Author Topic: Psychological Issue w/ Buy and Hold in Taxable Accounts  (Read 13257 times)

stlbrah

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Psychological Issue w/ Buy and Hold in Taxable Accounts
« on: July 14, 2015, 09:35:43 AM »
So, I am in my 20s and I am maxing out my 401k and roth each year and don't think twice about it. It is such a good deal with the tax free dividends that it is a no-brainer.

But when it comes to taxable accounts, I can never stick to the plan because I always have this overwhelming feeling that I am missing out or setting myself up for failure. I ended up trading funds in my brokerage account every few months in 2013 and 2014 and it worked out great, mostly due to luck. I had to pay taxes too obviously. I ended up selling all of my taxable funds when S&P 500 first went over 2100 so it was a great profit. In my taxable account, I mostly held blended index funds like FFNOX and VASGX.

But since then I have been sitting on the sidelines twiddling my thumbs and not getting any dividend money besides 1% from the bank. I didn't buy into anything in this Greece/China fueled dip when I should have. I am having trouble jumping into this pricey market because I am still having trouble believing that timing the market is for suckers.

I could easily get another 3-500/month into a taxable account, more on some occasions. I have a feeling most people will say "You're 27, just buy some index funds and not check them for a decade." I guess what I am looking for is to see if anyone else has trouble with this, and what you did to get past it. I am usually a very disciplined person who is good with delayed gratification, but I feel like opening up taxable funds in this market is overly risky. What motivated you to jump in when it feels that odds are stacked up against you?



innerscorecard

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #1 on: July 14, 2015, 09:40:01 AM »
What makes you act that way in your taxable account? It's exact the same thing as your 401(k) and Roth IRA - they are vehicles for you to hold financial assets. The tax treatment is merely different. So that makes some things (such as directly holding some foreign stocks) better in some accounts than others, but it should not change your behavior so greatly.

Are you trying to game tax loss harvesting or something like that?

NumberCruncher

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #2 on: July 14, 2015, 09:45:53 AM »
Would dollar cost averaging (DCA) make you feel better? That way you put in a little each week or each month, and you might not have as much of a negative gut reaction - if it's on autopilot like the 401k, it's easier not to think about. We did this for taxable accounts (and are similarly aged), but I wish we just put it all in at once (since it's almost always better).


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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #3 on: July 14, 2015, 09:51:41 AM »
...I am still having trouble believing that timing the market is for suckers.

What information would cause you to change your mind?

Cathy

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #4 on: July 14, 2015, 10:03:21 AM »
OP, I think your main problem here is that you just don't have much money. When you're just starting out, the expected returns from index investing (or even investing in general) are quite insignificant in absolute terms. On the other hand, if you engage in gambling rather than investing, you can double your money multiple times during a single day and then the returns start to seem significant. The urge to engage in these kind of behaviours will probably fade as you accumulate more money. Just keep saving and avoid depleting your assets in the meanwhile.

Zman

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #5 on: July 14, 2015, 10:15:51 AM »
I just remind myself that I am the tortoise.

You're thinking too much about the short term. Instead get excited about every dividend you receive! Its a huge win every 3 months :-)

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #6 on: July 14, 2015, 10:50:17 AM »
So, I am in my 20s and I am maxing out my 401k and roth each year and don't think twice about it. It is such a good deal with the tax free dividends that it is a no-brainer.

But when it comes to taxable accounts, I can never stick to the plan because I always have this overwhelming feeling that I am missing out or setting myself up for failure. I ended up trading funds in my brokerage account every few months in 2013 and 2014 and it worked out great, mostly due to luck. I had to pay taxes too obviously. I ended up selling all of my taxable funds when S&P 500 first went over 2100 so it was a great profit. In my taxable account, I mostly held blended index funds like FFNOX and VASGX.

But since then I have been sitting on the sidelines twiddling my thumbs and not getting any dividend money besides 1% from the bank. I didn't buy into anything in this Greece/China fueled dip when I should have. I am having trouble jumping into this pricey market because I am still having trouble believing that timing the market is for suckers.

I could easily get another 3-500/month into a taxable account, more on some occasions. I have a feeling most people will say "You're 27, just buy some index funds and not check them for a decade." I guess what I am looking for is to see if anyone else has trouble with this, and what you did to get past it. I am usually a very disciplined person who is good with delayed gratification, but I feel like opening up taxable funds in this market is overly risky. What motivated you to jump in when it feels that odds are stacked up against you?

Do you drink milk, I like milk so that's the example I'm going to use.

I can buy a gallon of milk right now, and it will likely cost $5 and I will enjoy it, in eggs, on cereal, or as chocolate milk after a good work out. I could also stick that $5 in my sock drawer and I will never get to enjoy any milk. That's what you're doing with your money out of the market. Except in 10 years, your $5 won't even buy you a gallon of milk. Maybe one of those little milk cartons we got in elementary school lunch, not even a full pint!

Or you could keep your money invested, no matter what the price of the market is, and in 10 years you can take out <insert cost of a gallon> and enjoy it, with a cookie. Oatmeal Raisin!

If you think the market is expensive now, then it will be much more expensive as you get older, the only way to keep up with that is to invest as soon as you have funds available to invest. The milk only gets more expensive. Sometimes you'll buy a market dip, that's a sale, it will be like buying yesterdays bread from the bakery, other days you'll buy high. Today's price will not matter in 10 years when everything costs much more, but you're money will lose value if you don't keep it invested. Remember that candy bar your dad used to by for a nickel... a nickel doesn't even buy a piece of Dubble Bubble from the counter at my favorite hot dog shop. That's $.10

Index Funds are not for short term speculation and gambling. Funds are for long term investing. Invest in funds you plan on holding for the rest of your life. And if you invest, plan on holding it for more than 5 years.

edit;

One more thing. While you've been out of the market with your 1% interest on cash, we invested 10k into VTIAX on Friday May 1, crappy timing right? Since then it has come down ~4.5% and has gone down as much a 9%. However, the dividend paid on June 25 for $103, beats your 1% interest significantly. In only 55 days we earned 1% on investment, your 1% is APY and takes 12 months. And it's even better when you consider that $103 dividend bought 3.7 more shares and we've invested an extra $130 while it's been 'on sale'. You're losing money keeping cash... no matter what the price of a share is.
« Last Edit: July 14, 2015, 11:17:55 AM by zdravé »

stlbrah

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #7 on: July 14, 2015, 11:30:28 AM »
What makes you act that way in your taxable account? It's exact the same thing as your 401(k) and Roth IRA - they are vehicles for you to hold financial assets. The tax treatment is merely different. So that makes some things (such as directly holding some foreign stocks) better in some accounts than others, but it should not change your behavior so greatly.

Are you trying to game tax loss harvesting or something like that?

I suppose the fact that the taxable account is so readily available and easy to sell. But really I think there are flaws in my logic that I am trying to sort out.

Would dollar cost averaging (DCA) make you feel better? That way you put in a little each week or each month, and you might not have as much of a negative gut reaction - if it's on autopilot like the 401k, it's easier not to think about. We did this for taxable accounts (and are similarly aged), but I wish we just put it all in at once (since it's almost always better).

The money in question is about $62k in a savings account. I am considering putting in a lump sum (haven't decided how much yet, thinking maybe $5-10k) into VASGX and then DCA $150 bi-weekly from my checking account as paychecks come in.

So, I am in my 20s and I am maxing out my 401k and roth each year and don't think twice about it. It is such a good deal with the tax free dividends that it is a no-brainer.

But when it comes to taxable accounts, I can never stick to the plan because I always have this overwhelming feeling that I am missing out or setting myself up for failure. I ended up trading funds in my brokerage account every few months in 2013 and 2014 and it worked out great, mostly due to luck. I had to pay taxes too obviously. I ended up selling all of my taxable funds when S&P 500 first went over 2100 so it was a great profit. In my taxable account, I mostly held blended index funds like FFNOX and VASGX.

But since then I have been sitting on the sidelines twiddling my thumbs and not getting any dividend money besides 1% from the bank. I didn't buy into anything in this Greece/China fueled dip when I should have. I am having trouble jumping into this pricey market because I am still having trouble believing that timing the market is for suckers.

I could easily get another 3-500/month into a taxable account, more on some occasions. I have a feeling most people will say "You're 27, just buy some index funds and not check them for a decade." I guess what I am looking for is to see if anyone else has trouble with this, and what you did to get past it. I am usually a very disciplined person who is good with delayed gratification, but I feel like opening up taxable funds in this market is overly risky. What motivated you to jump in when it feels that odds are stacked up against you?

Do you drink milk, I like milk so that's the example I'm going to use.

I can buy a gallon of milk right now, and it will likely cost $5 and I will enjoy it, in eggs, on cereal, or as chocolate milk after a good work out. I could also stick that $5 in my sock drawer and I will never get to enjoy any milk. That's what you're doing with your money out of the market. Except in 10 years, your $5 won't even buy you a gallon of milk. Maybe one of those little milk cartons we got in elementary school lunch, not even a full pint!

Or you could keep your money invested, no matter what the price of the market is, and in 10 years you can take out <insert cost of a gallon> and enjoy it, with a cookie. Oatmeal Raisin!

If you think the market is expensive now, then it will be much more expensive as you get older, the only way to keep up with that is to invest as soon as you have funds available to invest. The milk only gets more expensive. Sometimes you'll buy a market dip, that's a sale, it will be like buying yesterdays bread from the bakery, other days you'll buy high. Today's price will not matter in 10 years when everything costs much more, but you're money will lose value if you don't keep it invested. Remember that candy bar your dad used to by for a nickel... a nickel doesn't even buy a piece of Dubble Bubble from the counter at my favorite hot dog shop. That's $.10

Index Funds are not for short term speculation and gambling. Funds are for long term investing. Invest in funds you plan on holding for the rest of your life. And if you invest, plan on holding it for more than 5 years.

edit;

One more thing. While you've been out of the market with your 1% interest on cash, we invested 10k into VTIAX on Friday May 1, crappy timing right? Since then it has come down ~4.5% and has gone down as much a 9%. However, the dividend paid on June 25 for $103, beats your 1% interest significantly. In only 55 days we earned 1% on investment, your 1% is APY and takes 12 months. And it's even better when you consider that $103 dividend bought 3.7 more shares and we've invested an extra $130 while it's been 'on sale'. You're losing money keeping cash... no matter what the price of a share is.

Thanks, this is the type of kick in the butt that I need.
« Last Edit: July 14, 2015, 11:32:51 AM by stlbrah »

Eric

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #8 on: July 14, 2015, 11:38:15 AM »
What makes you act that way in your taxable account? It's exact the same thing as your 401(k) and Roth IRA - they are vehicles for you to hold financial assets. The tax treatment is merely different. So that makes some things (such as directly holding some foreign stocks) better in some accounts than others, but it should not change your behavior so greatly.

Are you trying to game tax loss harvesting or something like that?

I suppose the fact that the taxable account is so readily available and easy to sell. But really I think there are flaws in my logic that I am trying to sort out.


You can just as easily sell off your 401k and Roth IRA and sit in cash in those accounts too.  But you wouldn't do that because it would be fucking stupid.  So stop doing it in your taxable account.  /facepunch

Cycling Stache

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #9 on: July 14, 2015, 11:47:20 AM »
You've correctly identified that the problem is behavioral/pschological.  It is.  You're buying and holding in your taxable account just like your retirement account, for the same purpose.  Pick your index fund or preferred asset allocation, set it, and forget it.  Money only goes in (until some time a long time down the road, unless something specific comes up).

By the way, I just set up the automatic investment option at Vanguard last week for my non-retirement account to deal with exactly this issue.  I don't want to think about--and overthink--my investments in my taxable account.   So I just calculated what could come out after my paycheck came in, and set it to go automatically.

In terms of the money you have available now, just move it in ASAP.  Statistically, today is always the best day to invest.  Once it goes in--like you're retirement account--forget about it.  If you lose $5-10k in the next year because of a market drop, it doesn't matter.  You will almost certainly be much farther ahead in 10-15 years.   

 

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #10 on: July 14, 2015, 11:48:53 AM »
What makes you act that way in your taxable account? It's exact the same thing as your 401(k) and Roth IRA - they are vehicles for you to hold financial assets. The tax treatment is merely different. So that makes some things (such as directly holding some foreign stocks) better in some accounts than others, but it should not change your behavior so greatly.

Are you trying to game tax loss harvesting or something like that?

I suppose the fact that the taxable account is so readily available and easy to sell. But really I think there are flaws in my logic that I am trying to sort out.


You can just as easily sell off your 401k and Roth IRA and sit in cash in those accounts too.  But you wouldn't do that because it would be fucking stupid.  So stop doing it in your taxable account.  /facepunch

If anything selling (i,.e. trading) in a 401k or Roth would be better since there are no taxes! It's still a terrible idea though.

RoseRelish

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #11 on: July 14, 2015, 12:14:32 PM »
OP: I can relate to your issue. I have zero issues "investing and forgetting" in my 401k but have had a bit of trouble in my taxable account. For me, a big part of the issue is the automation of a 401k that isn't as clean for taxable accounts. To combat this issue, I've begun to make weekly purchases automatically in my taxable account. I reserve a modest amount for more opportunistic trades, but the bulk is now automatically invested and held. This way, I take the bulk of the decisions out of my hands while retaining a bit for the "high" of making a good trade.

stlbrah

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #12 on: July 14, 2015, 12:29:49 PM »
OP: I can relate to your issue. I have zero issues "investing and forgetting" in my 401k but have had a bit of trouble in my taxable account. For me, a big part of the issue is the automation of a 401k that isn't as clean for taxable accounts. To combat this issue, I've begun to make weekly purchases automatically in my taxable account. I reserve a modest amount for more opportunistic trades, but the bulk is now automatically invested and held. This way, I take the bulk of the decisions out of my hands while retaining a bit for the "high" of making a good trade.

I think part of my issue is that I need to partake in the low-information diet. Read some more books instead of marketwatch and other financial sites.

----

So I am thinking of doing $10,000 into VASGX in the next few days, and then setting up the auto deposit for around $200-300/bi-weekly, maybe a bit more.

sheepstache

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #13 on: July 14, 2015, 12:46:44 PM »

So, rationally you know you're not good at market timing because you missed the dip and you're currently losing money by sitting in cash. So, as you say, this is psychological.

What if you got dividends by check rather than automatic reinvestment? That would really hammer home that you're making more than 1% just in terms of cashflow.

And if taxes play a role in your thinking, don't forget the interest is taxed at a higher rate than the dividends.

Do you feel like you need the money for something else? You're fine with just throwing money into a retirement account where you don't have access to it, so you've mentally parted with that money, but you maybe aren't doing that with the taxable account. Maybe you don't have enough of a cash buffer for emergencies? Or you're thinking you want the money for a house downpayment or some other project coming up? Make sure you're not spreading yourself too thin. That's a big thing for me when people ask how I can stash so much away. I get sort of confused and say, well, what else am I going to do with it? I honestly don't feel like I have any other use for the money. So if you're looking around at things you'd enjoy using the money for, that makes it more difficult. If the market tanks but you weren't gonna use the money anyway, it doesn't matter.

To rephrase what Cathy was getting at, maybe not having much money means you're chasing returns. Remember the quote, "More money has been lost reaching for yield than at the point of a gun."

zephyr911

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #14 on: July 14, 2015, 01:27:58 PM »
I think part of my issue is that I need to partake in the low-information diet. Read some more books instead of marketwatch and other financial sites.
Yep.
The less I look at my portfolio, the less I worry about it, and the happier I am when I finally *do*.
Of course, a year after finding MMM and upping the ante, I find it harder and harder to avoid looking, because the portfolio is bigger than ever and the hot market has meant big increases. But every time it backs off a little bit, I have to remind myself that today's balance and today's movements really don't matter. I log my balances and net worth quarterly; I'd like to get to the point where that's the only time I even look.

johnny847

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #15 on: July 14, 2015, 03:59:36 PM »
OP, just suck it up and stick to the plan. Treat your taxable account like you do your retirement account. Your taxable account funds are for retirement anyway.

/facepunch. Stop being stupid. Like Eric said.

ZiziPB

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #16 on: July 14, 2015, 05:16:54 PM »
Quote
So I am thinking of doing $10,000 into VASGX in the next few days, and then setting up the auto deposit for around $200-300/bi-weekly, maybe a bit more.

This^^^^

Set up a direct deposit from your paycheck into your taxable account and then automatic investment in the account. I do that with my taxable account and it works perfectly. A set amount from each paycheck goes into the account, then it's auto invested into mutual funds.  Rebalance once a year when I get my bonus. Works exactly like a 401k :-)

innerscorecard

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #17 on: July 14, 2015, 08:03:56 PM »
What makes you act that way in your taxable account? It's exact the same thing as your 401(k) and Roth IRA - they are vehicles for you to hold financial assets. The tax treatment is merely different. So that makes some things (such as directly holding some foreign stocks) better in some accounts than others, but it should not change your behavior so greatly.

Are you trying to game tax loss harvesting or something like that?

I suppose the fact that the taxable account is so readily available and easy to sell. But really I think there are flaws in my logic that I am trying to sort out.


You can just as easily sell off your 401k and Roth IRA and sit in cash in those accounts too.  But you wouldn't do that because it would be fucking stupid.  So stop doing it in your taxable account.  /facepunch

Yeah, that's why this behavior is so puzzling to me.

OP: I can relate to your issue. I have zero issues "investing and forgetting" in my 401k but have had a bit of trouble in my taxable account. For me, a big part of the issue is the automation of a 401k that isn't as clean for taxable accounts. To combat this issue, I've begun to make weekly purchases automatically in my taxable account. I reserve a modest amount for more opportunistic trades, but the bulk is now automatically invested and held. This way, I take the bulk of the decisions out of my hands while retaining a bit for the "high" of making a good trade.

I think part of my issue is that I need to partake in the low-information diet. Read some more books instead of marketwatch and other financial sites.

Yup. Market sites are terrible. Stop reading them! It makes sense that they exist, but they're literally never actually useful. Especially for index investors (but even for individual stock investors like myself).

I have a list of books for beginners I like on my site (linked below in my signature). But that's just my preference. There are hundreds of lists out there that are equally as good. No accounting for taste. But do read. Reading is a chance to learn at minimal cost from the greats who have actually either been the greats of investing or alternatively spent their lifetimes conducting academic research on a topic. And books give knowledge that are edited and more or less timeless. Much better than the information on market sites which is useless a day after the fact.
« Last Edit: July 14, 2015, 08:10:56 PM by innerscorecard »

aschmidt2930

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #18 on: July 14, 2015, 08:11:52 PM »
...I am still having trouble believing that timing the market is for suckers.

What information would cause you to change your mind?

Market timing isn't for suckers.

Until it is.

stlbrah

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #19 on: July 14, 2015, 11:00:26 PM »

Do you feel like you need the money for something else? You're fine with just throwing money into a retirement account where you don't have access to it, so you've mentally parted with that money, but you maybe aren't doing that with the taxable account. Maybe you don't have enough of a cash buffer for emergencies? Or you're thinking you want the money for a house downpayment or some other project coming up? Make sure you're not spreading yourself too thin. That's a big thing for me when people ask how I can stash so much away. I get sort of confused and say, well, what else am I going to do with it? I honestly don't feel like I have any other use for the money. So if you're looking around at things you'd enjoy using the money for, that makes it more difficult. If the market tanks but you weren't gonna use the money anyway, it doesn't matter.

Can't really say that's the case either. I have lived in the same house for about 5.5 years and I don't have plans to sell it any time soon. I like that I have a heft emergency fund, but 62k emergency fund seems excessive for 1 person.

----

Thanks for the support and info, everyone. Sometimes constructive criticism is exactly what I need.

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #20 on: July 15, 2015, 12:19:16 AM »
If you already cashed out just trust the decision you have already made. October is said to be the best time to invest. September is famously a bad month. Of course you could always just buy Disney on the next dip. I started buying at $92 and I have been saying that in this forum since it was $105. Im still saying it a $118. Disney should do well through the summer and explode right when Star Wars comes out.

Be passive or be aggressive-- but whatever you do, don't be passive-aggressive

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #21 on: July 15, 2015, 12:45:16 AM »
If you already cashed out just trust the decision you have already made. October is said to be the best time to invest. September is famously a bad month. Of course you could always just buy Disney on the next dip. I started buying at $92 and I have been saying that in this forum since it was $105. Im still saying it a $118. Disney should do well through the summer and explode right when Star Wars comes out.

Be passive or be aggressive-- but whatever you do, don't be passive-aggressive

Please ignore this. If there were any legitimate reason to believe that stocks will always be at their low in October, the big banks would be all over it and it would no longer be true. The best time to invest is yesterday. The second best time is today. Sitting on the sidelines waiting for a lower day than today (which may never come!) is not the way to get your little green employees working for you.

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #22 on: July 15, 2015, 01:04:34 AM »
From a strictly dollar and cents perspective it makes more sense to be active in your tax sheltered accounts and passive in your taxable accounts.

The smart money is definitely to be passive in both. But why pay taxes every time you sell for a gain?

My preferred vehicle for my taxable account is Betterment with tax loss harvesting. TLH has more than covered the 0.25% fee for my $70k taxable account many times over to date.



milesdividendmd

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #23 on: July 15, 2015, 01:10:44 AM »

So, I am in my 20s and I am maxing out my 401k and roth each year and don't think twice about it. It is such a good deal with the tax free dividends that it is a no-brainer.

But when it comes to taxable accounts, I can never stick to the plan because I always have this overwhelming feeling that I am missing out or setting myself up for failure. I ended up trading funds in my brokerage account every few months in 2013 and 2014 and it worked out great, mostly due to luck. I had to pay taxes too obviously. I ended up selling all of my taxable funds when S&P 500 first went over 2100 so it was a great profit. In my taxable account, I mostly held blended index funds like FFNOX and VASGX.

But since then I have been sitting on the sidelines twiddling my thumbs and not getting any dividend money besides 1% from the bank. I didn't buy into anything in this Greece/China fueled dip when I should have. I am having trouble jumping into this pricey market because I am still having trouble believing that timing the market is for suckers.

I could easily get another 3-500/month into a taxable account, more on some occasions. I have a feeling most people will say "You're 27, just buy some index funds and not check them for a decade." I guess what I am looking for is to see if anyone else has trouble with this, and what you did to get past it. I am usually a very disciplined person who is good with delayed gratification, but I feel like opening up taxable funds in this market is overly risky. What motivated you to jump in when it feels that odds are stacked up against you?

Do you drink milk, I like milk so that's the example I'm going to use.

I can buy a gallon of milk right now, and it will likely cost $5 and I will enjoy it, in eggs, on cereal, or as chocolate milk after a good work out. I could also stick that $5 in my sock drawer and I will never get to enjoy any milk. That's what you're doing with your money out of the market. Except in 10 years, your $5 won't even buy you a gallon of milk. Maybe one of those little milk cartons we got in elementary school lunch, not even a full pint!

Or you could keep your money invested, no matter what the price of the market is, and in 10 years you can take out <insert cost of a gallon> and enjoy it, with a cookie. Oatmeal Raisin!

If you think the market is expensive now, then it will be much more expensive as you get older, the only way to keep up with that is to invest as soon as you have funds available to invest. The milk only gets more expensive. Sometimes you'll buy a market dip, that's a sale, it will be like buying yesterdays bread from the bakery, other days you'll buy high. Today's price will not matter in 10 years when everything costs much more, but you're money will lose value if you don't keep it invested. Remember that candy bar your dad used to by for a nickel... a nickel doesn't even buy a piece of Dubble Bubble from the counter at my favorite hot dog shop. That's $.10

Index Funds are not for short term speculation and gambling. Funds are for long term investing. Invest in funds you plan on holding for the rest of your life. And if you invest, plan on holding it for more than 5 years.

edit;

One more thing. While you've been out of the market with your 1% interest on cash, we invested 10k into VTIAX on Friday May 1, crappy timing right? Since then it has come down ~4.5% and has gone down as much a 9%. However, the dividend paid on June 25 for $103, beats your 1% interest significantly. In only 55 days we earned 1% on investment, your 1% is APY and takes 12 months. And it's even better when you consider that $103 dividend bought 3.7 more shares and we've invested an extra $130 while it's been 'on sale'. You're losing money keeping cash... no matter what the price of a share is.

I really like the angle you take here as a motivational approach, but the sad fact is that you are -3.5% since investing on May 1 so to date you would have been better off having invested in a checking account.

Obviously, long term, you made a smart choice.  My only point is that comparing yields is meaningless, all that matters in the end is total return after taxes.

mrpercentage

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #24 on: July 15, 2015, 02:44:19 AM »
If you already cashed out just trust the decision you have already made. October is said to be the best time to invest. September is famously a bad month. Of course you could always just buy Disney on the next dip. I started buying at $92 and I have been saying that in this forum since it was $105. Im still saying it a $118. Disney should do well through the summer and explode right when Star Wars comes out.

Be passive or be aggressive-- but whatever you do, don't be passive-aggressive

Please ignore this. If there were any legitimate reason to believe that stocks will always be at their low in October, the big banks would be all over it and it would no longer be true. The best time to invest is yesterday. The second best time is today. Sitting on the sidelines waiting for a lower day than today (which may never come!) is not the way to get your little green employees working for you.

;)

Depends on his reason. If his taxable is short then his choice is pretty sound. If its long then nothing should change his plan.

BlueHouse

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #25 on: July 15, 2015, 04:27:35 AM »
. What motivated you to jump in when it feels that odds are stacked up against you?
Having a written policy statement, as so many here on these boards suggest, has really changed my behavior and stopped me from doing irrational things based on emotion. It really makes a difference

StressLess

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #26 on: July 15, 2015, 06:18:44 AM »
to the OP:

you are in your 20s - do you own a home? 

I live in NYC, where currently renting is cheaper for me vs owning...but just a thought, you may want to think about purchasing a home or using some of that after tax money as a downpayment on a house.  Especially if you cant keep the money in the market due to trying to play the timing game.

check out the buy vs rent calculator from nytimes

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

stlbrah

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #27 on: July 15, 2015, 08:17:02 AM »
to the OP:

you are in your 20s - do you own a home? 

I live in NYC, where currently renting is cheaper for me vs owning...but just a thought, you may want to think about purchasing a home or using some of that after tax money as a downpayment on a house.  Especially if you cant keep the money in the market due to trying to play the timing game.

check out the buy vs rent calculator from nytimes

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

Thanks, ya I own a home. I have a recently re-financed to lower rate of 3.625%, apr is about 4.1 since there is PMI. I have considered making extra down-payments on the principal each month, but I am not sure if that is a a good route to go when I may be moving in 1-3 years.

BarkyardBQ

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #28 on: July 15, 2015, 09:38:20 AM »
I really like the angle you take here as a motivational approach, but the sad fact is that you are -3.5% since investing on May 1 so to date you would have been better off having invested in a checking account.

Obviously, long term, you made a smart choice.  My only point is that comparing yields is meaningless, all that matters in the end is total return after taxes.

Thanks MD. Did you get -3.5% by adding back the 1% distribution, which I didn't consider, or are you determining this by some other means than a stock chart?

True about yields. My statement was mostly to say that; My checking account isn't part of my AA, my risk tolerance accepting, the money is where it should be for the long term, and therefore the short term result isn't my concern.

Cathy

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #29 on: July 15, 2015, 11:03:46 AM »
From a strictly dollar and cents perspective it makes more sense to be active in your tax sheltered accounts and passive in your taxable accounts.

The smart money is definitely to be passive in both. But why pay taxes every time you sell for a gain?

If we assume (as is likely) that OP is more likely to lose money than gain money from his or her speculative securities trading, then the taxable account is the more rational vehicle for these transactions because the expected losses are potentially deductible, thus softening the blow. (Note: This assumes that OP is expected to have a net capital loss, rather than just not earning as much money as she or he otherwise would.)

milesdividendmd

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #30 on: July 15, 2015, 12:17:52 PM »

From a strictly dollar and cents perspective it makes more sense to be active in your tax sheltered accounts and passive in your taxable accounts.

The smart money is definitely to be passive in both. But why pay taxes every time you sell for a gain?

If we assume (as is likely) that OP is more likely to lose money than gain money from his or her speculative securities trading, then the taxable account is the more rational vehicle for these transactions because the expected losses are potentially deductible, thus softening the blow. (Note: This assumes that OP is expected to have a net capital loss, rather than just not earning as much money as she or he otherwise would.)

That's a bit strongly stated I think. Most individual active investors underperform their index long term, but most do not lose money.

brooklynguy

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #31 on: July 15, 2015, 12:37:26 PM »

From a strictly dollar and cents perspective it makes more sense to be active in your tax sheltered accounts and passive in your taxable accounts.

The smart money is definitely to be passive in both. But why pay taxes every time you sell for a gain?

If we assume (as is likely) that OP is more likely to lose money than gain money from his or her speculative securities trading, then the taxable account is the more rational vehicle for these transactions because the expected losses are potentially deductible, thus softening the blow. (Note: This assumes that OP is expected to have a net capital loss, rather than just not earning as much money as she or he otherwise would.)

That's a bit strongly stated I think. Most individual active investors underperform their index long term, but most do not lose money.

Cathy's post also (intentionally, I think) sidesteps the fact that no rational investor invests with the expectation of losing money, so if the OP were to adopt an expectation of losing money, the rational response would not be to continue the speculative trading in the taxable account but to abandon it altogether.

milesdividendmd

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #32 on: July 15, 2015, 12:57:17 PM »

I really like the angle you take here as a motivational approach, but the sad fact is that you are -3.5% since investing on May 1 so to date you would have been better off having invested in a checking account.

Obviously, long term, you made a smart choice.  My only point is that comparing yields is meaningless, all that matters in the end is total return after taxes.

Thanks MD. Did you get -3.5% by adding back the 1% distribution, which I didn't consider, or are you determining this by some other means than a stock chart?

True about yields. My statement was mostly to say that; My checking account isn't part of my AA, my risk tolerance accepting, the money is where it should be for the long term, and therefore the short term result isn't my concern.

Nothing complicated -4.5 in lost market value + 1% dividend = -3.5 percent total return, (though it's probably a little lower than that if you were taxed on your dividend.)

And I completely agree with your decision to have invested the money long term in a low cost index fund.

I would argue that your checking/savings account should be considered as "cash" in your asset allocation.

Personal Capital does a great job of tracking this for you.

BarkyardBQ

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #33 on: July 15, 2015, 01:03:33 PM »

I really like the angle you take here as a motivational approach, but the sad fact is that you are -3.5% since investing on May 1 so to date you would have been better off having invested in a checking account.

Obviously, long term, you made a smart choice.  My only point is that comparing yields is meaningless, all that matters in the end is total return after taxes.

Thanks MD. Did you get -3.5% by adding back the 1% distribution, which I didn't consider, or are you determining this by some other means than a stock chart?

True about yields. My statement was mostly to say that; My checking account isn't part of my AA, my risk tolerance accepting, the money is where it should be for the long term, and therefore the short term result isn't my concern.

Nothing complicated -4.5 in lost market value + 1% dividend = -3.5 percent total return, (though it's probably a little lower than that if you were taxed on your dividend.)

And I completely agree with your decision to have invested the money long term in a low cost index fund.

I would argue that your checking/savings account should be considered as "cash" in your asset allocation.

Personal Capital does a great job of tracking this for you.

Excellent.

Where do you see Cash Accounts as part of the AA? PC shows me .62% cash holdings, all held as a portion of my Index Funds. It doesn't consider savings accounts and checking as part of AA.

Kaspian

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #34 on: July 15, 2015, 02:36:42 PM »
So, I am in my 20s and I am maxing out my 401k and roth each year and don't think twice about it. It is such a good deal with the tax free dividends that it is a no-brainer.

But when it comes to taxable accounts, I can never stick to the plan because I always have this overwhelming feeling that I am missing out or setting myself up for failure. I ended up trading funds in my brokerage account every few months in 2013 and 2014 and it worked out great, mostly due to luck. I had to pay taxes too obviously. I ended up selling all of my taxable funds when S&P 500 first went over 2100 so it was a great profit. In my taxable account, I mostly held blended index funds like FFNOX and VASGX.

But since then I have been sitting on the sidelines twiddling my thumbs and not getting any dividend money besides 1% from the bank. I didn't buy into anything in this Greece/China fueled dip when I should have. I am having trouble jumping into this pricey market because I am still having trouble believing that timing the market is for suckers.

I could easily get another 3-500/month into a taxable account, more on some occasions. I have a feeling most people will say "You're 27, just buy some index funds and not check them for a decade." I guess what I am looking for is to see if anyone else has trouble with this, and what you did to get past it. I am usually a very disciplined person who is good with delayed gratification, but I feel like opening up taxable funds in this market is overly risky. What motivated you to jump in when it feels that odds are stacked up against you?

Did you notice how many times you wrote the word "feeling" and the other times you deferred rational thinking to emotion?  I think history has shown that even the wisest of gypsy fortune-tellers cannot predict in what ways markets move.  I wouldn't trust my money to your feelings.  For that matter, I wouldn't trust my money with my own.  The only thing we can trust in the investment game is good data and hopefully logic.  Detach yourself emotionally from money.  Invest like Mr. Spock, not Doc Holliday.  Check your gut instinct at the door because the S&P 500 doesn't care which way you feel it will go that year.  :)
« Last Edit: July 15, 2015, 02:40:32 PM by Kaspian »

milesdividendmd

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #35 on: July 15, 2015, 04:10:42 PM »


I really like the angle you take here as a motivational approach, but the sad fact is that you are -3.5% since investing on May 1 so to date you would have been better off having invested in a checking account.

Obviously, long term, you made a smart choice.  My only point is that comparing yields is meaningless, all that matters in the end is total return after taxes.

Thanks MD. Did you get -3.5% by adding back the 1% distribution, which I didn't consider, or are you determining this by some other means than a stock chart?

True about yields. My statement was mostly to say that; My checking account isn't part of my AA, my risk tolerance accepting, the money is where it should be for the long term, and therefore the short term result isn't my concern.

Nothing complicated -4.5 in lost market value + 1% dividend = -3.5 percent total return, (though it's probably a little lower than that if you were taxed on your dividend.)

And I completely agree with your decision to have invested the money long term in a low cost index fund.

I would argue that your checking/savings account should be considered as "cash" in your asset allocation.

Personal Capital does a great job of tracking this for you.

Excellent.

Where do you see Cash Accounts as part of the AA? PC shows me .62% cash holdings, all held as a portion of my Index Funds. It doesn't consider savings accounts and checking as part of AA.

Great point. I completely missed this deficiency in personal capital prior to you pointing it out. Thanks!

Aphalite

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #36 on: July 15, 2015, 05:15:09 PM »
If you already cashed out just trust the decision you have already made. October is said to be the best time to invest. September is famously a bad month. Of course you could always just buy Disney on the next dip. I started buying at $92 and I have been saying that in this forum since it was $105. Im still saying it a $118. Disney should do well through the summer and explode right when Star Wars comes out.

Be passive or be aggressive-- but whatever you do, don't be passive-aggressive

Do you realize how little Star Wars will contribute to Disney's bottom line? Even if it broke every record out there and made $3b in gross revenues, it would still be a drop in the bucket (studio entertainment has been consistently contributing between 12-15% of net earnings) when compared to Disney's earnings from ESPN and other network programming (66% of net earnings).

BarkyardBQ

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #37 on: July 15, 2015, 05:47:39 PM »


I really like the angle you take here as a motivational approach, but the sad fact is that you are -3.5% since investing on May 1 so to date you would have been better off having invested in a checking account.

Obviously, long term, you made a smart choice.  My only point is that comparing yields is meaningless, all that matters in the end is total return after taxes.

Thanks MD. Did you get -3.5% by adding back the 1% distribution, which I didn't consider, or are you determining this by some other means than a stock chart?

True about yields. My statement was mostly to say that; My checking account isn't part of my AA, my risk tolerance accepting, the money is where it should be for the long term, and therefore the short term result isn't my concern.

Nothing complicated -4.5 in lost market value + 1% dividend = -3.5 percent total return, (though it's probably a little lower than that if you were taxed on your dividend.)

And I completely agree with your decision to have invested the money long term in a low cost index fund.

I would argue that your checking/savings account should be considered as "cash" in your asset allocation.

Personal Capital does a great job of tracking this for you.

Excellent.

Where do you see Cash Accounts as part of the AA? PC shows me .62% cash holdings, all held as a portion of my Index Funds. It doesn't consider savings accounts and checking as part of AA.

Great point. I completely missed this deficiency in personal capital prior to you pointing it out. Thanks!

While PC doesn't consider cash part of the AA, it does nag you with notifications invest if you have too much cash.

Cycling Stache

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #38 on: July 15, 2015, 06:00:45 PM »
If you already cashed out just trust the decision you have already made. October is said to be the best time to invest. September is famously a bad month. Of course you could always just buy Disney on the next dip. I started buying at $92 and I have been saying that in this forum since it was $105. Im still saying it a $118. Disney should do well through the summer and explode right when Star Wars comes out.

Be passive or be aggressive-- but whatever you do, don't be passive-aggressive

Do you realize how little Star Wars will contribute to Disney's bottom line? Even if it broke every record out there and made $3b in gross revenues, it would still be a drop in the bucket (studio entertainment has been consistently contributing between 12-15% of net earnings) when compared to Disney's earnings from ESPN and other network programming (66% of net earnings).

And everyone else in the investing world who cares also knows about the Star Wars movie and how well it's expected to do.  Those projections are therefore built into the price.

That's the difficultly I see in any individual stock recommendation.  Such recommendations are premised on the idea that the individual has either (1) unique information, or (2) a unique ability to assess the available information.  The first is insider trading.  The second is highly unlikely given the number of people (with tons of investor money) trying to make the exact same assessment.  An individual might hit on a few, but seems to me highly unlikely to win against the market on a regular basis.

Rufus.T.Firefly

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #39 on: July 15, 2015, 06:04:49 PM »
I think there are a lot of great responses here so I don't have much more to add.

I too am younger and just starting out in investing. I knew I would be tempted to do "market timing" or play with my accounts. My solution was to type up an "Investing Manifesto" where I made up rules for myself. At the bottom of the document, I wrote this, "Remember, the math to early retirement is too easy to fool around and be cute."

Then I showed it to my wife and it sits there in my desk drawer to hold us accountable.

stlbrah

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #40 on: July 15, 2015, 08:26:08 PM »
This thread gave me the nudge I needed to do what I already knew I should do. Thanks guys
« Last Edit: July 15, 2015, 10:24:29 PM by stlbrah »

innerscorecard

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #41 on: July 16, 2015, 01:57:56 AM »
If you already cashed out just trust the decision you have already made. October is said to be the best time to invest. September is famously a bad month. Of course you could always just buy Disney on the next dip. I started buying at $92 and I have been saying that in this forum since it was $105. Im still saying it a $118. Disney should do well through the summer and explode right when Star Wars comes out.

Be passive or be aggressive-- but whatever you do, don't be passive-aggressive

Do you realize how little Star Wars will contribute to Disney's bottom line? Even if it broke every record out there and made $3b in gross revenues, it would still be a drop in the bucket (studio entertainment has been consistently contributing between 12-15% of net earnings) when compared to Disney's earnings from ESPN and other network programming (66% of net earnings).

And everyone else in the investing world who cares also knows about the Star Wars movie and how well it's expected to do.  Those projections are therefore built into the price.

That's the difficultly I see in any individual stock recommendation.  Such recommendations are premised on the idea that the individual has either (1) unique information, or (2) a unique ability to assess the available information.  The first is insider trading.  The second is highly unlikely given the number of people (with tons of investor money) trying to make the exact same assessment.  An individual might hit on a few, but seems to me highly unlikely to win against the market on a regular basis.

As inane as the original comment was, you simplify things too much as well. For one, you could also have a different time horizon than other investors. If you care only about 5+ year returns, and not the next quarter or year, you will think differently than other investors and be able to buy things at a good price that they won't.

bdbrooks

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #42 on: July 16, 2015, 07:49:04 AM »
From the perspective of someone that isn't simply a buy and hold index investor. What you WERE doing was incredibly risky. No one should be following their gut when it comes to investing. I use rule based systems to invest and rarely come out of the market (like 3 times since 2000 not every couple of months). Even following these rules, I don't expect it to enhance my actual returns over the long long haul, but I do expect to flatten out the ride a little bit and ALLOW ME TO FOLLOW MY LONG TERM PLAN. Studies show that investors feel the pain of losing $1 is 3x greater than the excitement of gaining $1. This causes lots of investors to abort their long term plan at precisely the wrong time. My system is set up to help me actually be able to follow my plan. I do not trust feelings with these things. If your system had you out of the market anytime this year, then it is looking at things too short term. As Miles said, in your taxable account you want to do as little trading as possible (if anywhere you would do that in a tax sheltered account).

When it comes to investing: Don't trust my feelings. Don't trust someone else's feelings. Don't trust your feelings.

Kaspian

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #43 on: July 16, 2015, 11:08:03 AM »
...No one should be following their gut when it comes to investing....

When it comes to investing: Don't trust my feelings. Don't trust someone else's feelings. Don't trust your feelings.

^^ Exactamundo!  If the big-wigs who study in-depth Shiller CAPE data can't predict what's going to happen, there's no possible way in hell any of our guts or feelings can.

Quote

Source:  http://www.advisorperspectives.com/newsletters15/25-are-grantham-and-hussman-correct-about-valuations.php

In February 2012, with the Shiller CAPE 10 at 21.8, Grantham warned that investors who bought stocks at that time could expect meager returns over the next seven years. GMO forecasted that, after figuring for 2.5% in annualized inflation, U.S. large-cap stocks -- namely the S&P 500 --were poised to return slightly less than 1% per year, or under 3.5% in nominal terms. However, in 2012, the S&P 500 returned 16.0%. In 2013, it returned 32.4%. In 2014, it returned 13.7%. And through May, it has returned 3.3% in 2015. From March 2012 through May 2015, the S&P 500 produced a total return of about 65%.
 
•  In a mid-January 2013 letter, Hussman stated: “Present overvalued, overbought, overbullish, rising-yield conditions fall within a tiny percentage of market history that is associated with dismal market outcomes, on average. It’s true that we’ve observed extreme conditions since about March 2012 with little resolution aside from short-term declines. But the S&P 500 remains only a few percent from its March 2012 high, and if history is any guide, the extension of these unfavorable conditions is not likely to reduce the depth of the market loss that can be expected to resolve them.” From February 2013 through May 2015, the S&P 500’s total return was about 48%.
 
•  In mid-November 2013, with the CAPE 10 now at an even higher 24.6, GMO offered the following dire warning: “Combining the current P/E of over 19 for the S&P 500 and a return on sales about 42% over the historical average, we would get an estimate thatthe S&P 500 is approximately 75% overvalued.” The firm’s model gave them an estimated real return to the S&P 500 of -1.3% per year for the next seven years, after inflation. From December 2013 through May 2015, the S&P 500 has returned a total of about 20%.
 
•  In a March 2014 interview with Barron’s, and with the CAPE 10 having risen to 25.0, Grantham warned that stocks were 65% overpriced. From April 2014 through May 2015, the S&P 500 produced a total return of about 15%.


mrpercentage

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #44 on: July 16, 2015, 05:58:00 PM »
If you already cashed out just trust the decision you have already made. October is said to be the best time to invest. September is famously a bad month. Of course you could always just buy Disney on the next dip. I started buying at $92 and I have been saying that in this forum since it was $105. Im still saying it a $118. Disney should do well through the summer and explode right when Star Wars comes out.

Be passive or be aggressive-- but whatever you do, don't be passive-aggressive

Do you realize how little Star Wars will contribute to Disney's bottom line? Even if it broke every record out there and made $3b in gross revenues, it would still be a drop in the bucket (studio entertainment has been consistently contributing between 12-15% of net earnings) when compared to Disney's earnings from ESPN and other network programming (66% of net earnings).

I mention Star Wars and everyone acts like thats the only reason I bought it... but its up to $119.07 today. You will probably wait until it dips and instead of buy you will lift your finger and say "I told you it was over priced." Its not done. Don't take my word for it wait until December. Of course it will be too late. I don't mind though because Im holding it indefinitely. Unlike, NM or PAH or RCPT--I will not cash Disney. When it becomes less than 20% of my portfolio through other purchases, I will buy more. That might take a while. Its hard to out contribute its growth in other stocks.

So why did I really buy Disney? Because I have absolute faith Disney will be successful 30 years from now. Because regardless of what hits the news, Miley Cyrus showing her snatch, or Measles at the park-- nobody gives a shit. Disney is going up long term. It may not always beat the market but it is going up. Going up fast enough to never touch it.

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #45 on: July 16, 2015, 06:30:35 PM »
The question is not whether it is a good company. And the question is not whether it will experience growth. The real question: is the price reasonable for the company's quality and growth potential?

It is entirely possible to buy a great company at too high a price. Disney is trading at 25 P/E. They are a massive business already (200B market cap) and would have to grow at a very unlikely rate to fulfill the potential this premium multiple suggests it will.

Long-term gains are driven almost by starting yields and earnings growth, not P/E effects. To buy because you think "the price will go up" is foolish because the P/E ratio always balance out in the end, even if the market has a short-term love affair with the stock, it will eventually revert to represent the true value of the company, i.e. yield and earnings growth. If you're buying for the long-term, then who cares what the price is in December? If you're not going to sell to realize gains, then it's irrelevant. And if you do sell in December, then you're effectively becoming a short-term trader, trying to outsmart the best analytical minds in the industry who spend every waking hour performing security analysis. Not a good bet in my opinion.

mrpercentage

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #46 on: July 16, 2015, 06:51:22 PM »
I wasn't making a recommendation for me. I already have invested. They will be successful the next few years for many reasons. If somebody wants a fast good run they need to jump on sooner rather than later.

What I would do depends on how much capital I have. Capital greatly determines how some DGI stocks perform. Some will absolutely kill the market if you have $50,000 to put in them. I don't so I still have to rely on equity growth.

Honestly some of my diversification has been what Peter Lynch calls da-worse-ifcation. It hasn't helped. It has taken profits away from companies I knew would be successful but didn't throw everything at it. I think Im done talking about DIS.
« Last Edit: July 16, 2015, 07:20:45 PM by mrpercentage »

seattlecyclone

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #47 on: July 16, 2015, 11:29:34 PM »
What I would do depends on how much capital I have. Capital greatly determines how some DGI stocks perform. Some will absolutely kill the market if you have $50,000 to put in them. I don't so I still have to rely on equity growth.

Please tell me more about why a stock is likely to perform better if I invest $50,000 compared to some smaller amount. This is sure to be interesting.

milesdividendmd

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #48 on: July 16, 2015, 11:42:39 PM »
4% of 50 K > 4% of $500. Duh.

:)

BarkyardBQ

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Re: Psychological Issue w/ Buy and Hold in Taxable Accounts
« Reply #49 on: July 17, 2015, 09:11:37 AM »
What I would do depends on how much capital I have. Capital greatly determines how some DGI stocks perform. Some will absolutely kill the market if you have $50,000 to put in them. I don't so I still have to rely on equity growth.

Please tell me more about why a stock is likely to perform better if I invest $50,000 compared to some smaller amount. This is sure to be interesting.

Cause man, you know, dividends man.