I'm considering putting my retirement money on the bench for a bit. My logic is the market probably won't take a big uptick soon and chances are pretty good that it slides... what's GRM think?
I'm considering putting my retirement money on the bench for a bit. My logic is the market probably won't take a big uptick soon and chances are pretty good that it slides... what's GRM think?
The market is a future predictor (at least that is what it attempts to be). It's clearly not concerned with what might happen in a few months or six months (and clearly does not exactly know) based on it effectively being stuck where it is for a while now. It also seems to much less "excitable" then it used to be.
I suspect we will see some movement (most likely up of course) when the whole V thing has a more clear conclusion.
Are you planning on retiring in the next few years? If not, you are risking trying to time the market, which rarely works out well.
In reply to aircooled :
hope to retire in 10-12 years. I agree timing is not generally reliable. The thought occurred because we migrated my wife's former employer 401k account to a Vanguard rollover IRA this week and for the moment it's parked in a money market and effectively "on hold" for a few more days.
Sitting out until after the election seems reasonable in my mind- but that's why I am asking for discussion
Based on your profile, you're a 49 year old architect based in Atlanta. If you think your job is reasonably secure and you have several months of cash on hand, I'd say NO.
Pull back and look at the stock market from a multi-year / multi-decade prospective...it reliably gives a ~9.84% return...get rewarded for holding your capital at risk.
As some wise person once said "don't judge me relative to perfection, judge me relative to the alternative"...where else are you going to put your money; cash, bonds, metals???
As Braveheart famously said "Hold...Hold"
I know it's frightening to place your money at risk but that's exactly why you're likely to receive a hansom reward...my advise is Stand-Your-Ground.
I got out of specific stocks a long time ago (30 years maybe?) and have been invested in various vanguard funds. I look at the 1,3, 5, and 10 year averages of a fund and also look at what it is. Any number of tech funds have been returning above the market reliably for almost 20 years. Funds are playing the market but diversifying across a group of similar companies so the risk is much less. That is not to say that you can not loose and you have to look at things (I evaluate things quarterly) but it is much better than trying to pick that one winning company out of the haystack. Instead you are averaging the growth of a market sector. Been doing this for years and it has worked out over all a point or two above the market average.
In reply to RX Reven' & dean1484:
Thanks. Dollar cost averaging despite the weirdness of the season probably is the best plan... Hopefully my 15% pay cut gets lifted soon.
I do believe I should find a fiduciary advisor to review my 401k elections and positions. Everything is with Vanguard.
Has anyone used their branded advisory services?
In reply to OHSCrifle :
I haven't used their advisory services but would check on bogleheads.org for people that have. DCA is fine; I think there is a slight statistical advantage to just dumping it all in at one time, but probably also a slightly psychological disadvantage.
I would guess that the advisors ar Vanguard are generally not fiduciaries. So be careful that you actually talk to one. The investment industry recently got a rule shot down that would require all (I think it was only retirement) advisors be fiduciaries. Lots of shady stuff goes on in that industry, especially in the selling of product area.
I will add that (from what I hear) the market is being effectively held up by the tech stocks currently (they are up, many others are down). I also hear there are some very sketchy bonds out there now based on rather fragile financials, since many companies can't easily sell as much stock as they want. Just some things to consider.
The following is not to be considered advice, guidance, or even intelligent. You've been warned.
I started a new job last Nov. and at first I was not adding money to my 401k at the new job due to wanting to build my liquid cash savings (read: checking account) due to moving costs and all of that. I've still not done anything with my 401k at the new job as this year, to me, seems like a very fluid situation with a stock market at all-time highs. I keep waiting for another shoe to drop, like a coming wave of evictions or something else to really rock consumer spending beyond what's happened so far, as the catalyst for a 2008-2009 style contraction. So I keep hoarding cash instead of investing with new money. I watch the market but haven't sold anything off this year as my timing hasn't been great and I'd rather have the shares for later vs. selling at a sub-optimal time. And I like having the spending money if/when I want to make another move to another job in another part of the country.
I don't know if I'm really sharing thoughts that are pertinent to your question; the above is just what I've been doing and thinking about investing in 2020. I would like to be semi-retired in 12 or so years if that helps.
In reply to OHSCrifle :
If you like the idea of buying stocks over the long term then stay with a long term investment in a low cost index fund.
Historically the market out performs all but 5% of the "Pro's" over any 5 year period. Making the cost of stock selection advice a dubious value at best.
I choose buying the DOW through the Diamonds fund. That gave me sufficient diversity. When I got a nice commission check some of it went into various Tech stocks and did better. My flaw was I was too conservative. I could have done better being more aggressive. That's my limitation and nothing to do with the stock market.
The reality is timing the market presupposes nothing in your life will interfere with your plans. That you won't have need of those funds for an dire emergency such as health issues, Job loss, legal or Any other unforeseen reason and be forced to sell in a down market.
Bonds on the other don't offer the bigger growth potential but insure withdrawal won't be as affected by market forces.
A couple of thoughts, and they're probably worth less than you paid for them and your Internet access.
As mentioned, what you're trying to do is market timing. What's your actual market timing system that tells you exactly when to get out and exactly when to get in? Your gut feeling doesn't count as a system, btw. Market timing works when you have a mechanical system that you blindly follow. There's plenty of research out there that suggests not having a system is detrimental to your wealth. Heck, there are still people out there who went into cash in 2008 (thereby locking into what were paper losses) and are waiting for the market to be "safe" to get in. In order to avoid that, the successful timing systems use mechanical indicators to time the in and out points.
Market timing is generally a capital preservation strategy. Based on your comments above, you're still in the accumulation phase - basically stuffing money into the investment mattress - and that tends to make market timing less appropriate. Why would that be? Market timing with a system basically tries to preserve your capital by getting you out during market dips and back in when the market rises. Unfortunately due to the way the non-fairytale versions of these systems work is by locking in some losses (because most systems don't trigger unless there is a reversal as they try to lock in the "top") and missing out on some of the gains (because they're lagging a tad, so the "safe" indicators don't get you a buy signal until the upswing is well under way). The result tends to be that you end up with considerably lower returns - guess 3-5% instead of 7-10% depending on your asset mix and the exact signals, plus YMMV - in exchange for potentially better capital preservation. Unless you hit a sawtooth market that confuses the signaling analysis, and then you're well and truly berkeleyed.
Now IMHO the picture changes slightly if you've oversaved and maybe have already hit you monetary needs for retirement and the remaining accumulation phase is basically just gravy and money to your heir. In that case, congrats because that is really rare these days and yes, that could be a good indicator that you want to dial down the risk and returns - but maybe not by market timing, or only market timing in a portion of your portfolio.
If you want to get market returns, you basically need to stay in the market through all of the times, because it's the bad, volatile times that make you money, not the good times. The good times just convince everybody else that the E36 M3 you bought when it was down and The World Was Going To End is worth more than you paid for it 
.
If you want to beat the market, work on Wall Street and may hay for a bunch of quarters before the reversal to mean kicks in 
. Remember, the point is not to beat "the market", it is to make the maximum return that fits your risk profile. Otherwise we'll all be 60/40 in bitcoin + pump & dumps, plus highly distressed high yield debt.
What I would do:
frenchyd said:Bonds on the other don't offer the bigger growth potential but insure withdrawal won't be as affected by market forces.
That's mostly true for government bonds. Non-government bonds tend to have (slightly) higher yields at increased risk - if the company goes belly up, you (well, the fund you bought) might get cents on the dollar. Problem is that government bonds, especially right now, are returning even below inflation.
OHSCrifle said:In reply to aircooled :
hope to retire in 10-12 years. I agree timing is not generally reliable. The thought occurred because we migrated my wife's former employer 401k account Io to a Vanguard rollover IRA this week and for the moment it's parked in a money market and effectively "on hold" for a few more days.
Sitting out until after the election seems reasonable in my mind- but that's why I am asking for discussion
October is one of the months that the market tends to do radicle things. I suspect ( gut feeling) this is going to be one of those times
And as frenchy himself has told us repeatedly, frenchy's financial gut is not the most reliable divining rod.
OHSCrifle said:In reply to RX Reven' & dean1484:
Everything is with Vanguard....Has anyone used their branded advisory services?
I haven't....I'm a passive, buy-n-hold investor with 90.4% of my portfolio in S&P 500 index funds.
At this point, I'm only holding two specific equities...company stock that I receive each year and don't sell as I don't want to get hit with the taxes and Amazon which is worth 68 times what I paid for it decades ago. I also hold silver, not because I think it's a great investment but because I started a family tradition years ago of giving it as gifts instead of wasting money on crap that nobody needs. Lastly, I have a fairly large cash reserve as I'm ahead of schedule in terms of retirement savings so I'm gradually moving towards a more risk-off position.
FWIW, I'm 56 and want to be able to retire in two years if necessary and four years if on my own terms.
If you're considering pulling out because you feel uncertain, ask yourself when you'll feel good enough about the market to put the money back? That's the rub with market timing. Not only do you have to sell at the right time, you also have to get back in at the right time.
As noted already, a huge percentage of the gains in the market have been the top tech companies (FAANG). To me, their rise really shows just how much the upper-middle class drives spending in the economy. The market isn't concerned about the massive job loss or even the hundreds of thousands of deaths because the people most impacted by all of that aren't statistically big spenders.
The other thing to consider is that there aren't many other options for investments that are better than the market. Bonds aren't worth much, real estate is just as expensive as stocks and involves more competition so money is coming into the stock market from other asset classes which should continue to prop it up.
And so, we get the K shaped recovery, where those at the top of the socio-economic pile have shrugged all of this off while those at the bottom continue to struggle. I don't see a huge reason why any of that would change enough to make the market suddenly reverse course in any significant or lengthy way.
Duke said:And as frenchy himself has told us repeatedly, frenchy's financial gut is not the most reliable divining rod.
I agree with that statement.
I bob when they weave, lost $240k in 2008; not the guy to ask.
Thanks for the bogleheads.org referral and all the other discussion above this reply. I posted an intro in the personal finance board over there and I am down the rabbit hole... taking inventory was quite cathartic. Gonna figure out a plan - in fact already consolidated one Roth IRA account that I forgot existed. Sadly it had mostly E36 M3 the bed.
My main concern is all the frugal living and saving I've done from age 21-49 has been (mostly) of the "squirrel it way and pretend it doesn't exist" plan. That's been really valuable but I don't feel like I'm in control at all. So I'm determined to get there.
thanks gang.
OHSCrifle said:I'm considering putting my retirement money on the bench for a bit. My logic is the market probably won't take a big uptick soon and chances are pretty good that it slides... what's GRM think?
My dad had that same thought 4 years ago, and did just that...As the market proceeded undeterred.
I promptly invested the proceeds from a house sale...Just before COVID hit the fan.
In less than a year, my poor timing by not trying to time the market is already beating his poor timing by trying to time the market for 4 years...Not that he actually needed the growth.
If you want to see how a fund has weathered past recessions, you'll need to go back farther than the 10 years that the vast majority of sites offer. Yahoo Finance is the only free site I've found that has annual returns going back to fund inception.
In reply to Driven5 :
good call
anybody have a preferred fiduciary investment advisor "company"?
Currently going through this. But I decided to find a fee based fiduciary advisor. We shall see how it goes.
Fueled by Caffeine said:Currently going through this. But I decided to find a fee based fiduciary advisor. We shall see how it goes.
How did you select? Word of mouth?
In reply to OHSCrifle :
October seems to be the month to not be in the market. I know there are more cases but 1929 and 1987, 2018come to mind.
In reply to OHSCrifle :
Everyone that was recommended to me was a high fee rip off artist. So I just started interviewing people. Found someone who feels sane. But it's a bit of a leap to be honest.
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