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Learning, Sharing, and Teaching => Investor Alley => Topic started by: chadat23 on March 24, 2018, 12:42:51 PM

Title: When would you get back in?
Post by: chadat23 on March 24, 2018, 12:42:51 PM
A few weeks ago I initiated a transfer of about $90k worth of IRA funds from Betterment to Vanguard. This past Monday funds were liquidated from Betterment. I'm assuming that any day now they'll show up in my Vanguard account. If you were in my shoes, if the money showed up on Monday, how quickly would you move to get back in the market? And that's not to imply that I think I can time the bottom, but is waiting a few days to see if we're plunging off a cliff that naive of an idea? I don't usually think twice about these kinds of ideas, but usually, I don't have such a large chunk of cash waiting to be invested while the market's pulling back from record highs while there's a real threat of a trade war.
Title: Re: When would you get back in?
Post by: chasesfish on March 24, 2018, 01:25:37 PM
I'd invest immediately.

I only keep a little cash lying around...then when the bear rears its ugly head, I throw money at it until it goes away
Title: Re: When would you get back in?
Post by: nereo on March 24, 2018, 01:29:26 PM
time IN the market is more important than timing the market.
Title: Re: When would you get back in?
Post by: MDM on March 24, 2018, 01:42:38 PM
If you were in my shoes, if the money showed up on Monday, how quickly would you move to get back in the market?
Monday.  Don't know if that would be correct in hindsight (which is the only way to know), but I'd likely think "Wow, what great luck to have been out of the market last week!" and jump back in ASAP.
Quote
And that's not to imply that I think I can time the bottom, but is waiting a few days to see if we're plunging off a cliff that naive of an idea?
It's not naive, in the sense that one can find plenty of Wall Street "experts" who would agree.  But one could also find plenty of Wall Street "experts" who would not agree.
Title: Re: When would you get back in?
Post by: webguy on March 24, 2018, 07:48:51 PM
I know everyone says they'd just put it in right away, but if I'm being honest and it was my money then I would probably wait a day or two to feel things out.  I know that's probably not the optimal thing to do, but I'm just being honest.
Title: Re: When would you get back in?
Post by: Travis on March 24, 2018, 08:07:37 PM
Don't try to play the timing game. Consider the drop we just had as a gift and get back in immediately.
Title: Re: When would you get back in?
Post by: gredenko on March 24, 2018, 10:05:11 PM
I know everyone says they'd just put it in right away, but if I'm being honest and it was my money then I would probably wait a day or two to feel things out.  I know that's probably not the optimal thing to do, but I'm just being honest.

No this is the optimal thing to do, especially if you have time to check on the market more than once a week. Buying without a signal that the drop has ended is how you start your investment off with a major loss.
Title: Re: When would you get back in?
Post by: Toad on March 24, 2018, 10:41:22 PM

No this is the optimal thing to do, especially if you have time to check on the market more than once a week. Buying without a signal that the drop has ended is how you start your investment off with a major loss.

...and waiting for the correct signal is how you miss out on the upswing.  This is how I missed out on all of 2017.   Finally said F it and tossed it all in (~120k) at the beginning of Feb.  I am sitting at a loss...but you know what?  I am ok with it since I don't need the funds anytime soon.

If you are uncomfortable with throwing it all in stocks now then at least throw it in bonds (AGG or whatever the Vanguard equivalent is) until you get the signal you are looking for.

Edit to add:. I did "scale in" over about 1 week with my funds.  Really it will make no difference in the long run, but if it makes you feel better doing it that way it is still better than sitting on the side and waiting for the "correct" moment since it will only come in hindsight and then you might end up sitting on the sidelines like I did.
Title: Re: When would you get back in?
Post by: privatefarmer on March 24, 2018, 11:51:55 PM
I know everyone says they'd just put it in right away, but if I'm being honest and it was my money then I would probably wait a day or two to feel things out.  I know that's probably not the optimal thing to do, but I'm just being honest.

No this is the optimal thing to do, especially if you have time to check on the market more than once a week. Buying without a signal that the drop has ended is how you start your investment off with a major loss.

wait, what? I'm assuming your "signal" has either made you the richest person on earth or whomever you learned it from is the richest person on earth. because if anyone had a "signal" that reliably told them when the market was going up or down, they'd very quickly be richer than warren buffett.

no? you're not worth hundreds of billions? then your signal is not working. nobody can predict HUMAN BEHAVIOR which is what drives short-term market returns, not fundamentals. Fundamentals (ie the economy growing) drives long-term stock market returns but day-to-day or even year-to-year volatility is driven almost exclusively by human behavior, which we cannot possibly predict ahead of time.
Title: Re: When would you get back in?
Post by: chadat23 on March 25, 2018, 12:52:37 AM
"Get in ASAP, with everything you can afford, for the long term" is a great rule of thumb, but I'd argue that the most import, typically last, and typically hardest thing to be learned about any rule of thumb is when it's not the best option.

A few things to keep in mind: people rightfully talk about the cost of opportunity but given that I'm only talking about sitting on the sidelines for a few days at most (assuming things don't start going up or really tanking) this is a largely mute point, it's not that hard to get lucky once if you have a few things going in your favor and I'd argue that I do (trade war, interest rates...), I'm only planning on doing this once so neither regression to the mean nor cost of opprotunity considerations are relevant, I'm not trying to pick a top AND a bottom (I got out for unrelated reasons) only the next bit of direction, the fact that the market's behaviors don't repeat with sufficient regularity for people to use them to consistently beat the market doesn't mean that zero insights can be gleaned.

I'm not convinced that this is a good idea, I'm just not convinced that it's an innately bad idea just because it's different from what I do the other 99% of the time since this is a different circumstance from the other 99% of the time (at least for me).
Title: Re: When would you get back in?
Post by: nereo on March 25, 2018, 06:08:02 AM
You asked for advice and we offered it.  You seemed to have made up your mind to wait "a few days" and see what happens.

Here's why waiting "a few days" often doesn't work out.  Suppose first that the market drops another 500 points on Monday the talking heads will start bickering about "is this the start of a bear market,' and you pat yourself on the back for being 'smart.'  BUt hten what?  you wait a few more days and one of two things happens - most of the time (and particularly lately) the market bounces back up and you are left with a bunch of cash on the sidelines.  OR it continues downward, each day bringing a more negative tone from the talking heads and newspapers.  Problem here is there's no way of knowing where the bottom is, and people sitting on the sidelines almost always continue to sit on the sidelines until well past the recovery point.

OR - the dip just happened (as it has multiple times the market has dipped 4-5% in the last 2 years), you've missed out nad you are left with a bunch of cash sitting on the sidelines.

Staying ont eh sidelines for a few days is just a lesser version of market timing.  If you truly wait just a few days the most common result will be a difference of a percent or two.  Over years and years of compounding this will matter little, and it probabably won't be in your favor. The bigger worry is that a few days will become a few weeks, which might be a few months.  THen you miss dividends and anything else that comes along.  This is behavior psychology - the forming of bad habits and convincing yourself that you are smarter than everyone else.
Title: Re: When would you get back in?
Post by: Villanelle on March 25, 2018, 06:26:40 AM
If you sit for those "few days" and the market goes up, will you still invest?  If the market goes down, will you still invest?  What if it goes way up or way down?  Then is it another "few more days"?  If not, then why is your thinking supposedly sound for the first set of "more day"?  And if you will, then how on earth is this anything other than standard market-timing, which even you seem to admit is to be avoided?  And, more to the point, when will it be down or up "enough" that you stop few-more-day-ing?



Title: Re: When would you get back in?
Post by: privatefarmer on March 25, 2018, 07:16:10 AM
"Get in ASAP, with everything you can afford, for the long term" is a great rule of thumb, but I'd argue that the most import, typically last, and typically hardest thing to be learned about any rule of thumb is when it's not the best option.

A few things to keep in mind: people rightfully talk about the cost of opportunity but given that I'm only talking about sitting on the sidelines for a few days at most (assuming things don't start going up or really tanking) this is a largely mute point, it's not that hard to get lucky once if you have a few things going in your favor and I'd argue that I do (trade war, interest rates...), I'm only planning on doing this once so neither regression to the mean nor cost of opprotunity considerations are relevant, I'm not trying to pick a top AND a bottom (I got out for unrelated reasons) only the next bit of direction, the fact that the market's behaviors don't repeat with sufficient regularity for people to use them to consistently beat the market doesn't mean that zero insights can be gleaned.

I'm not convinced that this is a good idea, I'm just not convinced that it's an innately bad idea just because it's different from what I do the other 99% of the time since this is a different circumstance from the other 99% of the time (at least for me).

sometimes doing whatever makes you "comfortable" is the best answer, regardless of what history tells us. the bigger question you should be asking yourself is how much of a drawdown can you stick with? if the 5% drawdown we just experienced last week was too much, you should have only a fraction of your portfolio in the market. if you are second guessing yourself or trying to time the market, you likely are over exposed to stocks and should rethink how much volatility you can truly stomach.
Title: Re: When would you get back in?
Post by: Dicey on March 25, 2018, 07:20:47 AM
Wait! Did OP really make a mute point? I didn't hear it.
Title: Re: When would you get back in?
Post by: ePalmtrees on March 25, 2018, 07:59:35 AM
I understand your dilemma. On one hand you can now buy with a 5% discount versus a few days ago. I get the urge to wait and see if we are on the side of a cliff. But what if it just goes back up and you lost your 5% discount? I can only say personally timing the market hasn't worked great for me. It never seems to do exactly what I want it to. It does take some experience to prove this to yourself. But I'm personally done with it and would just put the money in.
Title: Re: When would you get back in?
Post by: Indexer on March 25, 2018, 08:14:12 AM
I think we are confusing two VERY different questions.

Scenario 1: Someone has money sitting in cash, and it's been in cash for awhile. They probably don't have the investing discipline to put it all in tomorrow. Dollar cost averaging lets them put money in over time, without worrying that they will invest at the top of the market.

Chadat, that's not you.

Scenario 2: Someone is fully invested. During a transfer money gets converted to cash. Should they leave it in cash or get back in? GET BACK IN!!!  You aren't changing your allocation by investing the money. If you don't get back in then you are changing your allocation. Being invested = your normal. Not being invested = abnormal. The decision to put the money in cash wasn't driven by your goal or even by you market timing(bad). It was driven by Betterment putting the money in cash(even worse). That's a terrible reason to be sitting in cash. Get back to your allocation. Everyday you aren't you should be thinking, "I need to rebalance! I need to rebalance!"
Title: Re: When would you get back in?
Post by: EngineeringFI on March 25, 2018, 09:03:37 AM
Wait! Did OP really make a mute point? I didn't hear it.

LOL, it's a huge pet peeve of mine. The expression is "moot point" people, not "mute point". http://www.dictionary.com/e/moot-point-vs-mute-point/ (http://www.dictionary.com/e/moot-point-vs-mute-point/)
Title: Re: When would you get back in?
Post by: RWD on March 25, 2018, 09:13:07 AM
Monday.  Don't know if that would be correct in hindsight (which is the only way to know), but I'd likely think "Wow, what great luck to have been out of the market last week!" and jump back in ASAP.

That's exactly what I was thinking. Be happy for your lucky accidental market timing and get right back in.
Title: Re: When would you get back in?
Post by: chadat23 on March 25, 2018, 10:59:56 AM
Regarding the "then what?" comments, I would have to have everything all planned out before the money ends up back in my account or everything gets too emotional in the moment and is ripe for dumb emotion-driven mistakes. That said, I don't see a clear and obviously good solution; this is a real and fundamental problem with this approach which I can't dismiss and part of the reason I initially asked the question rather than just blindly moving forward with it.

While my questioning of the initial answers I was given may have made me look obstinant, to be honest, I'm glad I did because the resulting replies were much more fleshed out and subsequently helpful :) But in retrospect, I suppose that in the OP I should have asked "what would you do and why".

Regarding the "mute point", I'm pretty dyslexic so while I generally put a lot of time into writing even little things to try to avoid these mistakes, some clearly slip through.

Thanks for all the input, it's honestly been very helpful! Well, maybe not so much with the "mute point" stuff ;)
Title: Re: When would you get back in?
Post by: nereo on March 25, 2018, 11:11:14 AM
Regarding the "then what?" comments, I would have to have everything all planned out ...

THis is the very reason why having an investor policy statement (IPS) is so important.  Presumably you compose it analytically (i.e. non-emotionally), and then you stick to the ISP instead of making decisions based on emotion or the tea leaves or whatever.
Title: Re: When would you get back in?
Post by: gredenko on March 25, 2018, 01:22:13 PM

No this is the optimal thing to do, especially if you have time to check on the market more than once a week. Buying without a signal that the drop has ended is how you start your investment off with a major loss.

...and waiting for the correct signal is how you miss out on the upswing.  This is how I missed out on all of 2017.   Finally said F it and tossed it all in (~120k) at the beginning of Feb.  I am sitting at a loss...but you know what?  I am ok with it since I don't need the funds anytime soon.

If you are uncomfortable with throwing it all in stocks now then at least throw it in bonds (AGG or whatever the Vanguard equivalent is) until you get the signal you are looking for.

Edit to add:. I did "scale in" over about 1 week with my funds.  Really it will make no difference in the long run, but if it makes you feel better doing it that way it is still better than sitting on the side and waiting for the "correct" moment since it will only come in hindsight and then you might end up sitting on the sidelines like I did.

Well it always depends on your goals and your style of investment. If you are someone who is looking to get in for several years without touching your investment at all, and can afford to risk that money, then the drops of a few hundred points won't affect your investment over the long term very much, and then you definitely should consider jumping in ASAP after a correction like the recent one.  Some people were okay with the last recession because they held and recovered by 2015 or so. Many others couldn't hold on that many years after jumping in too early and lost a lot. So if you are someone who may worry about it and maybe are more involved day to day or week to week, your goals may be different. I'm sure most people here are looking for the longer term so yes you are correct in that regard. I hear the housing bubble is pretty much where it was a decade ago or worse, and so another massive correction is not implausible. Time will tell.

I know everyone says they'd just put it in right away, but if I'm being honest and it was my money then I would probably wait a day or two to feel things out.  I know that's probably not the optimal thing to do, but I'm just being honest.

No this is the optimal thing to do, especially if you have time to check on the market more than once a week. Buying without a signal that the drop has ended is how you start your investment off with a major loss.

wait, what? I'm assuming your "signal" has either made you the richest person on earth or whomever you learned it from is the richest person on earth. because if anyone had a "signal" that reliably told them when the market was going up or down, they'd very quickly be richer than warren buffett.

no? you're not worth hundreds of billions? then your signal is not working. nobody can predict HUMAN BEHAVIOR which is what drives short-term market returns, not fundamentals. Fundamentals (ie the economy growing) drives long-term stock market returns but day-to-day or even year-to-year volatility is driven almost exclusively by human behavior, which we cannot possibly predict ahead of time.

oh you must think price moves are completely random... my apologies. carry on
Title: Re: When would you get back in?
Post by: davisgang90 on March 25, 2018, 01:52:46 PM
It absolutely cracks me up that it is still possible for folks in this forum to think that timing the market is a good idea "just this one time".

Don't time the market.
Title: Re: When would you get back in?
Post by: waltworks on March 25, 2018, 04:36:54 PM
oh you must think price moves are completely random... my apologies. carry on

Erm, other than the general upward trend, yes, they are very very random.

-W
Title: Re: When would you get back in?
Post by: Mighty-Dollar on March 26, 2018, 01:22:17 AM
Great entry point now that stocks have dropped about 10%. I'd get in 100%.
Title: Re: When would you get back in?
Post by: soccerluvof4 on March 26, 2018, 03:04:09 AM
Great entry point now that stocks have dropped about 10%. I'd get in 100%.




^ this. +1
Title: Re: When would you get back in?
Post by: bob999 on March 26, 2018, 03:31:03 AM
GET BACK IN NOW!!!

http://jlcollinsnh.com/2018/03/16/stocks-part-xxxii-why-you-should-not-be-in-the-stock-market/

Hopefully the above link helps.
Title: Re: When would you get back in?
Post by: Stelpy on March 26, 2018, 11:06:23 AM
Correct me if I'm wrong but I think the idea of "timing the market" gets misunderstood here. Here are two scenarios :

1. You always try to gauge the entry/exit points and profit from it which is impossible to do unless you have insights from those in power.

2. You evaluate overall condition of the market and base your decisions on that. Eg. right now we have several warning signs that were not present in the previous years, which are

end of the cycle
extreme growth of 2017
overvalued stocks
huge blips in stock prices
drops in dow, s&p500
interest rates increase

None of those warnings sings were present in 2010, 11, 12, 14 or 15, which means the market is much more risky now than it was before.

Surely, you could lose a few % if the market goes up a bit more before eventually correcting itself but at the same time you could gain a lot if it drops 50+%.
Title: Re: When would you get back in?
Post by: RWD on March 26, 2018, 11:50:45 AM
Correct me if I'm wrong but I think the idea of "timing the market" gets misunderstood here. Here are two scenarios :

1. You always try to gauge the entry/exit points and profit from it which is impossible to do unless you have insights from those in power.

2. You evaluate overall condition of the market and base your decisions on that. Eg. right now we have several warning signs that were not present in the previous years, which are

end of the cycle
extreme growth of 2017
overvalued stocks
huge blips in stock prices
drops in dow, s&p500
interest rates increase

None of those warnings sings were present in 2010, 11, 12, 14 or 15, which means the market is much more risky now than it was before.

Surely, you could lose a few % if the market goes up a bit more before eventually correcting itself but at the same time you could gain a lot if it drops 50+%.

"The market can remain irrational longer than you can remain solvent." -- John Maynard Keynes

We're not misunderstanding the idea of timing the market. What you're suggesting is exactly what is being warned against. There may be tons of warning signs but it can still be a long time before the market drops. Or it could be tomorrow. But keeping your capital sidelined while waiting for the big drop is not a good strategy.
http://jlcollinsnh.com/stock-series/

See also, Bob the world's worst market timer:
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/
Title: Re: When would you get back in?
Post by: Travis on March 26, 2018, 11:53:41 AM
Correct me if I'm wrong but I think the idea of "timing the market" gets misunderstood here. Here are two scenarios :

1. You always try to gauge the entry/exit points and profit from it which is impossible to do unless you have insights from those in power.

2. You evaluate overall condition of the market and base your decisions on that. Eg. right now we have several warning signs that were not present in the previous years, which are

end of the cycle
extreme growth of 2017
overvalued stocks
huge blips in stock prices
drops in dow, s&p500
interest rates increase

None of those warnings sings were present in 2010, 11, 12, 14 or 15, which means the market is much more risky now than it was before.

Surely, you could lose a few % if the market goes up a bit more before eventually correcting itself but at the same time you could gain a lot if it drops 50+%.

1. True statement.
2. None of what you just wrote makes any sense or predicates a course of action.  In fact it's just a wordy version of #1.

-End of the cycle: which cycle? When did "it" end? What about this cycle makes it a good time to get out or conversely when does this cycle restart to get back in?
-Extreme growth of 2017. What about it? 2016 wasn't exactly a down year either. Why wasn't that the time to get out? Why would a great 2017 mean 2018 is going to suck?
-Overvalued stocks. YMMV. To many, stocks have been overvalued for most of the last decade. They can remain overvalued for another decade if that's what the market feels like.
-Huge blips in stock prices. What's the difference between a blip and an overvaluation?
-Drops in Dow, S&P500. If a drop in the market is your trigger to get out, you're too late. You've already lost. The market just went down.
-Interest rate increase.  How much of an increase is your trigger?

You forgot to add one of the most important things to your list: What deep research are you doing to decide when the correction is over with and get back in?  None of these variables come with a ready-made equation for reacting to them. All of this presumes you can predict the future. See #1.

Take any or all of these variables and put a date on the calendar for pulling out of the market and getting back in. If you can't, then it's a pointless mental exercise that will only add stress to your day.

Three out of every four years the market is up.  Your nightmare scenario happens one year in ten.  If you can't accept your investments going up 75-90% of the time, then don't play.
Title: Re: When would you get back in?
Post by: Eric on March 26, 2018, 11:59:28 AM
Correct me if I'm wrong but I think the idea of "timing the market" gets misunderstood here. Here are two scenarios :

1. You always try to gauge the entry/exit points and profit from it which is impossible to do unless you have insights from those in power.

2. You evaluate overall condition of the market and base your decisions on that. Eg. right now we have several warning signs that were not present in the previous years, which are

end of the cycle
extreme growth of 2017
overvalued stocks
huge blips in stock prices
drops in dow, s&p500
interest rates increase

None of those warnings sings were present in 2010, 11, 12, 14 or 15, which means the market is much more risky now than it was before.

Surely, you could lose a few % if the market goes up a bit more before eventually correcting itself but at the same time you could gain a lot if it drops 50+%.

Hi!  Welcome to the MMM forums.  You're in luck, because we have old threads where posters like yourself definitely thought that the bull run was over in all of those years you mentioned.  Many people have missed out on tons of gains waiting for that inevitable correction.

This is my personal favorite, but there are hundreds of them filled with people that made poor investment decisions because they thought they could predict market movements. 

https://forum.mrmoneymustache.com/investor-alley/here-it-comes-red-dow/

It's probably time to read A Random Walk Down Wall Street.
Title: Re: When would you get back in?
Post by: Eric on March 26, 2018, 02:01:35 PM
Well, hopefully you learned your lesson.  The markets were all up at least 2.5% today.  What a day!  Would've been a shame to miss that!
Title: Re: When would you get back in?
Post by: SubL stache on March 26, 2018, 02:17:41 PM
Well, hopefully you learned your lesson.  The markets were all up at least 2.5% today.  What a day!  Would've been a shame to miss that!
lol, as soon as I saw the results from today I came to check this thread.
Title: Re: When would you get back in?
Post by: ZMonet on March 26, 2018, 03:20:34 PM
Well, hopefully you learned your lesson.  The markets were all up at least 2.5% today.  What a day!  Would've been a shame to miss that!
lol, as soon as I saw the results from today I came to check this thread.

Same here.  I'm assuming OP couldn't have gotten back in by this morning even if they wanted because their funds hadn't cleared. Well, now you have a real decision to make.  There has been a bounce...but it probably won't continue...so you probably should hold off on getting back in.


JUST KIDDING.  Get back in.
Title: Re: When would you get back in?
Post by: Stelpy on March 26, 2018, 07:24:55 PM

"The market can remain irrational longer than you can remain solvent." -- John Maynard Keynes

We're not misunderstanding the idea of timing the market. What you're suggesting is exactly what is being warned against. There may be tons of warning signs but it can still be a long time before the market drops. Or it could be tomorrow. But keeping your capital sidelined while waiting for the big drop is not a good strategy.

Yeah, I know and understand this quote. But you will lose all those irrational gains when the market goes back to sensible evaluations and unless you could to exit at the peak (which would be timing the market) these would be just paper gains anyway.
Title: Re: When would you get back in?
Post by: Stelpy on March 26, 2018, 07:38:29 PM
-End of the cycle: which cycle? When did "it" end? What about this cycle makes it a good time to get out or conversely when does this cycle restart to get back in?

Economical cycle usually lasts 7-12 years, we're at year 10 after 2008 downturn.

-Extreme growth of 2017. What about it? 2016 wasn't exactly a down year either. Why wasn't that the time to get out? Why would a great 2017 mean 2018 is going to suck?

Extreme growth occurs right before the crash. That's a typical sign of a bubble.

-Overvalued stocks. YMMV. To many, stocks have been overvalued for most of the last decade. They can remain overvalued for another decade if that's what the market feels like.

Every of those evaluations will be wiped out when the market turns and assuming you won't be able to quit in time they're just paper gains at this point.

-Huge blips in stock prices. What's the difference between a blip and an overvaluation?

Stocks haven't dip 5%+ in the previous years, which means now the market started questioning the prices and testing them while before it was steadily going up.

-Drops in Dow, S&P500. If a drop in the market is your trigger to get out, you're too late. You've already lost. The market just went down.

The drop is not a trigger but a smoke of the fire to come which was not there in the previous years.

-Interest rate increase.  How much of an increase is your trigger?

Doesn't matter "how much", what matter is it STARTED to increase and was steady/decreasing before. This means the money has become more expensive and the availability will decrease. Hence the stock prices won't be able to have gain so easily as before.

You forgot to add one of the most important things to your list: What deep research are you doing to decide when the correction is over with and get back in?  None of these variables come with a ready-made equation for reacting to them. All of this presumes you can predict the future. See #1.

Take any or all of these variables and put a date on the calendar for pulling out of the market and getting back in. If you can't, then it's a pointless mental exercise that will only add stress to your day.

It doesn't need to be over as every significant drop in valuations and you getting in at cheaper costs is already a win. So, there's no need to predict the future.
Title: Re: When would you get back in?
Post by: Stelpy on March 26, 2018, 07:42:17 PM
Hi!  Welcome to the MMM forums.  You're in luck, because we have old threads where posters like yourself definitely thought that the bull run was over in all of those years you mentioned.  Many people have missed out on tons of gains waiting for that inevitable correction.

This is my personal favorite, but there are hundreds of them filled with people that made poor investment decisions because they thought they could predict market movements. 

https://forum.mrmoneymustache.com/investor-alley/here-it-comes-red-dow/

It's probably time to read A Random Walk Down Wall Street.

Thanks, Eric. Reading all of it.

So, you suggesting right now is as good of a time to start investing as it was back in 2009? Even though none of those warning signs were present?
Title: Re: When would you get back in?
Post by: chadat23 on March 26, 2018, 08:16:02 PM
FYI the money still hasn't shown up in my account so I'm still on the sidelines regarding that chunk of money.

And I haven't put much more thought into my re-entry strategy (the default option is reentring ASAP so a lack of planning plus the simplicity of it will presumably push me to that) because I've been reading about what to do with it long term; that seems more fruitful. Short term it'll end up 90/10 VTSAX/VBMFX (about like the majority of my money) but I've been reading some about Modern Portfolio Theory and have been weighing my love for the math vs my scepticism for the relative lack of historical data.
Title: Re: When would you get back in?
Post by: Travis on March 26, 2018, 08:18:41 PM
-End of the cycle: which cycle? When did "it" end? What about this cycle makes it a good time to get out or conversely when does this cycle restart to get back in?

Economical cycle usually lasts 7-12 years, we're at year 10 after 2008 downturn.

-Extreme growth of 2017. What about it? 2016 wasn't exactly a down year either. Why wasn't that the time to get out? Why would a great 2017 mean 2018 is going to suck?

Extreme growth occurs right before the crash. That's a typical sign of a bubble.

-Overvalued stocks. YMMV. To many, stocks have been overvalued for most of the last decade. They can remain overvalued for another decade if that's what the market feels like.

Every of those evaluations will be wiped out when the market turns and assuming you won't be able to quit in time they're just paper gains at this point.

-Huge blips in stock prices. What's the difference between a blip and an overvaluation?

Stocks haven't dip 5%+ in the previous years, which means now the market started questioning the prices and testing them while before it was steadily going up.

-Drops in Dow, S&P500. If a drop in the market is your trigger to get out, you're too late. You've already lost. The market just went down.

The drop is not a trigger but a smoke of the fire to come which was not there in the previous years.

-Interest rate increase.  How much of an increase is your trigger?

Doesn't matter "how much", what matter is it STARTED to increase and was steady/decreasing before. This means the money has become more expensive and the availability will decrease. Hence the stock prices won't be able to have gain so easily as before.

You forgot to add one of the most important things to your list: What deep research are you doing to decide when the correction is over with and get back in?  None of these variables come with a ready-made equation for reacting to them. All of this presumes you can predict the future. See #1.

Take any or all of these variables and put a date on the calendar for pulling out of the market and getting back in. If you can't, then it's a pointless mental exercise that will only add stress to your day.

It doesn't need to be over as every significant drop in valuations and you getting in at cheaper costs is already a win. So, there's no need to predict the future.

-So we're either late for a downturn or we still have a couple years. So worry now? Take action now?
-"Extreme growth" is certainly in the eye of the beholder. 2017 was a great year. So was the year immediately following the 2008 crash. In fact, 2013 was the highest, not 2017.
-Lock in your losses when it goes down (but before an undetermined bottom) and wing it on when to get back in.

Sorry, but I won't be making any serious financial decisions off of that advice.

And the market went back up nearly 3% today anyways. 
Title: Re: When would you get back in?
Post by: Stelpy on March 26, 2018, 08:43:07 PM
-So we're either late for a downturn or we still have a couple years. So worry now? Take action now?

It's not a race but a marathon, right? =)

-"Extreme growth" is certainly in the eye of the beholder. 2017 was a great year. So was the year immediately following the 2008 crash. In fact, 2013 was the highest, not 2017.

Year after 2008 was the 1st year after the recession when the market "usually" bounces back not the 10th one when the cycle "usually" ends. Again, 2013 was the 5th year after 2008 crash not the 10th year as it is now. You never look at a single factor but take several into account when making the ground for a decision.

-Lock in your losses when it goes down (but before an undetermined bottom) and wing it on when to get back in.

Don't they call it "catching a falling knife"?

Sorry, but I won't be making any serious financial decisions off of that advice.

I'm in no position to give a financial advice. Just trying to put my Masters Degree in System Analysis to good use =)

And the market went back up nearly 3% today anyways.

I'm talking about the bigger picture, 10+ years span.
Title: Re: When would you get back in?
Post by: Travis on March 26, 2018, 09:00:39 PM


I'm talking about the bigger picture, 10+ years span.

As are we all, which is why trying to predict when to get in and out is a waste of time and money. 

So taking all these factors into account that seem important to you, when are you pulling your money out?
Title: Re: When would you get back in?
Post by: Stelpy on March 26, 2018, 11:29:43 PM
As are we all, which is why trying to predict when to get in and out is a waste of time and money. 

So taking all these factors into account that seem important to you, when are you pulling your money out?

I'm waiting to get in and would hate to lose 50%+ right at the entrance =) Especially, if there is a potential for a downturn to last any significant amount of time.
Title: Re: When would you get back in?
Post by: waltworks on March 27, 2018, 07:53:39 AM
Well, good luck. Rallies don't have to end with a crash, you know. Even if you're right about the market being at a peak, the road back to 15 P/E (assuming that's what you're waiting for) could be via stagnating prices and increasing earnings for a few years.

50% drops are incredibly rare. If you're really waiting for that, you may very well never put your money in.

-W
Title: Re: When would you get back in?
Post by: ooeei on March 27, 2018, 08:57:25 AM
I'd get back in ASAP.

I play an online game where you open crystals to get certain prizes of varying rarity. It's shocking the strategies people come up with, despite the devs being very clear that the probabilities are constant from crystal to crystal. Some people open them 1 at a time, some open 10 at a time, some open 1 until they get something good then open 10. Some open at certain times of day, or when someone else gets something good. It's all nonsense and confirmation bias, you should see the confidence people get when their strategy "works". They'll never change it again.

This forum is full of posts talking about how the top is in, the market has peaked, the bubble is soon to burst, etc. They come around every few months. Unfortunately most of them get lost in the mix, but if you search hard enough you can find them. This one was started in April of last year, we're currently up approximately 13% from the day it was posted. You can find them going all the way back to the start of the forum if you care to look. Most of them have very convincing theories about how we're overdue for a recession (been saying that since about 2012), the P/E ratio is inflated compared to historical averages (again, since probably 2012), America is dying due to foreign competition, etc etc.

https://forum.mrmoneymustache.com/investor-alley/top-is-in/

Here's one from 2013, just went back through pages and randomly found it:

https://forum.mrmoneymustache.com/investor-alley/doom-and-gloom/

Another one:

https://forum.mrmoneymustache.com/investor-alley/stock-market-expensive-now-alternatives/

While the Shiller PE isn't near historical highs your statement is a little misleading/misinformed as there really are only three periods in the history where the Shiller PE was higher than now - right before the great depression and before the dot com crash and just slightly above where we are prior to the financial crisis. 

So there may be room to run and push the markets but history is not on the side of good returns from this point. 

We're up 51% since this post was made. A year after this post was made the market was up 15%. 2 months after this post was made the market was up 4.5%. The S&P 500 has never been lower than it was on Oct 28, 2013, since Oct 28, 2013 (at least, based on the resolution in my yahoo chart). Anyone who waited starting then lost money, no matter how perfect they timed a future drop.

I could post dozens of these threads, maybe hundreds, since this forum was started. Occasionally some of them will be right, but the problem is you don't know that until the time is past. Most of them are wrong. Most don't have actionable intel, just general negative feelings that you can't really act on in a productive way. Knowing that the market will probably crash in the next 1-5 years, or might just stagnate or have numerous small corrections, doesn't really help you. The most reliable information we have is the market usually goes up. Because of that long term trend, it's always better to get in as soon as you can, provided you don't need the money soon.


"Get in ASAP, with everything you can afford, for the long term" is a great rule of thumb, but I'd argue that the most import, typically last, and typically hardest thing to be learned about any rule of thumb is when it's not the best option.

A few things to keep in mind: people rightfully talk about the cost of opportunity but given that I'm only talking about sitting on the sidelines for a few days at most (assuming things don't start going up or really tanking) this is a largely mute point, it's not that hard to get lucky once if you have a few things going in your favor and I'd argue that I do (trade war, interest rates...), I'm only planning on doing this once so neither regression to the mean nor cost of opprotunity considerations are relevant, I'm not trying to pick a top AND a bottom (I got out for unrelated reasons) only the next bit of direction, the fact that the market's behaviors don't repeat with sufficient regularity for people to use them to consistently beat the market doesn't mean that zero insights can be gleaned.

I'm not convinced that this is a good idea, I'm just not convinced that it's an innately bad idea just because it's different from what I do the other 99% of the time since this is a different circumstance from the other 99% of the time (at least for me).

If you actually have some sort of insight that gives you the ability to time the market this time, why would you assume you can't do it any other time? Either you can do it or you can't.

Which is more likely:

You have a newfound ability to time the market one time that just so happens to exactly coincide with when your work plan was cashed out.

You see a big chunk of money and are getting a bit greedy/fearful because now it's cash and you have to make a decision. You're for some reason treating it differently than two weeks ago when it was already invested, and presumably you weren't talking about pulling it out to cash (the same decision in reverse) to prevent losses from a drop.
Title: Re: When would you get back in?
Post by: Eric on March 27, 2018, 09:40:19 AM
Hi!  Welcome to the MMM forums.  You're in luck, because we have old threads where posters like yourself definitely thought that the bull run was over in all of those years you mentioned.  Many people have missed out on tons of gains waiting for that inevitable correction.

This is my personal favorite, but there are hundreds of them filled with people that made poor investment decisions because they thought they could predict market movements. 

https://forum.mrmoneymustache.com/investor-alley/here-it-comes-red-dow/

It's probably time to read A Random Walk Down Wall Street.

Thanks, Eric. Reading all of it.

So, you suggesting right now is as good of a time to start investing as it was back in 2009? Even though none of those warning signs were present?

Now is a great time to start.  You've mentioned in other posts that you're investing for the long term.  Do you really not think the market will be higher in 20 years than it is today?

The idea that there were no "warning signs" in 2009 is pretty funny.  The whole fucking world was melting down.  Everything was on its way to zero.  This was the "new normal" that we'd all have to get used to.

There will always, always be reasons not to invest.  And yet, in the long run, the stock market has consistently made great returns for those willing to ignore them.
Title: Re: When would you get back in?
Post by: waltworks on March 27, 2018, 11:33:28 AM
The idea that there were no "warning signs" in 2009 is pretty funny.  The whole fucking world was melting down.  Everything was on its way to zero.  This was the "new normal" that we'd all have to get used to.

True story, in 2009 after reading too much financial news, I freaked out and went to Costco and loaded the car with bags of rice. No joke. Like $200 worth of rice (which is a LOT of rice at Costco prices).

I put it in the basement. A year later my wife got sick of looking at it and we put it all on Craigslist for free, once I figured out civilization wasn't collapsing.

-W
Title: Re: When would you get back in?
Post by: Eric on March 27, 2018, 11:51:52 AM
The idea that there were no "warning signs" in 2009 is pretty funny.  The whole fucking world was melting down.  Everything was on its way to zero.  This was the "new normal" that we'd all have to get used to.

True story, in 2009 after reading too much financial news, I freaked out and went to Costco and loaded the car with bags of rice. No joke. Like $200 worth of rice (which is a LOT of rice at Costco prices).

I put it in the basement. A year later my wife got sick of looking at it and we put it all on Craigslist for free, once I figured out civilization wasn't collapsing.

-W

I think I would need a bigger apartment to fit $200 worth of rice!  That's a good story. 

It's weird that people look back at 2009 in hindsight and think "what a great time to start investing".  I mean, yes, that's technically true, but if you can't invest in a bull market, you'll never have the guts to buy (or even hold) in a meltdown like that.  It was truly nerve racking and scary.  Everywhere you turned, someone was freaking out.  But yes, what a great time to invest (in rice)!  lol
Title: Re: When would you get back in?
Post by: 2Birds1Stone on March 27, 2018, 01:34:57 PM
I would hold off, according to this credible source we are headed for a major recession.

ymmv

https://www.cnbc.com/2018/03/27/investment-chief-of-250-billion-firm-says-financial-markets-are-on-a-collision-course-for-disaster.html
Title: Re: When would you get back in?
Post by: MDM on March 27, 2018, 01:54:50 PM
And we should be very scared, because here are 10 other predictions adding credibility to a crash by the end of 2013 (https://www.marketwatch.com/story/doomsday-poll-87-risk-of-stock-crash-by-year-end-2013-06-05).
Title: Re: When would you get back in?
Post by: davisgang90 on March 27, 2018, 05:56:04 PM
I'm putting everything in Beanie Babies again.
Title: Re: When would you get back in?
Post by: woopwoop on March 27, 2018, 06:12:26 PM
I'm cashing out my 401k and starting a tulip farm.
Title: Re: When would you get back in?
Post by: 2Birds1Stone on March 27, 2018, 07:34:24 PM
I'm cashing out my 401k and starting a tulip farm.

Water them with bitcoins.
Title: Re: When would you get back in?
Post by: SwitchActiveDWG on March 27, 2018, 07:50:11 PM
I'm putting everything in Beanie Babies again.

Squishys are the thing.
Title: Re: When would you get back in?
Post by: gredenko on April 02, 2018, 01:15:04 PM
As are we all, which is why trying to predict when to get in and out is a waste of time and money. 

So taking all these factors into account that seem important to you, when are you pulling your money out?

I'm waiting to get in and would hate to lose 50%+ right at the entrance =) Especially, if there is a potential for a downturn to last any significant amount of time.

I think the same way, which is why I suggested not getting in now. It's also a psychological thing, and most people do not like to see their investment start off deeply in the red. Many would eventually exit and take the loss, so if you are willing to endure it, that's on you. As anyone can see from the last week's moves as well as today, the correction is not close to finished and should continue until some clear signal of a bottom is shown. As of now, there is none. 

Great entry point now that stocks have dropped about 10%. I'd get in 100%.

And now?
Title: Re: When would you get back in?
Post by: MDM on April 02, 2018, 01:39:10 PM
...the correction is not close to finished and should continue until some clear signal of a bottom is shown.
What would that be?  No points for after-the-fact observations. :)
Title: Re: When would you get back in?
Post by: blinx7 on April 02, 2018, 01:49:46 PM

It's just like planting a tree.  The best time is 20 years ago.  The second best is today!
Title: Re: When would you get back in?
Post by: harvestbook on April 02, 2018, 02:19:32 PM
Every day you wait, you are missing out on dividends. Maybe you can guess right (doubtful) jumping in and out but you're not compounding anything.
Title: Re: When would you get back in?
Post by: ooeei on April 02, 2018, 02:44:50 PM
...the correction is not close to finished and should continue until some clear signal of a bottom is shown.
What would that be?  No points for after-the-fact observations. :)

I'd love to hear what the signal will be as well.
Title: Re: When would you get back in?
Post by: WhatFreshHell on April 02, 2018, 02:52:56 PM
Every day you wait, you are missing out on dividends. Maybe you can guess right (doubtful) jumping in and out but you're not compounding anything.

This is the key thing I think most people ignore.

Just from my own experience when I hear people talk about stocks/index funds/etc they are only focused on the price, but never realize the value in the dividend gains over the period of time.
Title: Re: When would you get back in?
Post by: gredenko on April 02, 2018, 03:09:41 PM
...the correction is not close to finished and should continue until some clear signal of a bottom is shown.
What would that be?  No points for after-the-fact observations. :)

That is true.  And good traders don't make any of their money from after the fact observations either!

If you are seriously considering investing in either the S&P 500 or Nasdaq indexes immediately after this correction ends (may take several weeks or even months the way the Nasdaq/S&P and the volatility indexes are looking currently), feel free to PM me.
Title: Re: When would you get back in?
Post by: sol on April 02, 2018, 03:18:00 PM
If you are seriously considering investing in either the S&P 500 or Nasdaq indexes immediately after this correction ends (may take several weeks or even months the way the Nasdaq/S&P and the volatility indexes are looking currently), feel free to PM me.

Oooh, do you have a newsletter?
Title: Re: When would you get back in?
Post by: gredenko on April 02, 2018, 03:52:11 PM
If you are seriously considering investing in either the S&P 500 or Nasdaq indexes immediately after this correction ends (may take several weeks or even months the way the Nasdaq/S&P and the volatility indexes are looking currently), feel free to PM me.

Oooh, do you have a newsletter?

What a good idea! I'll start one right now.
Title: Re: When would you get back in?
Post by: Jamese20 on April 02, 2018, 05:02:22 PM
In 2013 the p/e was around 17...with extremely low interest rates at the time I didn't see any logic in stating the US was overpriced back then because it simply wasn't

Now of course it is different territory and they do look high by any standard or metric..
Title: Re: When would you get back in?
Post by: MrThatsDifferent on April 02, 2018, 05:40:47 PM
Look, I get why you all think the worrywarts are such a joke, youíre using fancy things like facts. But as a newbie to investing, who took over 40 years before deciding to dip themselves in this previously foreign environment, that I still donít get, this shit is scary! Last year, watching the returns go up and up was exciting as hell. Now, watching the numbers go down is depressing, even though I know itís a long game because you people, the helpful internet stranger people, keep telling us dimwits that itís all going to turn out perfect. Well, you try convincing unconvinced partner who doesnít believe in investing to give it a go when your money goes backwards! It ainít easy. So you all can mock and ridicule and rub our noses in all of this but remember, for many of us, this is new and weíre praying that our leap of faiths pay off and the sacrifices weíre making are worth it. None of us want to fuck this up. Empathy and compassion can go just as far, maybe farther than ridiculing and minimalizing peopleís fears and ignorance. I hope one day Iím as confident, knowledgeable and secure as the rest of you, but I ainít there yet, but at least Iím willing to be a part of the game.
Title: Re: When would you get back in?
Post by: Optimiser on April 02, 2018, 05:44:13 PM
I've seen this posted around here before. Seems relevant to the topic at hand.
(http://ei.marketwatch.com/Multimedia/2016/08/18/Photos/NS/MW-EU203_chartP_20160818115202_NS.png?uuid=b4870b24-655b-11e6-9390-0015c588dfa6)

There are always good sounding reasons why this time it's different.
Title: Re: When would you get back in?
Post by: Eric on April 02, 2018, 06:28:31 PM
Look, I get why you all think the worrywarts are such a joke, youíre using fancy things like facts. But as a newbie to investing, who took over 40 years before deciding to dip themselves in this previously foreign environment, that I still donít get, this shit is scary! Last year, watching the returns go up and up was exciting as hell. Now, watching the numbers go down is depressing, even though I know itís a long game because you people, the helpful internet stranger people, keep telling us dimwits that itís all going to turn out perfect. Well, you try convincing unconvinced partner who doesnít believe in investing to give it a go when your money goes backwards! It ainít easy. So you all can mock and ridicule and rub our noses in all of this but remember, for many of us, this is new and weíre praying that our leap of faiths pay off and the sacrifices weíre making are worth it. None of us want to fuck this up. Empathy and compassion can go just as far, maybe farther than ridiculing and minimalizing peopleís fears and ignorance. I hope one day Iím as confident, knowledgeable and secure as the rest of you, but I ainít there yet, but at least Iím willing to be a part of the game.

I mean, the S&P is a bit better than -2% YTD.  -1.X% for the quarter.  There are going to be PLENTY of returns way, way worse than that over your investing lifetime.  If that sort of return is depressing, then maybe the stock market isn't for you.  Head on over to the Real Estate forum and find out how fun it is to be a landlord.  Otherwise, you just have to ignore short term noise.  Stop checking your accounts every day, every week, or even every month.  Set it and forget it.  That's the best advice anyone can give.

Title: Re: When would you get back in?
Post by: Radagast on April 02, 2018, 07:38:53 PM
Look, I get why you all think the worrywarts are such a joke, youíre using fancy things like facts. But as a newbie to investing, who took over 40 years before deciding to dip themselves in this previously foreign environment, that I still donít get, this shit is scary! Last year, watching the returns go up and up was exciting as hell. Now, watching the numbers go down is depressing, even though I know itís a long game because you people, the helpful internet stranger people, keep telling us dimwits that itís all going to turn out perfect. Well, you try convincing unconvinced partner who doesnít believe in investing to give it a go when your money goes backwards! It ainít easy. So you all can mock and ridicule and rub our noses in all of this but remember, for many of us, this is new and weíre praying that our leap of faiths pay off and the sacrifices weíre making are worth it. None of us want to fuck this up. Empathy and compassion can go just as far, maybe farther than ridiculing and minimalizing peopleís fears and ignorance. I hope one day Iím as confident, knowledgeable and secure as the rest of you, but I ainít there yet, but at least Iím willing to be a part of the game.
That is a good point, it is best to spread your bets around a little to improve your chances of owning whatever ends up doing best over a given time period. We talk about the S&P500 or USTSM a lot here, but both are pretty under-diversified compared to all that is available. Generally it is best to plan in advance and have a decent allocation to stocks from around the globe as well as to bonds. It is perfectly acceptable if you decide decent-yielding Certificates of Deposit from a bank and Series I Savings Bonds straight from the Treasury Department are your definition of bonds. Neither can lose value, and I-bonds won't even lose real value. Generally I suggest:
+At least 50% stocks (backtesting has never or almost never shown a better result after 30 years or more by owning fewer than 50% stocks)
+Not more than 50% of the total in US or any other single country stocks
+10% to 40% in bonds
+Enough stocks should be allocated to international to make a difference
+A small amount of an additional diversifier is fine, and maybe even desirable
+Directly held real estate is a pretty nice addition, if you have the inclination

If you stick with that you greatly improve your odds and especially your mental situation. Then, rebalance every year or so.
Title: Re: When would you get back in?
Post by: MrThatsDifferent on April 03, 2018, 04:08:50 AM
Look, I get why you all think the worrywarts are such a joke, youíre using fancy things like facts. But as a newbie to investing, who took over 40 years before deciding to dip themselves in this previously foreign environment, that I still donít get, this shit is scary! Last year, watching the returns go up and up was exciting as hell. Now, watching the numbers go down is depressing, even though I know itís a long game because you people, the helpful internet stranger people, keep telling us dimwits that itís all going to turn out perfect. Well, you try convincing unconvinced partner who doesnít believe in investing to give it a go when your money goes backwards! It ainít easy. So you all can mock and ridicule and rub our noses in all of this but remember, for many of us, this is new and weíre praying that our leap of faiths pay off and the sacrifices weíre making are worth it. None of us want to fuck this up. Empathy and compassion can go just as far, maybe farther than ridiculing and minimalizing peopleís fears and ignorance. I hope one day Iím as confident, knowledgeable and secure as the rest of you, but I ainít there yet, but at least Iím willing to be a part of the game.

I mean, the S&P is a bit better than -2% YTD.  -1.X% for the quarter.  There are going to be PLENTY of returns way, way worse than that over your investing lifetime.  If that sort of return is depressing, then maybe the stock market isn't for you.  Head on over to the Real Estate forum and find out how fun it is to be a landlord.  Otherwise, you just have to ignore short term noise.  Stop checking your accounts every day, every week, or even every month.  Set it and forget it.  That's the best advice anyone can give.

The, stop checking accounts daily, is really what I need to and will stop doing. Iíve been checking daily and charting just to see the flow and what happens to my actual money, itís all been a learning experience and for some reason, Iím pretty slow with this. I think I need to just chart monthly as it keeps me focused and everything front of mind. I know I have to just trust the process.
Title: Re: When would you get back in?
Post by: Villanelle on April 03, 2018, 05:18:54 AM
Why even track monthly?  That's not a rhetorical question.  What are you trying to accomplish?  What set of information would be actionable for you?  IOW, is there some "if I see X, I will do Y"?  If not, what is the point?  It's a source of stress for you, so don't do it.

If you personal investing statement (if you don't have one, make one!!!!) says you rebalance quarterly, then check quarterly, and not more often than that.  Also, that statement will have you making decisions when they are just theoretical and you can be rational and apply the stats and historical data that exists.  So spend some time on it, and be very thoughtful. And then, when the numbers start to spook you, you can fall back on that and know that you already said that when A happens, you are going to do B, and unless C happens you will not do D, and that should hopefully provide some comfort.
Title: Re: When would you get back in?
Post by: MrThatsDifferent on April 03, 2018, 06:23:51 AM
Why even track monthly?  That's not a rhetorical question.  What are you trying to accomplish?  What set of information would be actionable for you?  IOW, is there some "if I see X, I will do Y"?  If not, what is the point?  It's a source of stress for you, so don't do it.

If you personal investing statement (if you don't have one, make one!!!!) says you rebalance quarterly, then check quarterly, and not more often than that.  Also, that statement will have you making decisions when they are just theoretical and you can be rational and apply the stats and historical data that exists.  So spend some time on it, and be very thoughtful. And then, when the numbers start to spook you, you can fall back on that and know that you already said that when A happens, you are going to do B, and unless C happens you will not do D, and that should hopefully provide some comfort.

I honestly donít know what a personal investment statement is and I donít know anything about rebalancing and honestly donít want to be that active with it. I do the  Vanguard life strategy high growth fund and let that do all the work. I check monthly so I can record my net worth for the challenges and so I remind myself why Iím doing it. It was great as the numbers shot up, slightly less great when the numbers go down but I guess they would be going down for everyone. Iíll try to not do it so frequently and see if that helps, or jut keep reminding myself, that itís ll a natural part of the journey and nothing to be afraid of. 
Title: Re: When would you get back in?
Post by: Brother Esau on April 03, 2018, 06:33:43 AM
...the correction is not close to finished and should continue until some clear signal of a bottom is shown.
What would that be?  No points for after-the-fact observations. :)

I'd love to hear what the signal will be as well.

The signal will be when thorstach posts "Bottom is in!".
Title: Re: When would you get back in?
Post by: Scandium on April 03, 2018, 08:34:41 AM
...the correction is not close to finished and should continue until some clear signal of a bottom is shown.
What would that be?  No points for after-the-fact observations. :)

"reliable signals" have accurately predicted 9 of the last 5 recessions
Title: Re: When would you get back in?
Post by: wenchsenior on April 03, 2018, 09:06:19 AM
Why even track monthly?  That's not a rhetorical question.  What are you trying to accomplish?  What set of information would be actionable for you?  IOW, is there some "if I see X, I will do Y"?  If not, what is the point?  It's a source of stress for you, so don't do it.

If you personal investing statement (if you don't have one, make one!!!!) says you rebalance quarterly, then check quarterly, and not more often than that.  Also, that statement will have you making decisions when they are just theoretical and you can be rational and apply the stats and historical data that exists.  So spend some time on it, and be very thoughtful. And then, when the numbers start to spook you, you can fall back on that and know that you already said that when A happens, you are going to do B, and unless C happens you will not do D, and that should hopefully provide some comfort.

I honestly donít know what a personal investment statement is and I donít know anything about rebalancing and honestly donít want to be that active with it. I do the  Vanguard life strategy high growth fund and let that do all the work. I check monthly so I can record my net worth for the challenges and so I remind myself why Iím doing it. It was great as the numbers shot up, slightly less great when the numbers go down but I guess they would be going down for everyone. Iíll try to not do it so frequently and see if that helps, or jut keep reminding myself, that itís ll a natural part of the journey and nothing to be afraid of.

I'm not trying to be snarky. I sincerely think you might have gotten into investing before you were entirely emotionally ready to do so.   Like you, I'm happy being pretty hands-off and using life-cycle type funds that re-balance for me.   But I do know HOW to re-balance and do it across my broader portfolio occasionally.  I have an investment PLAN so I know in advance how I will respond to all likely market conditions.  I don't have to keep wondering: "what will I do if...?"

Whereas, your anxiety over the past couple months' returns is of concern.  These recent stock market blips are NOTHING...like a speed bump on a 100 mile road.  We [ETA, I just realized you aren't in the U.S. and might be experiencing different conditions depending on investment vehicles] aren't even in a recession right now! The economy is strong.  But a recession is inevitable; what will your mental state be then?   What is your plan for when the the market mostly drops for a year, etc?  That is definitely going to happen at some point, so you need one.  How will you react if your investments decrease in value by >30% (as we experienced during 2008)?    Do you feel confident that you won't pull your money out and lock in your losses?  Do you feel confident that you will keep investing during those periods?  If not, you need to have an actual alternate plan as to exactly what you will do when the inevitable crap periods of returns arrive. 
Title: Re: When would you get back in?
Post by: Eric on April 03, 2018, 09:19:16 AM
Look, I get why you all think the worrywarts are such a joke, youíre using fancy things like facts. But as a newbie to investing, who took over 40 years before deciding to dip themselves in this previously foreign environment, that I still donít get, this shit is scary! Last year, watching the returns go up and up was exciting as hell. Now, watching the numbers go down is depressing, even though I know itís a long game because you people, the helpful internet stranger people, keep telling us dimwits that itís all going to turn out perfect. Well, you try convincing unconvinced partner who doesnít believe in investing to give it a go when your money goes backwards! It ainít easy. So you all can mock and ridicule and rub our noses in all of this but remember, for many of us, this is new and weíre praying that our leap of faiths pay off and the sacrifices weíre making are worth it. None of us want to fuck this up. Empathy and compassion can go just as far, maybe farther than ridiculing and minimalizing peopleís fears and ignorance. I hope one day Iím as confident, knowledgeable and secure as the rest of you, but I ainít there yet, but at least Iím willing to be a part of the game.

I mean, the S&P is a bit better than -2% YTD.  -1.X% for the quarter.  There are going to be PLENTY of returns way, way worse than that over your investing lifetime.  If that sort of return is depressing, then maybe the stock market isn't for you.  Head on over to the Real Estate forum and find out how fun it is to be a landlord.  Otherwise, you just have to ignore short term noise.  Stop checking your accounts every day, every week, or even every month.  Set it and forget it.  That's the best advice anyone can give.

The, stop checking accounts daily, is really what I need to and will stop doing. Iíve been checking daily and charting just to see the flow and what happens to my actual money, itís all been a learning experience and for some reason, Iím pretty slow with this. I think I need to just chart monthly as it keeps me focused and everything front of mind. I know I have to just trust the process.

Yeah, you don't want to check daily.  That's enough to make anyone go mad.  There's a phrase about investing that is pretty reassuring to me:  When in doubt, zoom out.  Which means that the financial media, and most investors, wrongly focus on the short term.  Instead, zoom out on the chart to see what returns look like for the year, 5 years, 10 years, etc.  This is a long term thing.  Over time, you're going to come out ahead.  If the market gave a reliable return like a savings account, it would pay out at the same rate.  This volatility is what ends up making you money.

Have you read Jim Collins's Stock Series?  I'd recommend it.  He has a great way of distilling investing down to its basic principles in simple terms.  There's a number of posts, but the first 6 or so I'd consider required reading and then you can pick and choose after that. 

http://jlcollinsnh.com/stock-series/

Title: Re: When would you get back in?
Post by: MrThatsDifferent on April 03, 2018, 09:45:53 AM
Why even track monthly?  That's not a rhetorical question.  What are you trying to accomplish?  What set of information would be actionable for you?  IOW, is there some "if I see X, I will do Y"?  If not, what is the point?  It's a source of stress for you, so don't do it.

If you personal investing statement (if you don't have one, make one!!!!) says you rebalance quarterly, then check quarterly, and not more often than that.  Also, that statement will have you making decisions when they are just theoretical and you can be rational and apply the stats and historical data that exists.  So spend some time on it, and be very thoughtful. And then, when the numbers start to spook you, you can fall back on that and know that you already said that when A happens, you are going to do B, and unless C happens you will not do D, and that should hopefully provide some comfort.

I honestly donít know what a personal investment statement is and I donít know anything about rebalancing and honestly donít want to be that active with it. I do the  Vanguard life strategy high growth fund and let that do all the work. I check monthly so I can record my net worth for the challenges and so I remind myself why Iím doing it. It was great as the numbers shot up, slightly less great when the numbers go down but I guess they would be going down for everyone. Iíll try to not do it so frequently and see if that helps, or jut keep reminding myself, that itís ll a natural part of the journey and nothing to be afraid of.

I'm not trying to be snarky. I sincerely think you might have gotten into investing before you were entirely emotionally ready to do so.   Like you, I'm happy being pretty hands-off and using life-cycle type funds that re-balance for me.   But I do know HOW to re-balance and do it across my broader portfolio occasionally.  I have an investment PLAN so I know in advance how I will respond to all likely market conditions.  I don't have to keep wondering: "what will I do if...?"

Whereas, your anxiety over the past couple months' returns is of concern.  These recent stock market blips are NOTHING...like a speed bump on a 100 mile road.  We [ETA, I just realized you aren't in the U.S. and might be experiencing different conditions depending on investment vehicles] aren't even in a recession right now! The economy is strong.  But a recession is inevitable; what will your mental state be then?   What is your plan for when the the market mostly drops for a year, etc?  That is definitely going to happen at some point, so you need one.  How will you react if your investments decrease in value by >30% (as we experienced during 2008)?    Do you feel confident that you won't pull your money out and lock in your losses?  Do you feel confident that you will keep investing during those periods?  If not, you need to have an actual alternate plan as to exactly what you will do when the inevitable crap periods of returns arrive.

I debated investing for a bit but was convinced by MMM to give it a go. I donít regret it. I read the forums, understand that itís going to get worse, but itís different seeing it. Iím committed to the til 60 plan unless an emergency or we need the money for property. I know it has to stay no matter what though and have plans for cash reserves to get me through until Iím early 60s. The point of my post is maybe for people to not treat us newbies like fools to ridicule as it is scary, no one in my family invests, and itís a lot to get our head around. Iíll grow into it. Thanks.
Title: Re: When would you get back in?
Post by: MrThatsDifferent on April 03, 2018, 09:48:45 AM
Look, I get why you all think the worrywarts are such a joke, youíre using fancy things like facts. But as a newbie to investing, who took over 40 years before deciding to dip themselves in this previously foreign environment, that I still donít get, this shit is scary! Last year, watching the returns go up and up was exciting as hell. Now, watching the numbers go down is depressing, even though I know itís a long game because you people, the helpful internet stranger people, keep telling us dimwits that itís all going to turn out perfect. Well, you try convincing unconvinced partner who doesnít believe in investing to give it a go when your money goes backwards! It ainít easy. So you all can mock and ridicule and rub our noses in all of this but remember, for many of us, this is new and weíre praying that our leap of faiths pay off and the sacrifices weíre making are worth it. None of us want to fuck this up. Empathy and compassion can go just as far, maybe farther than ridiculing and minimalizing peopleís fears and ignorance. I hope one day Iím as confident, knowledgeable and secure as the rest of you, but I ainít there yet, but at least Iím willing to be a part of the game.

I mean, the S&P is a bit better than -2% YTD.  -1.X% for the quarter.  There are going to be PLENTY of returns way, way worse than that over your investing lifetime.  If that sort of return is depressing, then maybe the stock market isn't for you.  Head on over to the Real Estate forum and find out how fun it is to be a landlord.  Otherwise, you just have to ignore short term noise.  Stop checking your accounts every day, every week, or even every month.  Set it and forget it.  That's the best advice anyone can give.

The, stop checking accounts daily, is really what I need to and will stop doing. Iíve been checking daily and charting just to see the flow and what happens to my actual money, itís all been a learning experience and for some reason, Iím pretty slow with this. I think I need to just chart monthly as it keeps me focused and everything front of mind. I know I have to just trust the process.

Yeah, you don't want to check daily.  That's enough to make anyone go mad.  There's a phrase about investing that is pretty reassuring to me:  When in doubt, zoom out.  Which means that the financial media, and most investors, wrongly focus on the short term.  Instead, zoom out on the chart to see what returns look like for the year, 5 years, 10 years, etc.  This is a long term thing.  Over time, you're going to come out ahead.  If the market gave a reliable return like a savings account, it would pay out at the same rate.  This volatility is what ends up making you money.

Have you read Jim Collins's Stock Series?  I'd recommend it.  He has a great way of distilling investing down to its basic principles in simple terms.  There's a number of posts, but the first 6 or so I'd consider required reading and then you can pick and choose after that. 

http://jlcollinsnh.com/stock-series/

Yeah, read all of that before I pulled the trigger. He just confirmed what MMM said. I then talked to people on here to work out that I needed something low stress and easily managed to get into, so lifestyle funds fit perfect. I just obsessed with checking and also trying to convince my partner. Harder to convince partner now. Thatís ok. Slow and steady...
Title: Re: When would you get back in?
Post by: wenchsenior on April 03, 2018, 09:52:37 AM
Why even track monthly?  That's not a rhetorical question.  What are you trying to accomplish?  What set of information would be actionable for you?  IOW, is there some "if I see X, I will do Y"?  If not, what is the point?  It's a source of stress for you, so don't do it.

If you personal investing statement (if you don't have one, make one!!!!) says you rebalance quarterly, then check quarterly, and not more often than that.  Also, that statement will have you making decisions when they are just theoretical and you can be rational and apply the stats and historical data that exists.  So spend some time on it, and be very thoughtful. And then, when the numbers start to spook you, you can fall back on that and know that you already said that when A happens, you are going to do B, and unless C happens you will not do D, and that should hopefully provide some comfort.

I honestly don’t know what a personal investment statement is and I don’t know anything about rebalancing and honestly don’t want to be that active with it. I do the  Vanguard life strategy high growth fund and let that do all the work. I check monthly so I can record my net worth for the challenges and so I remind myself why I’m doing it. It was great as the numbers shot up, slightly less great when the numbers go down but I guess they would be going down for everyone. I’ll try to not do it so frequently and see if that helps, or jut keep reminding myself, that it’s ll a natural part of the journey and nothing to be afraid of.

I'm not trying to be snarky. I sincerely think you might have gotten into investing before you were entirely emotionally ready to do so.   Like you, I'm happy being pretty hands-off and using life-cycle type funds that re-balance for me.   But I do know HOW to re-balance and do it across my broader portfolio occasionally.  I have an investment PLAN so I know in advance how I will respond to all likely market conditions.  I don't have to keep wondering: "what will I do if...?"

Whereas, your anxiety over the past couple months' returns is of concern.  These recent stock market blips are NOTHING...like a speed bump on a 100 mile road.  We [ETA, I just realized you aren't in the U.S. and might be experiencing different conditions depending on investment vehicles] aren't even in a recession right now! The economy is strong.  But a recession is inevitable; what will your mental state be then?   What is your plan for when the the market mostly drops for a year, etc?  That is definitely going to happen at some point, so you need one.  How will you react if your investments decrease in value by >30% (as we experienced during 2008)?    Do you feel confident that you won't pull your money out and lock in your losses?  Do you feel confident that you will keep investing during those periods?  If not, you need to have an actual alternate plan as to exactly what you will do when the inevitable crap periods of returns arrive.

I debated investing for a bit but was convinced by MMM to give it a go. I don’t regret it. I read the forums, understand that it’s going to get worse, but it’s different seeing it. I’m committed to the til 60 plan unless an emergency or we need the money for property. I know it has to stay no matter what though and have plans for cash reserves to get me through until I’m early 60s. The point of my post is maybe for people to not treat us newbies like fools to ridicule as it is scary, no one in my family invests, and it’s a lot to get our head around. I’ll grow into it. Thanks.


Ok, that's good to hear. FWIW, personality and upbringing definitely plays a role.  My husband is more emotional about money than I am, and comes from near poverty. He would have a lot of trouble staying calm were he in charge of our investment plan.  I tend to talk to him more about our investments when the market is doing well, and focus on other things that we can control in our daily lives when the market is not doing well.  But for most people, once you weather a few bad patches, it does help remove some of the anxiety, even in people like my husband.
Title: Re: When would you get back in?
Post by: tooqk4u22 on April 03, 2018, 10:09:47 AM
In 2013 the p/e was around 17...with extremely low interest rates at the time I didn't see any logic in stating the US was overpriced back then because it simply wasn't

Now of course it is different territory and they do look high by any standard or metric..

You are not looking at it correctly due to the tax law change.  The current TTM PE is 24 for SP 500, yet there are no benefits of the tax law factored in yet as no 2018 earnings have yet to be reported.  So the effective or forward PE is actually lower and is about 17-18 provided earnings are in line with consensus estimates or in line with your 2013 figure.
Title: Re: When would you get back in?
Post by: nereo on April 03, 2018, 10:12:06 AM
wait, what... there are no benefits of the tax law factored in yet...??
seriously?
Title: Re: When would you get back in?
Post by: tooqk4u22 on April 03, 2018, 10:20:38 AM
wait, what... there are no benefits of the tax law factored in yet...??
seriously?

Into the earnings.....you know the denominator of the P/E.  Sure, price has factored in the expected earnings but the earnings need to be reported throughout the year in order to be reflected into the P/E so it results in the current P/E being inflated.  Another thing that may be contributing to the high P/E is that at the end of the year after the law was passed a number of companies (mostly banks) that had deferred taxes had to write those down as they are worth less - so earnings were temporarily depressed in Q4.

Title: Re: When would you get back in?
Post by: chadat23 on April 03, 2018, 10:34:52 AM
Ha, so after all of the talk on what to do, the period over which I was considering waiting passed without the money ending up in my account. It finally made it there last Friday but Vanguard wasn't trading that day because of the holiday so I placed an order for VTSAX over the weekend. After things were settled yesterday I saw that VTSAX was down 5.2% compared to the day that my money was taken out of the old account and about 3% since the day I was expecting to have the money back in my account so I'm happy with how things played out.
Title: Re: When would you get back in?
Post by: Radagast on April 03, 2018, 10:51:50 AM
Look, I get why you all think the worrywarts are such a joke, youíre using fancy things like facts. But as a newbie to investing, who took over 40 years before deciding to dip themselves in this previously foreign environment, that I still donít get, this shit is scary! Last year, watching the returns go up and up was exciting as hell. Now, watching the numbers go down is depressing, even though I know itís a long game because you people, the helpful internet stranger people, keep telling us dimwits that itís all going to turn out perfect. Well, you try convincing unconvinced partner who doesnít believe in investing to give it a go when your money goes backwards! It ainít easy. So you all can mock and ridicule and rub our noses in all of this but remember, for many of us, this is new and weíre praying that our leap of faiths pay off and the sacrifices weíre making are worth it. None of us want to fuck this up. Empathy and compassion can go just as far, maybe farther than ridiculing and minimalizing peopleís fears and ignorance. I hope one day Iím as confident, knowledgeable and secure as the rest of you, but I ainít there yet, but at least Iím willing to be a part of the game.

I mean, the S&P is a bit better than -2% YTD.  -1.X% for the quarter.  There are going to be PLENTY of returns way, way worse than that over your investing lifetime.  If that sort of return is depressing, then maybe the stock market isn't for you.  Head on over to the Real Estate forum and find out how fun it is to be a landlord.  Otherwise, you just have to ignore short term noise.  Stop checking your accounts every day, every week, or even every month.  Set it and forget it.  That's the best advice anyone can give.

The, stop checking accounts daily, is really what I need to and will stop doing. Iíve been checking daily and charting just to see the flow and what happens to my actual money, itís all been a learning experience and for some reason, Iím pretty slow with this. I think I need to just chart monthly as it keeps me focused and everything front of mind. I know I have to just trust the process.

Yeah, you don't want to check daily.  That's enough to make anyone go mad.  There's a phrase about investing that is pretty reassuring to me:  When in doubt, zoom out.  Which means that the financial media, and most investors, wrongly focus on the short term.  Instead, zoom out on the chart to see what returns look like for the year, 5 years, 10 years, etc.  This is a long term thing.  Over time, you're going to come out ahead.  If the market gave a reliable return like a savings account, it would pay out at the same rate.  This volatility is what ends up making you money.

Have you read Jim Collins's Stock Series?  I'd recommend it.  He has a great way of distilling investing down to its basic principles in simple terms.  There's a number of posts, but the first 6 or so I'd consider required reading and then you can pick and choose after that. 

http://jlcollinsnh.com/stock-series/

Yeah, read all of that before I pulled the trigger. He just confirmed what MMM said. I then talked to people on here to work out that I needed something low stress and easily managed to get into, so lifestyle funds fit perfect. I just obsessed with checking and also trying to convince my partner. Harder to convince partner now. Thatís ok. Slow and steady...
I've been tracking the total amount of money made in investments, which is currently about $37,000. Even if things get rocky I expect it to remain strongly positive, so that is the number I report to DW. Hard for her to argue against investing, whether we made $40K or only $20k!
Title: Re: When would you get back in?
Post by: GillyMack on April 04, 2018, 07:15:10 AM
Ha, so after all of the talk on what to do, the period over which I was considering waiting passed without the money ending up in my account. It finally made it there last Friday but Vanguard wasn't trading that day because of the holiday so I placed an order for VTSAX over the weekend. After things were settled yesterday I saw that VTSAX was down 5.2% compared to the day that my money was taken out of the old account and about 3% since the day I was expecting to have the money back in my account so I'm happy with how things played out.

Iím glad that it accidentally worked out well for you.  It must have been stressful just waiting and waiting for the money to clear.
Title: Re: When would you get back in?
Post by: Scandium on April 04, 2018, 09:30:22 AM
I've been tracking the total amount of money made in investments, which is currently about $37,000. Even if things get rocky I expect it to remain strongly positive, so that is the number I report to DW. Hard for her to argue against investing, whether we made $40K or only $20k!

I feel like this could backfire, when the market crashes and your wife ask how much you lost. Maybe she's ok "only" making $20k, but how will she feel when you have to tell her you lost $100k+?

My wife don't care much about investing. Just got her 401k set up to max and can't be bothered beyond that. I don't "brag" about how much we made precisely so won't have to discuss how much we lost at some point. She understand that the nature of it and I think she'd be ok, but no need to prime her expectations to be that the market only goes up. If it come up how much our accounts went up I'm quick to say "well, could of course drop by 50% tomorrow"
Title: Re: When would you get back in?
Post by: Radagast on April 04, 2018, 01:51:27 PM
I've been tracking the total amount of money made in investments, which is currently about $37,000. Even if things get rocky I expect it to remain strongly positive, so that is the number I report to DW. Hard for her to argue against investing, whether we made $40K or only $20k!

I feel like this could backfire, when the market crashes and your wife ask how much you lost. Maybe she's ok "only" making $20k, but how will she feel when you have to tell her you lost $100k+?

My wife don't care much about investing. Just got her 401k set up to max and can't be bothered beyond that. I don't "brag" about how much we made precisely so won't have to discuss how much we lost at some point. She understand that the nature of it and I think she'd be ok, but no need to prime her expectations to be that the market only goes up. If it come up how much our accounts went up I'm quick to say "well, could of course drop by 50% tomorrow"
This method keeps things focused on the long term net result of our investing, which has a pretty good chance of only ever being a positive number since early 2016, even more because I only calculate it every three months. A 100k loss is pretty close to impossible, it would take around a 70% loss from today, and within a couple years even a repeat of the Great Depression would not result in a net -100k. That's why I emphasize the net number, it will likely always show us being considerably wealthier as a result of investing, even after a crash.

I don't think "brag" is the right word, it is a financial discussion that comes up 2-3 times a year regarding where our money is since it is obviously not manifesting itself as a McMansion or BMW.
Title: Re: When would you get back in?
Post by: Scandium on April 04, 2018, 02:02:33 PM
I've been tracking the total amount of money made in investments, which is currently about $37,000. Even if things get rocky I expect it to remain strongly positive, so that is the number I report to DW. Hard for her to argue against investing, whether we made $40K or only $20k!

I feel like this could backfire, when the market crashes and your wife ask how much you lost. Maybe she's ok "only" making $20k, but how will she feel when you have to tell her you lost $100k+?

My wife don't care much about investing. Just got her 401k set up to max and can't be bothered beyond that. I don't "brag" about how much we made precisely so won't have to discuss how much we lost at some point. She understand that the nature of it and I think she'd be ok, but no need to prime her expectations to be that the market only goes up. If it come up how much our accounts went up I'm quick to say "well, could of course drop by 50% tomorrow"
This method keeps things focused on the long term net result of our investing, which has a pretty good chance of only ever being a positive number since early 2016, even more because I only calculate it every three months. A 100k loss is pretty close to impossible, it would take around a 70% loss from today, and within a couple years even a repeat of the Great Depression would not result in a net -100k. That's why I emphasize the net number, it will likely always show us being considerably wealthier as a result of investing, even after a crash.

I don't think "brag" is the right word, it is a financial discussion that comes up 2-3 times a year regarding where our money is since it is obviously not manifesting itself as a McMansion or BMW.

That's why I put brag in quotes. Just meant stuff like "hey wife, we made $10k last month!". Sure, it's cool, but this could result in her being conditioned to only making money in the market. That's all I meant. If it works for you great, I'm just always careful to mention potential downsides, before they surprise us :) Helps with my on mental state too.

Also surprised you say loosing $100k is close to impossible. At some point I'm sure you'll have $500k in the market? A 25% drop in the market isn't that uncommon. Or you'll probably have a million eventually, and dropping 10% happens frequently. 

Title: Re: When would you get back in?
Post by: Radagast on April 04, 2018, 02:14:29 PM
Also surprised you say loosing $100k is close to impossible. At some point I'm sure you'll have $500k in the market? A 25% drop in the market isn't that uncommon. Or you'll probably have a million eventually, and dropping 10% happens frequently.
On a net basis it is pretty close to impossible (Current value - sum of deposited value). Measuring from the peak it is easily possible and expected, so I prefer not to measure from the peak.
Title: Re: When would you get back in?
Post by: ysette9 on April 04, 2018, 03:45:13 PM
In your shoes I would invest everything as quickly as I could. Market timing is a fool’s game.
Title: Re: When would you get back in?
Post by: Radagast on April 04, 2018, 07:18:28 PM
Also surprised you say loosing $100k is close to impossible. At some point I'm sure you'll have $500k in the market? A 25% drop in the market isn't that uncommon. Or you'll probably have a million eventually, and dropping 10% happens frequently.
On a net basis it is pretty close to impossible (Current value - sum of deposited value). Measuring from the peak it is easily possible and expected, so I prefer not to measure from the peak.
As an example, right now I can say "we have placed $170k into our investment accounts, and they are worth $210K now". If the market declines 20% by the end of June (~30% from peak) I will be able to say something like "we have placed $180k into our investment accounts and they are worth $180K right now, good time to buy!." But no net loss.

After playing with Portfolio Visualizer for a few minutes, I think nobody who invested $4000 of new money into VTSMX monthly would ever have suffered a $100K net loss, even in 2008-9. If they started early enough they would have had a low enough cost basis to avoid that big net loss, and if they started later they would not have enough invested for a 100k net loss to be possible. Whatever the circumstances are that make a 100k net loss possible on a 4k monthly investment, my guess is they have not occurred since the Great Depression. So our odds of avoiding it now after three+ years of gains are pretty good.

If you invested 5k monthly or more, a 100k net loss would have been possible in 2008-2009. Probably out of the cards for us at this point though, even as our monthly contributions increase by ~80% over the next year.
Title: Re: When would you get back in?
Post by: Patrick584 on April 04, 2018, 07:54:36 PM
I think the correct answer that you should always be invested is well captured. Based on the fact that trades are free, your question is no different than the scenario of selling your position after a downturn. It worries me that some posters on this forum believe that a future expected return changes based on past  performance.
Title: Re: When would you get back in?
Post by: theolympians on April 05, 2018, 10:13:19 AM
I didn't read all the posts, I just skimmed the first page. The posts started with: get in immediately to wait a couple days. At the bottom of the page there were a couple, "The crash is coming!" posts.

The danger of waiting a couple days, is that you will see confirmation bias. No doubt you will check all the networks which will talk about all the negatives in the long term. Feeding your hesitation, you'll wait a couple more days, then a few, more, then wait until after vacation, then forget about it for a couple months. You'll wake up one day and a year will have passed.

I would put it in now and forget it.