Another call for a market short. (margin, puts, mortgages, paycheck)

[lottamoxie]

Originally Posted by 2Navigate

I get that, but that is separate from the fact that if cash instruments yield 5%, you have an option to go there instead of stocks (compared to the situation where only stock gain anything meaningful).

This is where B&W thinking isn't optimal in investing.

Yes, one can deploy cash into shorter or medium term 5+% yielding instruments, depending on when that cash is needed for spending. I did just that recently, using brokered CDs in a ladder going from 3 months to 18 months.

I also have allocation to stocks, bonds and all the typical type investments. Higher risk/higher volatility goes to investments that are not needed for spending for >10 years.

Using a mix of investment and saving types, aligned to a time horizon, makes sense.

[mathjak107]

Originally Posted by 2Navigate

I get that, but that is separate from the fact that if cash instruments yield 5%, you have an option to go there instead of stocks (compared to the situation where only stock gain anything meaningful).
I mean, shouldn't that pull money out of stocks and towards cash instruments? I know that enough has been printed and the whole stock market which is supposed to reflect the health of the economy (sarc.) but still...

the problem isn’t bailing to cash , it’s getting IT ALL back in to make bailing to cash worth it .

most timers fail getting it all back in giving back more than they benefited being out in cash.

there is no volatile time frame where morningstar small investor returns as a group beat doing nothing but riding it out .

investors show time and time again that the investments they were in surpass what they gained being out simply because most miss the large early gains , followed by a wait for a roll back followed by dipping their toes slowly back in .

by the time they get it all back they are behind simply riding the wave .

nothing wrong riding it out in a low ulcer index portfolio.

you will be down but not to badly and still can benefit from these rates as most low ulcer index portfolios use heavy cash positions .

but they have ready ,assets that can respond very heavily once economic outcomes have a clearer path.

there has been no time frames ever where the outflow of money from stocks and funds and then trying to get back in , beat doing nothing .

you used to be able to see the investor numbers vs the actual investments free on morningstar but i think now it’s a paying feature

another issue is most who bail don’t do it at the top of the market .

markets are already under way having gone down ..

usually these people who think they are smarter usually are doing so out of fear of falling lower .

these nervous nellie’s are not going to be putting it all back in which takes nerves of steel when it looks like a suckers rally and nothing changed much.

they want signs things are better and not simply waiting for the other shoe to drip .

well that sign never comes in time and so they give back any advantage they gained being out

these volatile times and bear markets is where rebalancing beats being out .

you are forced to buy low whether you think it’s time or not .

i have the both a check coming next week for the sale of my car and the end of year coming up when i rebalance where i have to buy tens of thousands of TLT .

do you think mentally i can buy tens of thousands of dollars worth of TLT on my own ?

of course not , but the discipline of the portfolio strategy will force me to buy lower

no different then having to buy stocks during the lost decade for stocks , or having to buy stocks in the 1960s when the stock market was declared dead as an investment after almost being flat two decades adjusted for inflation.

if you don’t own assets that look they have no hope , then you are NOT diversified

[oneasterisk]

Originally Posted by BeerGeek40

Your strategy is obviously working -- Kudo's and no argument from me -- my strategy is working for me, and I still don't like this market right now. I paid off my small house 10 years ago and have been basically putting the mortgage payment saved, into investments ever since.

My method would not work without my live-below-your-means lifestyle. I'd have no choice but to chase higher returns.

So are your ytd returns beating or trailing a typical sp500 index this year? If you're breathing it then you got no argument from me. If you're trailing, then you have to ask yourself if it worth the effort?

[Lowexpectations]

Originally Posted by oneasterisk

So are your ytd returns beating or trailing a typical sp500 index this year? If you're breathing it then you got no argument from me. If you're trailing, then you have to ask yourself if it worth the effort?

The reality is more than likely he trails, it’s normal for his historic performance. His financial success is largely based on simply living well under earnings which mask his underperformance investment wise. He fits a typical diy profile which makes far too many moves, is emotional and doesn’t stick to any plan

[mathjak107]

Originally Posted by Lowexpectations

The reality is more than likely he trails, it’s normal for his historic performance. His financial success is largely based on simply living well under earnings which mask his underperformance investment wise. He fits a typical diy profile which makes far too many moves, is emotional and doesn’t stick to any plan

except cutting expenses only works until there is nothing left to cut .

once there is nothing left to cut , when expenses rise you need gains to keep up

[BeerGeek40]

Originally Posted by Lowexpectations

The reality is more than likely he trails, it’s normal for his historic performance. His financial success is largely based on simply living well under earnings which mask his underperformance investment wise. He fits a typical diy profile which makes far too many moves, is emotional and doesn’t stick to any plan

Can't really argue this one, except for sticking to a 3 decade plan of aiming to retire early. I've probably made 5% a year on 'everything' over the years.

[mathjak107]

Originally Posted by BeerGeek40

Can't really argue this one, except for sticking to a 3 decade plan of aiming to retire early. I've probably made 5% a year on 'everything' over the years.

a lot of money left on the table for no other reason then poor investor behavior trying to time things or poor investment choices rather then just accept the returns mister market hands us each year.

thinking one is going to beat mister market at his own game hurts more often then not .

the playing around is like tossing money out the window at the same time one is trying so hard to cut expenses and it becomes counterproductive

[oneasterisk]

Originally Posted by BeerGeek40

Can't really argue this one, except for sticking to a 3 decade plan of aiming to retire early. I've probably made 5% a year on 'everything' over the years.

That's a high entrance fee when it'd be cheaper to get a fidget spinner...

[FREE866]

Originally Posted by BeerGeek40

Can't really argue this one, except for sticking to a 3 decade plan of aiming to retire early. I've probably made 5% a year on 'everything' over the years.

And over 30 years you've woefully underperformed the averages, yet still haven't learned.

[BeerGeek40]

Originally Posted by FREE866

And over 30 years you've woefully underperformed the averages, yet still haven't learned.

And yet I'm still going to retire early. lol When you invest the savings in: A) a small house vs a big house and B) paying off said house early.... that can carry you a long way. Most people don't have the discipline to do it.

I shake my head at people in their 60s and 70's...and beyond...who are still paying a mortgage or renting. They failed at money management, which is plenty different than "underperforming the indexes".