Author Topic: Made 100K on the stock market bounce this year - now what?  (Read 3373 times)

Lady Stash

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Made 100K on the stock market bounce this year - now what?
« on: November 24, 2020, 11:35:34 AM »
I made 100K ON THE STOCK MARKET BOUNCE THIS YEAR!!!  When the market started crashing, I bought stock all the way down.   

Top pessimism is in.  WSJ today: "The Worst of the Global Sell Off Isn't Here Yet".

It's a sign that bottom is in and it's time to buy more stock.  More Stock!

Now that the market is down 20%-30%, I am being more aggressive with my AA.  It feels less risky to me to buy in now than it did a couple months ago at the end of a long bull run.

I got lucky with my Asset Allocation (AA) going into this.  I usually keep around 80% stocks/20% bonds but in December, I quit my job so my AA was more conservative than usual while I wasn't working.  I went into this mess with about 60% stock, 30% bonds, 10% cash. 

I've been buying stocks all the way down.  Every time the market drops 5% I move another 5% over to stocks.  By the bottom (so far) on March 23, I reached 75% stocks, 22% bonds and 3% cash.  My plan (if the market keeps dropping) is to slowly work up to about 90% in stocks. 

I'm pretty optimistic that the market is going to recover in the next few years.  We may even have seen the worst of it already.  Sure the market could tank another 30% but I think that's a lot less likely now than it was 3 months ago.

I started the year at 60% stock and by March 23rd, I was up to 75% stock. Now that the market has re-bounded I've made almost 100K and I have 1 Mil invested for the first time in my life.

I'm slowly moving back to a stronger cash / bond position.  I have such a razor thin FI margin that I don't want to weather another large market drop without a big cash buffer.  I'm not sure where to put my money as I pull it out of stocks.  If we go into a high inflation period, cash is going to lose real purchasing power.  Bonds are projected to be bad investments if interest rates start rising.   Anyone have any suggestions for where to put money to hedge against the risk of a another market drop?

v8rx7guy

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #1 on: November 24, 2020, 11:44:32 AM »
I'm slowly moving back to a stronger cash / bond position.  I have such a razor thin FI margin that I don't want to weather another large market drop without a big cash buffer.  I'm not sure where to put my money as I pull it out of stocks.  If we go into a high inflation period, cash is going to lose real purchasing power.  Bonds are projected to be bad investments if interest rates start rising.   Anyone have any suggestions for where to put money to hedge against the risk of a another market drop?

Are you sure you are ready to be FI and living of your investments?  Are you confident in the math of being FI?  In my opinion, with a post like this, it does not sound like you are either.  If you can't be confident in your plan at a time like this, what's going to prevent you from trying to get lucky and time the market or going into a period of being conservative with your investments due to a hunch during your FI years and potentially mess everything up?

I digress.  If I were looking for a place to store cash, I would be looking for a high-ish interest savings account with a decent big bonus to bring your effective interest rate up from the 0.5% or whatever crappy rate you might get.  Citi Bank has a $700 bonus if you stash $50K between a Priority Checking & Savings account for 60 days.

mistymoney

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #2 on: November 24, 2020, 12:05:17 PM »
I made 100K ON THE STOCK MARKET BOUNCE THIS YEAR!!!  When the market started crashing, I bought stock all the way down.   

Top pessimism is in.  WSJ today: "The Worst of the Global Sell Off Isn't Here Yet".

It's a sign that bottom is in and it's time to buy more stock.  More Stock!

Now that the market is down 20%-30%, I am being more aggressive with my AA.  It feels less risky to me to buy in now than it did a couple months ago at the end of a long bull run.

I got lucky with my Asset Allocation (AA) going into this.  I usually keep around 80% stocks/20% bonds but in December, I quit my job so my AA was more conservative than usual while I wasn't working.  I went into this mess with about 60% stock, 30% bonds, 10% cash. 

I've been buying stocks all the way down.  Every time the market drops 5% I move another 5% over to stocks.  By the bottom (so far) on March 23, I reached 75% stocks, 22% bonds and 3% cash.  My plan (if the market keeps dropping) is to slowly work up to about 90% in stocks. 

I'm pretty optimistic that the market is going to recover in the next few years.  We may even have seen the worst of it already.  Sure the market could tank another 30% but I think that's a lot less likely now than it was 3 months ago.

I started the year at 60% stock and by March 23rd, I was up to 75% stock. Now that the market has re-bounded I've made almost 100K and I have 1 Mil invested for the first time in my life.

I'm slowly moving back to a stronger cash / bond position. I have such a razor thin FI margin that I don't want to weather another large market drop without a big cash buffer.  I'm not sure where to put my money as I pull it out of stocks.  If we go into a high inflation period, cash is going to lose real purchasing power.  Bonds are projected to be bad investments if interest rates start rising.   Anyone have any suggestions for where to put money to hedge against the risk of a another market drop?

I'm not sure I'm understanding this. If you were FI at under 1m, and made 100k in the recent dip now getting up to 1m, then you've increased your stache by more than 10% - how is that razor thin?

to your question, where was it before you increased your stock exposure, and why aren't you putting it back there?

ixtap

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #3 on: November 24, 2020, 12:12:50 PM »
First, HI! I was thinking of you recently!

Have you ever sat down and written an IPS? I find it freeing to have a plan in place and need a strong justification to go off plan, rather than making decisions with each market fluctuation. And frankly, with the numbers you are giving, it seems like we made similar percentages just by continuing to max our regular investments throughout the V, rather than playing a guessing game. Part of our IPS is to put all new monies into stocks, then rebalance in bonds in the 401k twice a year. Of course, you didn't have the option to keep adding this year, but with our travel plans, we won't be aware of every vaguery of the market in withdrawal stage, so we will likely follow the same plan.

I keep cash flow in a HYSA and use bonds for long term stability.

ChpBstrd

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #4 on: November 24, 2020, 12:20:19 PM »
Congratulations! Now set your AA and forget it.

What should your AA be? I'd suggest either 90% stocks, 10% cash, or 80/20. Personally, I usually try to do 95% stocks and 5% protective options positions but that's complicated.

If high US stock market valuations concern you, look internationally.

maizefolk

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #5 on: November 24, 2020, 12:45:12 PM »
I'm slowly moving back to a stronger cash / bond position.  I have such a razor thin FI margin that I don't want to weather another large market drop without a big cash buffer.  I'm not sure where to put my money as I pull it out of stocks.  If we go into a high inflation period, cash is going to lose real purchasing power.  Bonds are projected to be bad investments if interest rates start rising.   Anyone have any suggestions for where to put money to hedge against the risk of a another market drop?

First of all, congratulations! An extra hundred thousand is a lot of money.

Second of all, the analysis you just described is why my portfolio is so heavily weighted towards stocks. Bonds are paying barely anything and can only provide a greater return if interest rates go negative in the USA, and cash is very vulnerable if we end up with a period of even modestly higher inflation post-coronavirus.

There are number of alternative investments you could consider, but all of them have significant drawbacks and I wouldn't personally recommend them, I'm just listing them out for the same of completeness:

Buying real estate: Not particularly correlated with stocks. Generally won't lose value to inflation. But real estate values are quite high relative to rent right now, and having rentals introduces a lot of new sources of stress and worry into a person's life.

Bank accounts in foreign countries: Not impacted by USD inflation. But of course you have to worry about local inflation, and most banks in other countries don't like to open accounts for US citizens because of the reporting requirements involved.

GoCubsGo

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #6 on: November 24, 2020, 02:03:24 PM »
I've had something similar this year, I rotated heavily into tech out of bonds in April and have reaped massive rewards.  I basically took a risk and and upended my asset allocation and I got lucky.  That has moved my FI timeline up drastically. 

I suggest you the read the  Early Retirement Now  site and his series on SWR and different strategies.  That site helped me start to formulate a plan.  I'm pretty concerned with sequence of return risks so I'll probably start a bond tent strategy soon.  My problem is the run up caught me off guard (I've been heavy tech for a few years now) and I don't have enough of a cash/ non tax advantaged bucket to pull from right now.  Definitely nice problems to have but I get your apprehension.  I would read every bit of that Early Retirement Now website.

Abe

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #7 on: November 24, 2020, 08:25:57 PM »
You can stay with the cash for now, and if inflation starts going up to some threshold you decide (2%? 3%? I dunno), consider TIPS (Treasury Inflation-Protected Securities). They are as safe as a bond can be, and keep up with the official US inflation figure (which is slightly below real inflation, but better than 0% return). Right now they return a measly 0.1%, so basically equivalent to cash but without the flexibility.

Jack0Life

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #8 on: November 25, 2020, 10:31:54 AM »
I'm in the same boat.
After yesterday when the SP500 hit an all time high, according to my chart, my investment account(mostly Vanguard) went from $303,564 beginning of year to $390,197 plus roughly $6k in profits from stocks(sold them all). I got lucky because I reallocated most everything to bonds when the market crashed and slowly reallocating the money back in.

We're sitting above $1,100,000 and my wife is planning to quit next year so we will use all the money above $1 mil and travel till the money runs out. We keep joking that it might never run out especially because we will be in SE Asia.
With that said I'm trying to have as much cushion as possible. My head tells me to keep all $400k and let it ride but part of me wants to hedge from another drop. I actually moved $50k out after yesterday all time high and was going to move another $50k if the market keeps going up today Let the $300k ride and I'll still have plenty of money to put back into the market if it ever drops again. Market is slightly down today, what to do, what to do.

mistymoney

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #9 on: November 25, 2020, 12:35:14 PM »
I'm in the same boat.
After yesterday when the SP500 hit an all time high, according to my chart, my investment account(mostly Vanguard) went from $303,564 beginning of year to $390,197 plus roughly $6k in profits from stocks(sold them all). I got lucky because I reallocated most everything to bonds when the market crashed and slowly reallocating the money back in.

We're sitting above $1,100,000 and my wife is planning to quit next year so we will use all the money above $1 mil and travel till the money runs out. We keep joking that it might never run out especially because we will be in SE Asia.
With that said I'm trying to have as much cushion as possible. My head tells me to keep all $400k and let it ride but part of me wants to hedge from another drop. I actually moved $50k out after yesterday all time high and was going to move another $50k if the market keeps going up today Let the $300k ride and I'll still have plenty of money to put back into the market if it ever drops again. Market is slightly down today, what to do, what to do.

That sounds like a fantastic plan! Will you be Nomads? Or will have an anchor house/apt in the states/whereeverishome?

Jack0Life

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #10 on: November 26, 2020, 10:32:02 PM »
I'm in the same boat.
After yesterday when the SP500 hit an all time high, according to my chart, my investment account(mostly Vanguard) went from $303,564 beginning of year to $390,197 plus roughly $6k in profits from stocks(sold them all). I got lucky because I reallocated most everything to bonds when the market crashed and slowly reallocating the money back in.

We're sitting above $1,100,000 and my wife is planning to quit next year so we will use all the money above $1 mil and travel till the money runs out. We keep joking that it might never run out especially because we will be in SE Asia.
With that said I'm trying to have as much cushion as possible. My head tells me to keep all $400k and let it ride but part of me wants to hedge from another drop. I actually moved $50k out after yesterday all time high and was going to move another $50k if the market keeps going up today Let the $300k ride and I'll still have plenty of money to put back into the market if it ever drops again. Market is slightly down today, what to do, what to do.

That sounds like a fantastic plan! Will you be Nomads? Or will have an anchor house/apt in the states/whereeverishome?

We have a rental. We have another house we bought with my BIL that he's slowly paying us back. We plan to lease our primary home for for 1 year and see how that goes. We figured we will travel for 1 year and come back to our primary home when the lease is up. If after 1 yr and our stash is still way above $1 mil, we might lease the house out for another year.
Our base during this time will be in Vietnam and we will travel all over SE Asia during this time.
That's the plan anyhow.

vand

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #11 on: November 27, 2020, 01:48:53 AM »
Don't really understand the point of questions like OP, other than just a not so humble brag.  Now make another 100k. Then another... you obviously have clairvoyance. What, you think you have too much money?


hodedofome

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #12 on: December 02, 2020, 09:39:18 AM »
If you are worried about a market crash you'll probably be better off having the rest of your money in bonds, not cash. Typically bonds (high quality ones, especially treasury bonds) increase in value when the market crashes. Just look at what treasury bonds did in the first quarter of this year - they took off like bandits.

v8rx7guy

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #13 on: December 02, 2020, 09:47:32 AM »
If you are worried about a market crash you'll probably be better off having the rest of your money in bonds, not cash. Typically bonds (high quality ones, especially treasury bonds) increase in value when the market crashes. Just look at what treasury bonds did in the first quarter of this year - they took off like bandits.

Did they, though?  I thought I was a genius carrying bonds as concern was brewing about COVID-19 in feb/early march, but then they crashed just like everything else when the market plummeted.  They recovered a bit faster... but I don't know if I would call what they did in March "increasing in value when the market crashed".

MustacheAndaHalf

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #14 on: December 02, 2020, 10:18:06 AM »
I did something similar to Lady Stash, after predicing the bottom:
https://forum.mrmoneymustache.com/investor-alley/bottom-is-in!/msg2585745/#msg2585745
The markets open at 9 am EST, so I'll use that as my clock: it's 2:45 am in New York, Thursday, March 19.
I'm predicting a market bottom in advance, today or tomorrow (Mar 19-20).
...
I went 100% index funds... then switched my Roth IRA to individual stocks, and later partly to call options on individual stocks.  The performance has been insane.  Despite insane gains, I'm sticking with it until recovery.

If you bought index funds like VTSAX, it's already recovered.  If you hold individual stocks like Macy's, even though it's up +67% in the past month (according to morningstar), I'd keep holding on since it's still down 36% YTD.  My approach, and what I recommend, is wait for recovery then switch back to normal allocations.

I'm currently holding 0% bonds and 10% cash.  Take Vanguard Total Bond ETF (BND) with a duration of 6.5 years.  If interest rates go up 0.25%, BND loses 1.625% ... but right now, it's SEC yield is 1.16%.  Because of historic low interest rates, it's very easy for bond funds to suffer a drop in value.  If, like me, you're worried about taking losses in bond funds, you can use short-term bond funds as a defensive measure.  The lower the "duration" of the bond fund, the less it suffers when interest rates go up.

Sandi_k

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #15 on: December 02, 2020, 12:57:36 PM »
I have a bucket of cash, TIPS, and GNMAE funds equivalent to the first 5 years of spending.

That puts us at 78/22% asset allocation.

Since the first 5 years are now guaranteed and in place, all future contributions will go to TSM Index fund, for additional growth. I don't have to worry about asset allocation until we retire.

ChpBstrd

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #16 on: December 02, 2020, 09:58:46 PM »

I'm currently holding 0% bonds and 10% cash.  Take Vanguard Total Bond ETF (BND) with a duration of 6.5 years.  If interest rates go up 0.25%, BND loses 1.625% ... but right now, it's SEC yield is 1.16%.  Because of historic low interest rates, it's very easy for bond funds to suffer a drop in value.  If, like me, you're worried about taking losses in bond funds, you can use short-term bond funds as a defensive measure.  The lower the "duration" of the bond fund, the less it suffers when interest rates go up.

I think the odds of a rate increase are near zero for the next couple of years, but I am still concerned that (1) everyone else believes this too, (2) trillions of dollars have been wagered on this one thing not happening, and (3) people are accepting enormous risks in exchange for puny returns, and are therefore not particularly committed to stay the course if there is a whiff of trouble, such as an unexpected CPI or PPI reading. I’ve thought lots of things have a near zero probability and then watched them happen.

Thing is, it doesn’t make sense to consider bonds risky at this level but not think stocks are twice as risky for the same reason. We’re all chasing upside in an asset bubble that continues to inflate.

GoCubsGo

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #17 on: December 03, 2020, 10:19:04 AM »
Maybe a stupid question or I'm missing something, but many posters talk about puny returns and the risk that goes along with them for bonds.  I've kept generally 15% of my net worth in AGG and FBND (a Fidelity Active Managed Bond Fund).  Over the past 3 years they are up close to 6% on average annually.  FBND is up 7.47% the past 52 weeks.  I know there is a heavy dose of corporate bonds mixed in these funds along with government bonds but they've held up remarkably well through 2018's Christmas crash and this years COVID crash.

AGG's 10 year return has averaged 3.55%.  I don't want to be 100% stock and short term yields are basically nothing.  I can't imagine TIPS have had near those returns the past decade.   I guess I don't see much of an option and to be honest and would be thrilled if AGG had similar returns the next ten years.  Thoughts?

« Last Edit: December 03, 2020, 10:22:14 AM by GoCubsGo »

MustacheAndaHalf

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #18 on: December 03, 2020, 10:57:20 AM »

I'm currently holding 0% bonds and 10% cash.  Take Vanguard Total Bond ETF (BND) with a duration of 6.5 years.  If interest rates go up 0.25%, BND loses 1.625% ... but right now, it's SEC yield is 1.16%.  Because of historic low interest rates, it's very easy for bond funds to suffer a drop in value.  If, like me, you're worried about taking losses in bond funds, you can use short-term bond funds as a defensive measure.  The lower the "duration" of the bond fund, the less it suffers when interest rates go up.

I think the odds of a rate increase are near zero for the next couple of years, but I am still concerned that (1) everyone else believes this too, (2) trillions of dollars have been wagered on this one thing not happening, and (3) people are accepting enormous risks in exchange for puny returns, and are therefore not particularly committed to stay the course if there is a whiff of trouble, such as an unexpected CPI or PPI reading. I’ve thought lots of things have a near zero probability and then watched them happen.

Thing is, it doesn’t make sense to consider bonds risky at this level but not think stocks are twice as risky for the same reason. We’re all chasing upside in an asset bubble that continues to inflate.
Using 20/20 hindsight, the Fed kept it's Fed funds rate at 0% from April to November.  How do you explain the changes in bond yields over that time?

The Fed didn't raise rates, yet the 3-month performance of Vanguard Total Bond (BND) is -1.59% (more than it's current SEC yield).
https://finance.yahoo.com/quote/BND/performance?p=BND

If you're arguing bonds won't lose money, you're too late.  They already did.


I also disagree with treating the market as a monolith.  Amazon (AMZN) has a P/E between 60 and 90.  Let's say that's overvalued...  Can you lump that with Macy's (M), which has a P/E of between 3 and 19?   Or Carnival Cruises (CCL), between 6 and 33?
(According to Yahoo Finance.  Also, I own call options on Macy's and Carnival Cruises)

Lady Stash

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #19 on: January 05, 2021, 05:38:18 AM »
Thanks everyone for the advice.  I am slowly pulling $$ out of stocks and stashing it in a variety of bond and cash index funds.  My target AA is 75% stocks (split 65% US/ 35% international), 10% cash and 15% bonds.

the analysis you just described is why my portfolio is so heavily weighted towards stocks. Bonds are paying barely anything and can only provide a greater return if interest rates go negative in the USA, and cash is very vulnerable if we end up with a period of even modestly higher inflation post-coronavirus.
Yes and stocks are risky too.  It's threading a needle.

I have a bucket of cash, TIPS, and GNMAE funds equivalent to the first 5 years of spending.

That puts us at 78/22% asset allocation.
Thanks, this is about what I'm targeting.  This AA feels right for my risk tolerance.



I'm in the same boat.
After yesterday when the SP500 hit an all time high, according to my chart, my investment account(mostly Vanguard) went from $303,564 beginning of year to $390,197 plus roughly $6k in profits from stocks(sold them all). I got lucky because I reallocated most everything to bonds when the market crashed and slowly reallocating the money back in.

We're sitting above $1,100,000 and my wife is planning to quit next year so we will use all the money above $1 mil and travel till the money runs out. We keep joking that it might never run out especially because we will be in SE Asia.
With that said I'm trying to have as much cushion as possible. My head tells me to keep all $400k and let it ride but part of me wants to hedge from another drop. I actually moved $50k out after yesterday all time high and was going to move another $50k if the market keeps going up today Let the $300k ride and I'll still have plenty of money to put back into the market if it ever drops again. Market is slightly down today, what to do, what to do.
+1.  The market went up so fast the gains don't feel real yet.  I like the idea of taking some of that money off the table to lock in the gains. 




I've had something similar this year, I rotated heavily into tech out of bonds in April and have reaped massive rewards.  I basically took a risk and and upended my asset allocation and I got lucky.  That has moved my FI timeline up drastically. 

I suggest you the read the  Early Retirement Now  site and his series on SWR and different strategies.  That site helped me start to formulate a plan.  I'm pretty concerned with sequence of return risks so I'll probably start a bond tent strategy soon.  My problem is the run up caught me off guard (I've been heavy tech for a few years now) and I don't have enough of a cash/ non tax advantaged bucket to pull from right now.  Definitely nice problems to have but I get your apprehension.  I would read every bit of that Early Retirement Now website.
Thanks - I'll check these out!

Congratulations! Now set your AA and forget it.
Yes.  That's the plan. 

Pomegranate12

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #20 on: January 05, 2021, 08:18:11 PM »
Thanks everyone for the advice.  I am slowly pulling $$ out of stocks and stashing it in a variety of bond and cash index funds.  My target AA is 75% stocks (split 65% US/ 35% international), 10% cash and 15% bonds.

the analysis you just described is why my portfolio is so heavily weighted towards stocks. Bonds are paying barely anything and can only provide a greater return if interest rates go negative in the USA, and cash is very vulnerable if we end up with a period of even modestly higher inflation post-coronavirus.
Yes and stocks are risky too.  It's threading a needle.

I have a bucket of cash, TIPS, and GNMAE funds equivalent to the first 5 years of spending.

That puts us at 78/22% asset allocation.
Thanks, this is about what I'm targeting.  This AA feels right for my risk tolerance.



I'm in the same boat.
After yesterday when the SP500 hit an all time high, according to my chart, my investment account(mostly Vanguard) went from $303,564 beginning of year to $390,197 plus roughly $6k in profits from stocks(sold them all). I got lucky because I reallocated most everything to bonds when the market crashed and slowly reallocating the money back in.

We're sitting above $1,100,000 and my wife is planning to quit next year so we will use all the money above $1 mil and travel till the money runs out. We keep joking that it might never run out especially because we will be in SE Asia.
With that said I'm trying to have as much cushion as possible. My head tells me to keep all $400k and let it ride but part of me wants to hedge from another drop. I actually moved $50k out after yesterday all time high and was going to move another $50k if the market keeps going up today Let the $300k ride and I'll still have plenty of money to put back into the market if it ever drops again. Market is slightly down today, what to do, what to do.
+1.  The market went up so fast the gains don't feel real yet.  I like the idea of taking some of that money off the table to lock in the gains. 




I've had something similar this year, I rotated heavily into tech out of bonds in April and have reaped massive rewards.  I basically took a risk and and upended my asset allocation and I got lucky.  That has moved my FI timeline up drastically. 

I suggest you the read the  Early Retirement Now  site and his series on SWR and different strategies.  That site helped me start to formulate a plan.  I'm pretty concerned with sequence of return risks so I'll probably start a bond tent strategy soon.  My problem is the run up caught me off guard (I've been heavy tech for a few years now) and I don't have enough of a cash/ non tax advantaged bucket to pull from right now.  Definitely nice problems to have but I get your apprehension.  I would read every bit of that Early Retirement Now website.
Thanks - I'll check these out!

Congratulations! Now set your AA and forget it.
Yes.  That's the plan.

Which bond index and which international index  ?

brooklynmoney

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #21 on: January 05, 2021, 08:30:32 PM »
Is this in a taxable account and will you have to pay short term capital gains tax on it? If is ouch.

BoonDogle

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #22 on: January 06, 2021, 01:23:54 PM »
I second the idea of moving a fair amount to international stocks.  If you are a believer in the CAPE ratio, it would appear US equity indexes are much more overvalued than international stock indexes.

I also moved 100% into US equities in March.  By dumb luck, I hit the day the market bottomed out, rode it all the way back up, then reallocated a portion into international stocks.  For 2020 I showed a return on investment of 35% on my portfolio.  Still have a fair amount into US equities.  I didn't think of it as market timing, just saw a good buy-in price, jumped at it, and was prepared to leave the money there for several years if necessary.  The market just happened to climb back up faster than anyone anticipated.

Telecaster

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #23 on: January 07, 2021, 12:48:48 PM »
I second the idea of moving a fair amount to international stocks.  If you are a believer in the CAPE ratio, it would appear US equity indexes are much more overvalued than international stock indexes.

I also moved 100% into US equities in March.  By dumb luck, I hit the day the market bottomed out, rode it all the way back up, then reallocated a portion into international stocks.  For 2020 I showed a return on investment of 35% on my portfolio.  Still have a fair amount into US equities.  I didn't think of it as market timing, just saw a good buy-in price, jumped at it, and was prepared to leave the money there for several years if necessary.  The market just happened to climb back up faster than anyone anticipated.

If you use CAPE, be sure to compare it with that country over time, not between countries.   Not all countries are good for individual investors because profits tend to flow to wealthy insiders.  P/E ratios reflect that. 

DeniseNJ

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #24 on: January 07, 2021, 02:04:48 PM »
What about REITs as a way to invest in real estate without becoming a landlord?

BoonDogle

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #25 on: January 07, 2021, 02:25:35 PM »

If you use CAPE, be sure to compare it with that country over time, not between countries.   Not all countries are good for individual investors because profits tend to flow to wealthy insiders.  P/E ratios reflect that.

I look at it by region and compare it to the same region for the last 40 years (which is still a fairly small sample size).  I also look at how it has compared to US Cape over that same time period.  By all indications, US equity indexes are wildly overvalued.  Most international equity indexes appear to be overvalued as well but not nearly as much as US equities.  At least in my own analysis.

hodedofome

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Re: Made 100K on the stock market bounce this year - now what?
« Reply #26 on: January 07, 2021, 08:38:12 PM »
If you are worried about a market crash you'll probably be better off having the rest of your money in bonds, not cash. Typically bonds (high quality ones, especially treasury bonds) increase in value when the market crashes. Just look at what treasury bonds did in the first quarter of this year - they took off like bandits.

Did they, though?  I thought I was a genius carrying bonds as concern was brewing about COVID-19 in feb/early march, but then they crashed just like everything else when the market plummeted.  They recovered a bit faster... but I don't know if I would call what they did in March "increasing in value when the market crashed".

Treasury bonds were in an uptrend before Covid really hit and then when the market crashed, treasury bonds took off like a rocket. I had 50/50 trIple leveraged stocks and long term treasury bonds in my Roth IRA and I was flat for the year when the market bottomed, the bonds helped that much.
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2021&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&showYield=false&reinvestDividends=true&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=SPXL&allocation1_1=50&symbol2=TMF&allocation2_1=50
« Last Edit: January 07, 2021, 08:41:32 PM by hodedofome »