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i don't need maximum growth NOR MORE VOLATILITY . i find i am quite comfortable ramping up from 40-50% equity and holding , unless we have a big decrease in valuation . .
if all i cared about was growth i would be 100% equities -period!
2 out of 3 of my retirement years were already negative draw years .
40-60% are the most popular retirement allocations for a reason . most of us have no desire for anymore volatility than that nor are higher gains beyond that a priority . they may be for you , not for me at this stage nor many many others . we set a retirement course that works and we are comfortable with and the pedal to the metal years are behind us .
Last edited by mathjak107; 07-22-2017 at 11:46 AM..
If you're asking will we have a selloff some time in the future that brings the market below current levels? The answer is definitely yes, so you won't hurt yourself being in cash assuming you have the guts to buy back in when everyone else is selling. The average person should not try to time the market, though.
There are some unknown variables, such as whether Trump's corporate tax cut passes which could have a significant effect on earnings per share, lowering price to earnings multiples, making the stock market not overvalued anymore.
I would hold until at least 21,750 DOW and 6250 nasdaq.. seems we're definitely getting to these two levels for sure, looking at the charts. TBH, Trump has brought back the type of trading volume that we haven't seen in 9 or 10 years.. it's kind of interesting to see.
Timing the market is misunderstood. I timed the market so to speak, in 2008. I held onto cash. Rather than paying off my student loans, buying a house right then and there, etc. When the market bottomed out, I was sitting pretty. I bought a house paid in cash. You'd be amazed at how much money you can save with a high income job when you have very little expenses.
Having cash in your portfolio for buying opportunities is the way to go.
i disagree , holding cash in preparation for the next down turn or anticipated crash has usually lost more money by being out than you gain . unless you caught a once in a lifetime lucky hit odds are you will leave more on the table .
the more common story is markets just left them behind while they wait and wait
I know no one has a crystal ball to predict the future but is anyone holding off investing in the market and waiting for a correction?
Hey Jasper....gotta have a reason to do that. There's been two times in this last bull market that I've done it. The first was later half of 15. I thought the market had gotten ahead of itself and was pricing in interest rate hikes that weren't ready yet. So new money I started deleveraging with and old money I shifted to gold mining. That worked out well when the rate hike didn't come as originally anticipated.
The second time was selling after the Trump rally. I thought we'd have a swell of selling in January of 2017 with people who'd kept shares they may have sold in November or December of 16, but wanted to push the sell date in case of a retroactive capital gain tax cut. That, it turns out...didn't happen, so I was in too much cash for much of Q1 2017.
Obviously the market is trading high currently, which can make people uneasy. However, there seems to be small trades that can be made, especially as the correlation between the SAP500 and the Nasdaq seems to be going away. Some fun swings can be had, but it's the season for short term trading I think. This becomes more fun because you can trade the wobbles, get in and out quickly, and it works out as you can rotate into something else that's down.
Fast trades is how you handle this environment I think. There's record highs, but there's stuff on sale too.
Having cash in your portfolio for buying opportunities is the way to go.
This is where all or nothing thinking can get someone into a less optimal situation. So many people think they have to be all in stocks or all in cash or all in bonds or never this or never that.
I think having some money in cash or an equivalent is fine. It's valid for many reasons and for different situations. There is no one size fits all.
Note I said, some. That doesn't mean most, it doesn't mean half a portfolio, it means just what I said, "some." One person might decide they want to keep 1-3% cash or cash equivalents. Someone else might want 4% to 7%. And someone else may choose up to 10% - 20%. There's nothing wrong with having some monies set aside as long as it's part of an overall diversified portfolio and the person understands there's a tradeoff.
There will always be the person who hits it just right, manages to have reduced all their risk at the exact right time and is able to (and does) get into or back into the market at a great time and lets it rip. I'm not that person who guesses correctly so I don't attempt it. But I keep some cash available and I like it!
cash is a goal decision . it is usually a poor timing decision . there is a difference . goal oriented cash levels stay constant regardless of seat of the butt feelings .
Cash is a number and a decision, period. It doesn't have to align to a named and specific goal. It's a tool. It's available for whatever one wants to use it for, whenever they want to use it. That's the beauty of it. Person A might suddenly decide to take a vacation. Person B might see what they perceive is a buying opportunity in the market, Person C might decide they really want that high-end thingamabop. Person D might decide to loan some money or give to charity. With cash none of these people have to go into debt or sell any existing equities or bonds to obtain the thing they decide they want. In fact, as long as they put the word "fun" before it, it passes the side eye on C-D. i.e. this is just my "fun money" or "this is just the money I can play around with, my "serious money" is in serious investments, seriously."
in the case being discussed above there is only one reason that cash is being held . that is it is being held only for re-investment when markets fall .
that is generally not going to work out as well . waiting for that golden moment has left one behind more times than it has helped over and over .
so we are not talking just general cash levels here , we are talking delaying putting money specifically ear marked for being invested to work .
yeah , we all have those visions of holding cash and a big plunge comes and we buy , but in reality that rarely happens and more is given up anticipating or preparing for the next plunge than they actually get in difference when it happens.
i was skeptical about owning bonds last year . with bond prices falling i was sure i would do better waiting . had i done that, the difference in waiting would have cost me over 30k difference in interest had i held on as cash and waited.
Last edited by mathjak107; 07-29-2017 at 03:10 AM..
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