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Well, I seem to be good at picking the top of a market, that's for sure. Problem is that I seem to do the wrong thing.
After '08, I told myself that the next time the market started panicking, I'd follow the herd rather than stubbornly riding the bear. I'm having a difficult time convincing myself that that is truly the best idea right now.
You should to match your investment to your time-horizon and risk-tolerance. I know those are financial jargon, but it would be helpful in your situation. Assuming this money is a necessity in 10-20 years, the going long equity is fine - but you need to be able to take a deep breath during market downturns, not sell. But seemingly your tolerance is more conservative. For your equity position buying a single index may be okay (not my typical recommendation), but think about implementing some type of fixed income/alternative investment for the downside ballast.
Originally Posted by ryansmoneypit
pretty sure I actually lost money this year, as opposed to making 3-10% in the past 10 years
Makes sense given the recent market movement. Heck, if you had checked performance of your holdings near the end of February in 2018, you would have most likely showed a YTD loss. Intra-year losses are normal - even during the incredible years.
Originally Posted by sixshooter
Exactly. That's why having a fund with 1400-ish different small cap companies in wildly diverse fields is a good, safe spread and it outperforms the S&P500.
Small cap exposure is a great tool for added diversification, but putting all of your money into this can be a recipe for disaster - depending on several factors. The risk measures of small cap suggests higher returns relative to large cap and mid cap, but with higher risk comes the potential for more losses. All of my portfolios tilt small cap and value, but these tend to make up 15% of my overall allocation.
I'm puzzled by the second chart- it shows the opposite of the first one.
Without looking at the actual numbers, I read both charts as while the particular fund (small cap) outperformed the S&P500 benchmark over 10 yr it underperformed it over the last 5 yr.
Without looking at the actual numbers, I read both charts as while the particular fund (small cap) outperformed the S&P500 benchmark over 10 yr it underperformed it over the last 5 yr.
Yep. It always matters exactly where you buy into the market. Buy and hold for me.
Joe, if you sell now, that means you need to be able to correctly identify the real bottom (which may be yet to come . . . but might not). How good were you at identifying the peak?
At this point, you haven't lost anything, you still own the same amount of shares that you did before. If you sell now and then fail to identify the real bottom and buy higher later, then you've lost shares. Of course, you already know all this and are lying awake at night thinking about it like I am.
As one data point, I bought a bunch yesterday. Valuations were such that it seemed like a good value and it also seems like there's a lot of emotion in the market from a buildup of bad news. I had previously sold last January when the valuations were looking idiotic and emotions were reversed. I spent much of 2018 in agony as no further obvious (to me) buying opportunity arose and I sat on a pile of cash feeling stupid as the market made its run from Feb to Sep. Now I don't feel quite as stupid, but I don't feel smart either.
I suspect that just buying and holding would be a lot better for my mental health. It obviously pays off in the loooooonnnngggg run and can even weather things like '08.
BTW, if I had perfect information, I would invest in lottery tickets instead of stocks/bonds.
I just bought a new pair of running shoes and am taking lots of long runs to get high on endorphins. I recommend this.
Welp. I'm close to being flat for the year. Took out a long position on SDS that helped offset the hits a bit.
Good news is this volatility is admittedly good for business on the brokerage side. Bad news is my inbox and voicemails are a raging dumpster fire :(. if you need me, i'll be working on my Miata.
Welp. I'm close to being flat for the year. Took out a long position on SDS that helped offset the hits a bit.
Good news is this volatility is admittedly good for business on the brokerage side. Bad news is my inbox and voicemails are a raging dumpster fire :(. if you need me, i'll be working on my Miata.
Volatility and long on SDS would probably result in some kind of heart failure for me. Markets go up and down. Double bears go up and then delete all your money the next day.
Joe, if you sell now, that means you need to be able to correctly identify the real bottom (which may be yet to come . . . but might not). How good were you at identifying the peak?
This strategy is not going well.
Now down 16.7% from where I bought in.
In the same timeframe, @sixshooter , VSMAX is off by around 25%, illustrating the downside to small-caps.
Someone convince me not to liquidate first thing Wednesday, and convert to SDS.
In the same timeframe, @sixshooter , VSMAX is off by around 25%, illustrating the downside to small-caps.
Someone convince me not to liquidate first thing Wednesday, and convert to SDS.
So I take it you were one of those guys who said diversification was a bad thing? There’s nothing fundamentally wrong with the economy that’s driving the markets down and so now, after losing 17% of your paper equity it’s time to win it all back by doing a trade (SDS) to double down on a market you’ve pretty much ridden all the way down?
That’s all the convincing I can muster at the moment.
and so now, after losing 17% of your paper equity it’s time to win it all back by doing a trade (SDS) to double down on a market you’ve pretty much ridden all the way down?
I'm having trouble convincing myself that, at 17%, the market is finished panicking. The last time I clung to that belief, I wound up watching it go down all the way to a nearly 50% hit.
That said, I acknowledge that it's impossible to predict the future.
I'm having trouble convincing myself that, at 17%, the market is finished panicking. The last time I clung to that belief, I wound up watching it go down all the way to a nearly 50% hit.
That said, I acknowledge that it's impossible to predict the future.
I remember that 50% dive very well.
There’s no question we’re headed for a recession in mid-late 2019 and reliable leading indicators point to a light one. The $1M question is does this administration have the wherewithal to stop doing things to help push it there? Do you feel lucky?
Sorry Joe. After all the brave talk . . . I bailed.
Seems to be a bear market now.
I don't see the influences that caused this abating in the near term (only exception being the return of institutional investors after the New Year), so I'm just going to chill for the holidays and lick my wounds.
Now that the price is down it is a great time to buy, not sell.
Unless the price continues to go down considerably, as seems to be the present trend. That makes it a good time to sell, and then wait to re-buy later.
Unless the price continues to go down considerably, as seems to be the present trend. That makes it a good time to sell, and then wait to re-buy later.
In theory. Studies show people, especially non-professionals, are pretty bad at this timing and end up underperforming the market even when they are investing almost entirely in indexes. Pick an asset class that fits your risk tolerance and stick with it. Rebalance quarterly. If your stomach turns from short term volatility you are either overestimating your risk tolerance or you need a Xanax.
Its sucks, but Im just going to roll through it like always.
Also, professionals are pretty bad at timing markets too. Building a market portfolio is always the answer unless you know how to cheat (like building an infrared laser computer network all over wall street).
12-21-2018, 09:32 AM
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