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Post by oldskeet on Jan 16, 2022 11:47:43 GMT
This has become an interesting thread simply because there is no one right or wrong answer as how to govern. For me, I continue to sit simply because the markets have not pulled back far enough for me to start an equity buy campaign. As I write, I am finding the S&P 500 Index (SPY) off it's 52 week high by 3.18% and AGG (bonds) off it's 52 week high by 4.67% while cash has been stable. So, my near term strategy is to continue to sit while at the same time building cash as my mutual funds make their distributions. In time, I will become an equity buyer; but, the stars will have to come into better alignment before I move.
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Post by fritzo489 on Jan 16, 2022 14:32:58 GMT
oldskeet, I don't believe cash as being stable when inflation is added in . Just enjoying the ride, fritzo489
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Post by win1177 on Jan 16, 2022 15:00:47 GMT
oldskeet , I don't believe cash as being stable when inflation is added in . Just enjoying the ride, fritzo489
Fritzo489, Cash is always “losing value” to inflation, as you point out, but there is something to be said about the “safe feeling” that cash gives to me. I earn nothing on my checking account, and very little on our various money market accounts, BUT I sleep well and that is worth more than the potential “lost income”. I always keep a minimum of $8000 in our checking account, and never use leverage or buy on margin. I have all our accounts set to pay dividends/income in cash, so we are always slowly building cash. This allows me to periodically reinvest into areas that may be down. Right now, high quality bonds are yielding so low, that their returns are also NOT keeping up with inflation. BUT, they do offer some degree of ballast to equity sell offs. And “a little” better returns than cash. So I keep a relatively small amount in higher quality bonds, about 5% currently. Would like to put more in, but waiting for rates to rise some more before doing that. Cash, IMHO, is an under appreciated “asset class”, but one that becomes MUCH more “valuable” when the market suddenly plunges. Win
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Post by saratoga on Jan 16, 2022 16:08:42 GMT
I try to forecast truly major disruptions and I sell when I expect one. I sold out stock funds completely in 2000, sold partially in 2020, In 2008, I held on but I was busy with another crisis. For anything less than a major crisis, I either sell a little or none.
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Post by fred495 on Jan 17, 2022 14:52:30 GMT
As a retired investor, I tend to follow chang's motto: "I don't really need a lot more money - but I certainly don't want to loose a lot. I need to remind myself to err on the side of caution." Obviously, I am in the second category, i.e., when stock markets start falling, I sell and limit my losses. Fred I'm fairly sure that I wrote "lose" and not "loose". One of my pet peeves is mixing up lose/loose, principal/principle, etc. (I also loathe the misuse of words like "unique" and "peruse", but that's another matter.) Otherwise the citation looks like what I said.
Sorry for the typo, chang. If it happens again, you may take me to the woodshed.
Fred
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Post by saratoga on Jan 18, 2022 15:16:46 GMT
When I first joined Morningstar discussion forum, I thought that there might be a compact to use loose for lose.
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Post by richardsok on Jan 18, 2022 15:20:28 GMT
Yup. Word misuse has a bad affect.
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Post by Norbert on Jan 18, 2022 15:54:59 GMT
Irregardless, it can supposably effect there thinking. Anyways, these comments are irreverent to the object of this threat.
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Post by cactusjack on Jan 18, 2022 15:58:06 GMT
Good one, Rich. But I could care less.
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Post by Chahta on Jan 29, 2022 20:00:46 GMT
"Cash, IMHO, is an under appreciated “asset class”, but one that becomes MUCH more “valuable” when the market suddenly plunges.
Win"
It is nice to be able to turn my back on my investments and just transfer from brokerage cash into my checking during the last week.
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Post by FD1000 on Jan 31, 2022 0:48:26 GMT
When Stock Markets Start Falling What’s the Best Investment Strategy? Covered in the article (linked below) are some of the things you can do when volatility hits Wall Street. 1) Buy When Everyone Else is Selling 2) Sell and Limit Your Risks 3) Hold and Stick to Your Game Plan investorjunkie.com/investing/best-investment-strategy/For me, I'm invested in an all weather asset allocation of 20% cash, 40% bonds and 40% stocks that affords me the opportunity to buy during market pullbacks and to also use a seasonal investment strategy where I load equities come fall and then trim equities come spring. For me, option numer one is my plan A. Old_Skeet My answer is based on goals + age. When I was young, I was invested at 99+% all the time. 1995-2000 almost all in one fund, US total stock index. 2000-2013, changed funds based on my system. Since 2013 and planning for retirement, I decided on 2 simple rules to protect my portfolio. Sell any stock/allocation fund if it lost more than 6% from last top, and sell any bond fund with more than 3% lose. This means, sell to cash and wait for the next entry to follow within days-weeks. I was never in cash more than 3-4 weeks. Since 2017-8: our portfolio reached a level we can keep our living standard for 4+ decades and why I sell a lot quicker to cash based on several indicators. Going heavy into cash at 50-100% only at extreme market risk but staying invested at the other times at 99% looks like a great option for me. I never lost more than 1% since 2018 from any last top and no more than 3% since 2013 even when I used stocks until 2017. Using cash for years means that you made very little on that portion. B&H stocks/CEFs/other risk mean, your portfolio will lose a lot during meltdown. I want to avoid both IN RETIREMENT. If risk/SD doesn't bother you, by all means, invest 100% in stocks, after all, stocks would make you the most in the next several decades. BTW, being in cash doesn't mean you have a better opportunity of buying stocks. It's pretty easy to sell a bond fund and buy a stock fund when you think it's the right time, while your bond fund made a lot more than cash in the last 10 years. I never understood the concept of holding cash for years. Right now it's tough in bond land but it will pass too. Generally, most should just invest based on their goals with minimal trades and stay with their AA.
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