CNN Money Wall Street craves certainty but all it's getting is chaos
Well the good news is that I feel better now. See...
Now for the BIG questions...
When I was younger and the value of our portfolio was much smaller, it was easy to just stay 100% in through the ups and downs...
For better or worse, now a 30% swing is equal to years of my annual wage... And I am not excited to give that wealth up without a fight. So though I will stay at least 50% in... I am going to try some educated timing. We will see how this goes... Just remember the rules:
Well the good news is that I feel better now. See...
- back in middle to late 2017 I moved about 40% of our IRA type holdings to a combination of cash and bond funds, by that time I was pretty sure we were in for a wild ride
- I mean with Trump being a loose cannon and the USA being over due for a recession / correction, it was just a matter of time.
- so for the past 1+ years I have been kicking myself for not holding out for that top value...
- well now the market is below where I sold and I am pretty happy
- I mean not as happy as if I had held it all and sold it all at the peak... :-)
- But happy all the same...
Now for the BIG questions...
- Should I move more to safer waters? I mean we are still way above the 2012 value
- Should I buy something, there will likely be a bounce soon. If only temporary.
- When will be the correct time to move back to 100% stocks?
When I was younger and the value of our portfolio was much smaller, it was easy to just stay 100% in through the ups and downs...
- I was buying more monthly relative to my holdings, so dollar cost averaging had great power.
- And the value of my holdings were small, so 30% down was a modest value.
For better or worse, now a 30% swing is equal to years of my annual wage... And I am not excited to give that wealth up without a fight. So though I will stay at least 50% in... I am going to try some educated timing. We will see how this goes... Just remember the rules:
- When EVERYONE is excited about stocks, think about selling.
- When NO ONE wants to talk about stocks, think about buying.
6 comments:
Food for thought...
FOX Business What to Do...
In summary... No one's crystal ball is very clear right now...
I am moving, a bit late, into ETFs (picking carefully). That way I can issue a "follow stop" order that will move me to cash quickly if there is a further fall, or to take whatever gains if they come along later.
I am tempted sometimes to become an active trader, however rarely do I find anyone who wins at that game. Good luck !!!
I wasn't suggesting active trading. The "following stop" allows you to buy and forget, while automatic processes protect your gains and minimize your losses. It seems they pay a bit less than equivalent mutual funds, but those you have to monitor like a hawk to get the same benefit.
You still need to decide when and which ETF to buy...
How far down to set that trailing stop...
When to buy in again...
And there is the possibility that in this highly volatile market that you will miss the trailing stop.
But you are correct that it can be done.
And recognize that if you buy in to the same thing again, you'll likely have a "wash sale," and you are essentially day trading. I set the stop somewhere between where I would feel the loss and where short-term volatility won't bounce me out too soon. Where is that? YMMV
I look at ETFs based on performance, recommendations, and lack of downside volatility. Again, a judgement call. But combined, it's working well for me. I re-balance my portfolio about once a year, based on those factors, and on diversity. One place where diversity DOES add value. :-/
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