Taking Defensive Action - Your Views Please

[steadyeddy]

All,

I am interested to know what techniques you intend to apply in this down market - should things take a turn for the worse. 

A few questions to stimulate conversation:
- Are you raising more cash than usual for your portfolio?
- Have you set "sell prices" for your positions - when reached - will trigger a sell in order to preserve remaining capital?
OR
- Are you going to ride the storm out?

Here is what I am doing:
- Raised cash to 66% of investable assets last month
- I am buying "US total stock market" (ITOT) during the frenzy swings and so far deployed some of the cash, now at 57% cash
- i do not hold any individual stocks nor bonds, all of my widgets are ETFs/MFs/CEFs
- I have not sold anything lately
- I will probably take a breather for a bit and see how the market goes.

I need to figure out if I will act on deep/further drops in the market OR violent moves up.


I would love to hear your thoughts.

Thanks.

[Deleted]

I have sold everything I planned to - FB the morning after earnings, 25% of AMZN, and trimmed AAPL to 9%. As far as growth - Left GOOG alone and some speculative positions in COIN and UBER. I have cash to buy. I am putting 401k contributions in my stable bond-like fund. They had been going to EFA, but I am now at 20% international. Some of my international and healthcare funds aren't currently doing well.

I continue to buy where I see value. Still hope to add MSFT and V if the p/es drop to the mid 20s. GOOG is a buy for me so added a little.

I will be holding pat. If some cataclysmic downturn occurs, I will use the stable bond-like fund to add to equities and then rebuild cash.

Turning more stocks on auto re-invest.

I did manage to get my portfolio up to 9% energy and have 4% materials and 11% financials.

As far as buying equities - I don't see an alternative except spending. The economy is good right now. Can't predict a recession.

[fred495]

In the current dire geo-political and uncertain financial environment, and as a retired investor, preserving capital is more important to me than seeking return on capital. As of today, my portfolio is 90% in cash and 10% in PVCMX. Currently checking out RPIEX, may use the fund to reduce cash to 80%. Both funds have below average risk and have positive YTD total returns.

I will reconfigure my portfolio once the dust settles.

In the meantime, good luck,

Fred

[Mustang]

I'm sitting on too much cash from the sale of a house. Using dollar-cost-averaging I'm buying a little Wellington and Wellesley every month. I trust the fund managers to do the analysis and make the right choices. Since I'm still buying and not withdrawing, I can ride out a typical down market. If I were withdrawing I would keep the cash and wait for the recovery. I'm invested in balanced funds because I don't want to try to time the market and my wife can't.

[alvinthechipmunk]

I'm 60% in bonds. Collect divs. while waiting for a recovery from the current correction. (Cash = 9% of portfolio, owned by the mutual funds. And 5% of it is "shorted.")  I'd rather receive a monthly pay-out than to hold a lot in a MMF, just sitting like some un-dead creature, accomplishing nothing. Tonight, Ukraine is under FULL-scale attack. The shit hits the fan. I own only one single penny-stock right now, barely 1% of portfolio. I suspect the traders and bots will buy into the sharp dip in the markets, at the end of the day, or in the next days and weeks. When, exactly? Who can say. It's like trying to predict when a volcano will blow. Being retired, PROTECTION is vital. Wife still works. Balanced funds we own are PRWCX and BRUFX. No plans to leave them.

A Morningstar X-Ray of my stuff shows an estimated earnings per share growth rate over the next 5 years which captures 98% of the S&P, and a Yield which almost DOUBLES that of the S&P: 190%. Yes. Meanwhile, the P/E of the portfolio is at "fair value," neither bought at a bargain nor a premium. The numbers are going to get worse before they get better. The West can sanction Russia all day long, but it has no effect on Uncle Vlad the megalomaniac sniffer of pig-farts.

[racqueteer]

I've been shedding volatile stuff for months now and gradually lowering equity levels. I have a LOT of cash and newish purchases of commodities (which have been the only bright spot recently). I don't have plans to go any lower in equity, so it's "hold on" time for me. When I think the coast is clear, I'll probably go in big. I can then pare things down to 'normal' on the upswing; assuming I LIVE that long! 8^b

[oldskeet]

I have posted a couple of times what Old_Skeet is doing.

In short words, I am invested within the confines of my All Weather Asset Allocation towards the lower guardrails, of course, for both stocks (38%) and bonds (38%) and heavy in cash (24%).

When I feel the time is right I'll start adding to my SPIFF and Equity Ballast Sleeve. Currently, with the S&P 500 Index (SPY) just barley in correction territory with a decline from its 52 week high of 11.9%, as I write, I am in no hurry to put my buying britches on.

For now, I sit.

Wishing all ... "Good Investing." No matter how you choose to govern.

[richardsok]

Feb 24, 2022 0:45:38 GMT steadyeddy said:

All,

I am interested to know what techniques you intend to apply in this down market - should things take a turn for the worse. 

A few questions to stimulate conversation:
- Are you raising more cash than usual for your portfolio?
- Have you set "sell prices" for your positions - when reached - will trigger a sell in order to preserve remaining capital?
OR
- Are you going to ride the storm out?

Here is what I am doing:
- Raised cash to 66% of investable assets last month
- I am buying "US total stock market" (ITOT) during the frenzy swings and so far deployed some of the cash, now at 57% cash
- i do not hold any individual stocks nor bonds, all of my widgets are ETFs/MFs/CEFs
- I have not sold anything lately
- I will probably take a breather for a bit and see how the market goes.

I need to figure out if I will act on deep/further drops in the market OR violent moves up.


I would love to hear your thoughts.

Thanks.

Eddy --

The topic came up over on ARMCHAIR INVESTORS and I did a fairly complete series of posts and replies to questions about my trading theories and practice there.  I believe little lecture and demonstrations were quite well received.   I'm not about to cut and paste everything over to here, but you can pick the first post up on Jan 28 and they continue on that topic up to about Feb 20th

[Deleted]

I continue to evaluate my portfolio. Watching the volatility this week has been interesting and a lesson for me. This is a good economy. We are not in a recession. There is still inflation and the Fed is still going to raise rates in a data dependent manner. Whether that triggers a recession eventually is unknown, much less when. Bonds are awful and continue to have substantial interest rate risk. Cash beyond needs is not great due to inflation. Individual opinions can differ on this, but I think this is the general opinion of the investor - professional and otherwise - universe. I am concentrating on value for any new purchase - growth or otherwise. The Ukraine situation remains an unknown. Sticking to my plan and allocation with a long term focus. 

I am watching TSM to make a small add - now that the Ukraine invasion has been extrapolated to China making a grab for Taiwan. If that unlikely event happens then none of us will need to look at our portfolios for years.

[Chahta]

I am making lemonade. Plan to take a tax loss wash sale in my taxable to help offset this year's Roth conversion. I feel just fine that things will recover and no need to panic. However, the 800 lb. gorilla in the room is inflation, interest rates and the economy. I have no clue how to get defensive unless I turn what I can into CASH. I have done that with some bonds and could possibly do a little more. I don't rely on portfolio income yet so I can always sell something if needed for the unforeseen.

If Taiwan is invaded, we are in big trouble. And you know They are thinking about that as we speak. We have boxed ourselves in by outsourcing so much. Somehow we need to get very serious with our politicians and get them on the right path.

[win1177]

Interesting thread! I’ve been basically “staying the course”. Have a pretty heavy equity allocation, especially for a newly retired person. Have about 84% equity, 5% bonds (muni funds), and 10-11% cash. I see bonds as poor choices right now, hence the high cash percentage. Main “salvation” of our situation is we have a large portfolio, when we combine dividends plus my pension, we actually bring in a little more than we need. So NOT having to draw from principal, which allows us to remain relatively “aggressive”. Downside is we have volatility in our portfolio!

I have raised a little cash, could raise even more by selling some muni funds. Have placed some “low ball” limit orders in case we get a big selloff, in some stocks I see as long term dividend growers. Sold one stock entirely, will possibly sell a few others to capture capital losses. Other than that, just staying the course.

Win

[richardsok]

Win, you may be interested that Merrill Lynch just sent out a letter to its investors advising: Stay the course, Diversify, Invest for the long term.

Well, I'm having none of it, and am pretty much the polar opposite of you: am near zero percent common equities. Just unloaded half my big positions in commodities (nice gain) and added to PDI when it crossed YOC of 11%.

Upcoming: suspect Friday's rally was a short squeeze and will remain in cash, might even take on a short position with RWM or PSQ. PReferred CEFs like HPF look interesting now that they're distributing 8%.

WATCHING: BCI RJA GLTR EDF PCEF PSEC SACH KNOP and CODIpA GSBD TTP PDO

If I am wrong and market continues upward, will look at DFND DTH HDV DVOL

I've been remiss in posting here. Have been spending time over at Armchair. They have been making a serious effort to clean up the sharp-elbow conversations in their threads with three moderators elected. (They miss you over there, Sara.)

Find myself overly involved in Ukraine news and am trying not to let it affect my investment thinking.

[win1177]

Thanks Richard! Yes, I periodically think about selling some of our equities, but after looking at the tax costs I stick with them. If we sold, taxes would be huge. We have a pretty large portfolio, so even if it dropped a lot, we would still be OK. I recently sold a non-dividend payor, PYPL, after it had really come down over the past year. So cash is 11%. Bonds are 5%, all muni funds. 

The vast majority of our holdings are wide moat, large cap, dividend growers, that may fluctuate up and down but raise their dividends every year. We get enough in dividends, plus my pension (retired medical school professor) that we are fine financially. Waiting on SS until somewhere between full retirement and age 70, which will add to our “cushion”.

The only issue is if we had widespread multiple dividend cuts. But we are widely diversified in both industries and specific companies. None of our holdings are more than 5-6% (AAPL, MSFT), most are 1-3%. We hold 38 dividend growth stocks, 3 strong REITs, and two non dividend payers (BRK.B, GOOG/ GOOGL). So even if things get bad, we’ll be OK. We’re a little overweight in consumer staples (pharmaceutical, staples, etc.) and several strong utilities, which tend to be recession resistant. They never hit “home runs”, but hit singles nearly every year. So I’m ok with things as they are. In essence, we have created our own “index” fund of dividend aristocrats/ achievers. Dividend yield is about 2.1%, which is more than enough.

Win

[FD1000]

Feb 24, 2022 2:52:56 GMT fred495 said:

In the current dire geo-political and uncertain financial environment, and as a retired investor, preserving capital is more important to me than seeking return on capital. As of today, my portfolio is 90% in cash and 10% in PVCMX. Currently checking out RPIEX, may use the fund to reduce cash to 80%. Both funds have below average risk and have positive YTD total returns.

I will reconfigure my portfolio once the dust settles.

In the meantime, good luck,

Fred

 +1

I'm at 99+% in cash.