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I think what is happening in this thread is people are looking at 2017 and getting afraid of heights. The reality is that 2017 's increase of 20% is the average return in a bull market.
"record high" and "peak" are not synonymous. Also,trying to forecast what the market will do for the next 15 years is a little silly. Markets look out 3-30 months max and what we are seeing is a continuation of a long bull market that is built on a pretty solid foundation. Yes, we have moved into more optimistic territory , but we are far from euphoria.
I agree with everything you said until your last sentence. When people are thinking it's optimistic, and (not you) are piling in, even in circumspect "securities" like bitcoin, etc. because they don't want to miss out on a rise, I think we are very very near euphoria if not in it.
The S&P hasn't had a 20% pull back, heck even a 10% pull back. And that makes people nervous. However, with volatility so low I think it is a big mistake not to be invested right now.
Last edited by txgolfer130; 01-09-2018 at 09:47 PM..
Reason: insert pdf
What we're witnessing is investor behavior pucker factoring, combined with a dose of market timing and topped with the taking of monies to put on the sidelines to use for when stocks have tumbled in price. There's the blahblahblah and there's actions. Actions > words.
I wanted to quote this so I can easily find it a few months from now.
i didn't say it is plunging in a few months . no one knows the exact moment . point being there is more risk likely at this point than reward . it does not mean you have to act or do a thing as a long term investor . but it may not be a bad time to rebalance if stocks have exceeded the allocations you wanted .
many have not rebalanced in a long long time and just let things run and are "over invested " beyond the allocation range they wanted .
call it anything you want , but it may not be a bad time to reset your portfolio back .
Last edited by mathjak107; 01-10-2018 at 02:27 AM..
i didn't say it is plunging in a few months . no one knows the exact moment . point being there is more risk likely at this point than reward . it does not mean you have to act or do a thing as a long term investor . but it may not be a bad time to rebalance if stocks have exceeded the allocations you wanted .
many have not rebalanced in a long long time and just let things run and are "over invested " beyond the allocation range they wanted .
call it anything you want , but it may not be a bad time to reset your portfolio back .
That is a lot of back peddling for someone who has officially declared we are rapidly reaching the top of the market and in addition: " "the machines " that bring us the flash crashes will be dumping big time."
i don't see any back peddling at all . that is still my opinion . i never said sell out . I SAID REBALANCE IF YOU ARE AT THE HIGH END OF YOUR RANGE . that is all i did .
i believe these record levels of leverage will make the fall that much greater and exaggerate things on the way back down . .
I agree with everything you said until your last sentence. When people are thinking it's optimistic, and (not you) are piling in, even in circumspect "securities" like bitcoin, etc. because they don't want to miss out on a rise, I think we are very very near euphoria if not in it.
The S&P hasn't had a 20% pull back, heck even a 10% pull back. And that makes people nervous. However, with volatility so low I think it is a big mistake not to be invested right now.
Couple things...
Volatility—low or high; up or down—is incapable of foretelling the future.
Volatility will probably return one day. But when it does, it could easily be upside volatility that brings bigger returns. Some of our biggest bull market years have featured much higher volatility.
In terms of euphoria in bitcoin sure that is true, but bitcoin isn't the stock market....euphoria in stocks is what we experienced in 1999-2000....I adamantly disagree sentiment is similar today.....I think we are in the optimism phase and that can go on for awhile...and when we do hit euphoria it can last a while as well...think about it---Alan Greenspans "irrational exuberance" comment was made in 1996 a few years before we topped out in 2000.....
and yes, we haven't had a pullback or a correction in awhile...5-10-15% correction is always possible and my sense is we will see one or two of those this year, but thats not a bear market...bear market is 20% decline.....to attempt to move around ones assets allocation or trade around corrections is a very very hard thing to do....mentally and financially!
which is why I recommend rebalancing . you don't want to be out . anything is possible , but you don't want to treat things like the risk has not increased either because it sure has .
our brains are prewired to hate losing money more than making money . scans show that what we would do hypothetically is very different when under real stress . we don't even use the same parts of the brain when we actually have money invested and on the line .
the scans showed we will always try to talk ourselves out of doing something by pounding us with what if's .
Very true. One thing each of us can do to help us act more rationally is to have a written investment plan and then try to stick to it.
Now that the economy is doing well and we are at full employment and most people have lots of stock market gains baked into their personal portfolios & 401K plans and low inflation and very low real interest rates -- Now is the time to write down a plan for what you will do when inevitably things change for the worse. I'm not predicting things go south; I'm saying when they do go south, most of us would benefit from having a written plan and try to follow it.
We are all in different situation, I think we need to keep that in mind when reading peoples posts.
I am not very knowledgeable when it come to investing, yet I believe mathjak107, whose advice I admire a lot, posted somewhere that he is retired and living on his investments, I believe that would be a very different situation than for someone who has time for a corrected market to hopefully recover. I/we live on my pension, an immediate annuity and SS and our investments are therefore mostly for my younger wife's future and maybe some for my older age, thus I plan on riding out any possible correction while invested basically in a 60/40 fund for the most part, as well as some other personal picks that I play with from time to time, yet I may make some adjustments to safer funds down the road as I feel necessary at the time.
I suggest we all look at the situation the person giving advice is in before panicking and adjust for our own situation.
As a side note, Fidelity suggested to a retired friend that he do with his managed account similar to what mathjak107 has suggested, he went 40/60.
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