6.5k cash right now, would he buy precious metals with it?  Or would he invest in something else?  If he'd invest with something else he should sell, harvest the tax loss, and buy that thing.

Otherwise he's losing the opportunity cost of what that money could be invested in.  I'm not sure why you say that holding long term means there's no opportunity cost...  Explain, cause I must be missing something?  :)

If you are involved in options trading on margin and you subscribe to the methods of TastyTrade then you might have problems with tied up unusable buying power in your portfolio but this doesn't seem to be an issue. If precious metals are a small enough portion of your portfolio then it won't hurt to "let 'em ride" and just keep plugging away at your current strategy.

This isn't the case; if it was a small enough portion of his portfolio (say, under 5%), he wouldn't be concerned about it temporarily dipping 26%, as it would overall be a drop of a few percent of his portfolio at most.  He's clearly concerned, so it's likely not a small portion of his portfolio.  He also notes that PMs make up ~30% of his portfolio.  That's quite high for pretty much any AA, save the PP (and it's even high for that).

Sell is the clear choice, IMO.
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dungoofed

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Re: I fucked up, please help -_-
« Reply #34 on: February 14, 2015, 11:07:40 PM »
I purchased bullion, selling is out of the question as I lost it in a boating accident.

Huh?  What was the point of this thread and poll then?

I think we just got trolled!

iamlindoro

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Re: I fucked up, please help -_-
« Reply #35 on: February 14, 2015, 11:16:01 PM »
I purchased bullion, selling is out of the question as I lost it in a boating accident.

Huh?  What was the point of this thread and poll then?

I think we just got trolled!

OP at time of incident:


Goldielocks

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Re: I fucked up, please help -_-
« Reply #36 on: February 14, 2015, 11:25:30 PM »
You need to decide what you want your asset allocation to be, ignoring what you have now. Then rebalance to match that. Forget what you've already lost in the past and focus on what you should do with what you have now.

This. Decide on your desired allocation and rebalance all funds to that new allocation, regardless of losses. I voted for A.

If these losses are in a taxable account, I'd assume you'd be able to claim them.
+1. Although I am a wimp and would do this over 3 sells, over the next year... To space it out, assuming low buy/sell commissions.

arebelspy

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Re: I fucked up, please help -_-
« Reply #37 on: February 14, 2015, 11:29:29 PM »
I purchased bullion, selling is out of the question as I lost it in a boating accident.

Huh?  What was the point of this thread and poll then?

I think we just got trolled!

I guess so.  Too bad.
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Goldielocks

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Re: I fucked up, please help -_-
« Reply #38 on: February 14, 2015, 11:51:39 PM »
Yea I'd sell, take the $3000 loss on your taxes, then sell $6500 of winners (if you have) and harvest the gain.

Yeah, I bought 100 shares of SLV in 2013 @ $20/share to 'diversify' (it was after all around $40 six months prior to my buy). Then it went down to $18 and I bought another 100 shares. Then another 100 at $17 and yet another $100 @ $16. So, here I am w/400 shares.  Fortunately this only represents about 1% of my portfolio...so I'm riding it out.

Check with your accountant before cutting your losses. I think you can only claim $3000/year in losses on your tax return.

Me, I'm just going to hold. It'll go back up eventually. I don't need the money and just consider it a lesson learned. The End.
Think of the amount you need to save to hit FI.  9500 is a small percent of that.  This is a tiny speed bump, not a fuck up.

I lost over 10x that fucking up investing when I was in my early 20s.  I'm still on track to FIRE very quickly.

Sell, learn from it, and move on.  You'll be fine, and laugh about the lesson one day soon.

I purchased bullion, selling is out of the question as I lost it in a boating accident.

Why would you take bullion on a boat?   

Mistook it for a fishing lure (flasher)?

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Re: I fucked up, please help -_-
« Reply #39 on: February 15, 2015, 05:57:31 AM »
Haha, sorry I wasn't trying to troll anyone.

The boating accident joke is a long running one on many precious metals investing boards.

A common reply when someone asks where an individual is storing their bullion.

I was implying I do not own Ag/Au ETF's but rather the real thing.

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Re: I fucked up, please help -_-
« Reply #40 on: February 15, 2015, 06:01:48 AM »
arebelspy is correct. As of this morning PM's make up 28.7% of my portfolio, By the end of the year I believe it will be under ~24%, which would be in line with the permanent portfolio.

And to answer that fundamental question, knowing what I know now, would I invest $ into PM's?

Certainly. Just not sure I would dump in as much $$ as I did in such a short period of time. There is certainly opportunity cost involved but they offer diversification and they are NOT an investment, but rather an insurance policy.

 

arebelspy

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Re: I fucked up, please help -_-
« Reply #41 on: February 15, 2015, 09:22:17 AM »
Certainly. Just not sure I would dump in as much $$ as I did in such a short period of time. There is certainly opportunity cost involved but they offer diversification and they are NOT an investment, but rather an insurance policy.

Okay.  And do you need an insurance policy at this stage of your investment career (accumulation phase), or do you need an investment?
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dungoofed

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Re: I fucked up, please help -_-
« Reply #42 on: February 15, 2015, 02:59:12 PM »
Haha, sorry I wasn't trying to troll anyone.

The boating accident joke is a long running one on many precious metals investing boards.

A common reply when someone asks where an individual is storing their bullion.

I was implying I do not own Ag/Au ETF's but rather the real thing.

lol in that case I got drop-beared!

Alex239

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Re: I fucked up, please help -_-
« Reply #43 on: February 18, 2015, 06:51:19 PM »
I purchased bullion, selling is out of the question as I lost it in a boating accident.

Huh?  What was the point of this thread and poll then?

I don't care for alot of the "sell and take your lumps advice" IF you are indeed holding for the long term anyway. I don't think you are suffering opportunity costs if you are indeed investing to hold for the long term because you wouldn't be churning that capital anyway.

Uhh, what?  If he can sell, of course there's opportunity costs.  If he is holding long term, he has the opportunity costs of that entire period.

For example, say he bought for 10k, it's worth 6.5k now.  Yes, eventually long term it'll go back up, and maybe it's doubled in 20 years (a 3.6% or so annual return) and is worth 13k..  But what if he sold it and invested in something that doubled twice in twenty years (7.2% return), so he has 26k instead?

Sure, holding long term will bail him out of the loss, but the thing to compare is what could he do with the money if he sold now.  If he got 6.5k cash right now, would he buy precious metals with it?  Or would he invest in something else?  If he'd invest with something else he should sell, harvest the tax loss, and buy that thing.

Otherwise he's losing the opportunity cost of what that money could be invested in.  I'm not sure why you say that holding long term means there's no opportunity cost...  Explain, cause I must be missing something?  :)

If you are involved in options trading on margin and you subscribe to the methods of TastyTrade then you might have problems with tied up unusable buying power in your portfolio but this doesn't seem to be an issue. If precious metals are a small enough portion of your portfolio then it won't hurt to "let 'em ride" and just keep plugging away at your current strategy.

This isn't the case; if it was a small enough portion of his portfolio (say, under 5%), he wouldn't be concerned about it temporarily dipping 26%, as it would overall be a drop of a few percent of his portfolio at most.  He's clearly concerned, so it's likely not a small portion of his portfolio.  He also notes that PMs make up ~30% of his portfolio.  That's quite high for pretty much any AA, save the PP (and it's even high for that).

Sell is the clear choice, IMO.

Ooops, I missed the 30% of his portfolio issue.... Yikes... as far as opportunity cost is concerned I meant very little opportunity is missed on such a small amount of cash and taking into account mean reversion of the price of any stock/etf. But his real problem is the 30% of portfolio issue and gold being a rather slow long term mover...

Sell it ALL!