Stock Market

[rcknfrewld]

****NO GOLF TALK. NO POLITICS. NO MEMES. NO STUPID QUESTIONS. NOT EVEN RHETORICAL ONES. NO TRYING TO BE FUNNY WHEN YOU’RE NOT****

I've been sitting in a safe conservative fund for awhile now in my retirement account just waiting to pounce back into the market. Well I jumped all in yesterday after the week long coronavirus panic sell off into our international fund that has really taken a beating. Hopefully, I'm not catching a falling knife. And that we won't ever see these low prices ever again.

[coruler2]

Hard to say, once panic is spread the markets suffer. Just like the Greece economy issue years back. It's best to wait for some good news...don't always have to guess at the bottom, hitting a upswing slightly late is better than guessing a bottom that continues to fall

[rcknfrewld]

I think I made the right decision to go 100% in because everyone at work this morning was saying they sold and got back into our safest fund. What's that saying..be fearful when people are greedy, and greedy when people are fearful.

[MAJORHIGH]

It also depends on what that International Fund is truly invested in. A lot of times you'll find that the fund is slightly hedged when you dig down into some of those 1% to 2% holdings. Also, checkout the Beta of the fund. 1 means that it mimics the S&P 500 and you would be better off in Growth or Aggressive Growth depending on your age. -1 means it moves in a direct reciprocal to the 500. Anything between 1 and -1 has low volatility while the opposite hold true for betas above 1 or below -1.

[rcknfrewld]

Our international fund follows a large and mid-cap index fund of 21 developed countries excluding US, Canada, and China. The dollar affects it too. It has been underperforming for years compared to the S&P. And all throughout the history of our funds, international falls way behind then plays catch up. The gap between the stock prices is too great to ignore. Plus I got almost 25 years to retire.

[Cecil Harvey]

I am 100% a Boglehead. www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy

I invest in very low cost index funds across the board (Total Portfolio Expense Ratio under 0.05%). Over the long term I will outperform most active managers.

I don't try to time anything and I adjust as my asset allocation gets more than 5% out of whack (too equity of fixed income) one way or the other. That makes it very mathematical driven rather than emotionally driven. Last Thursday with the equity market drops across the world happening all week I fell more than that 5% out of whack and rebalanced some out of a bond fund back into U.S. and Int'l Total market funds.

[Cecil Harvey]

Mar 1, 2020 16:09:27 GMT -5 rcknfrewld said:

Our international fund follows a large and mid-cap index fund of 21 developed countries excluding US, Canada, and China. The dollar affects it too. It has been underperforming for years compared to the S&P. And all throughout the history of our funds, international falls way behind then plays catch up. The gap between the stock prices is too great to ignore. Plus I got almost 25 years to retire.

There are periods where International outdoes the U.S. too. Look at the "lost decade" of 2000-2009.

I would also look at how home bias works: link

I, too, have a home bias. The U.S. to World markets are statistically around 55% U.S. to 45% World. I choose a 2/3 U.S. to 1/3 International in my own portfolio among my equity holdings.

"It has been underperforming for years compared to the S&P."

I would also look at recency bias. This article link2 talks about four different behavioral biases and is a good read. The last is about chasing trends.

[Cecil Harvey]

Feb 29, 2020 20:45:04 GMT -5 rcknfrewld said:

I think I made the right decision to go 100% in because everyone at work this morning was saying they sold and got back into our safest fund. What's that saying..be fearful when people are greedy, and greedy when people are fearful.

Warren Buffett quote, yes.

[rcknfrewld]

Bob, I'm being serious and genuine here. I love reading and researching about the stock market. So feel free to get as long winded and detailed and tedious as you want here, but no golf talk!!! I mean it. I will read every word probably twice and have lots of questions for you. I'll click on that link up there when I get home from work.

[donkeypuncherben]

I don't know about the current stock market prices being low. What is going to happen to corporate earnings and where does that put our multiples? I think the high prices of the last few years might have anchored your perception if you see today's price as cheap. If you look at historic indicators like cyclically adjusted price earnings we are still way above normal.

www.multpl.com/shiller-pe

Treasury yields going to near zero means a lot of smart money is trying to be anywhere other than equities.

This covid virus could get a lot worse before it gets a lot better. Impact to global supply chains and aggregate demand from people just staying home is going to have huge effects on a lot of industries that may take some time to play out.

Governments will try to respond by cutting interest rates, but it may not be very effective because the loss of demand isn't due to people having maxed out credit

It's not a bad time to own some gold and there may be a great opportunity to refinance a mortgage in the near future, but unless the story on this virus changes I think the market could fall a lot more than 15% from the all time highs

[Cecil Harvey]

Mar 6, 2020 14:28:03 GMT -5 donkeypuncherben said:

I don't know about the current stock market prices being low. What is going to happen to corporate earnings and where does that put our multiples? I think the high prices of the last few years might have anchored your perception if you see today's price as cheap. If you look at historic indicators like cyclically adjusted price earnings we are still way above normal.

www.multpl.com/shiller-pe

Treasury yields going to near zero means a lot of smart money is trying to be anywhere other than equities.

This covid virus could get a lot worse before it gets a lot better. Impact to global supply chains and aggregate demand from people just staying home is going to have huge effects on a lot of industries that may take some time to play out.

Governments will try to respond by cutting interest rates, but it may not be very effective because the loss of demand isn't due to people having maxed out credit

It's not a bad time to own some gold and there may be a great opportunity to refinance a mortgage in the near future, but unless the story on this virus changes I think the market could fall a lot more than 15% from the all time highs

As someone who is a follower of the FIRE movement (albeit from a different perspective/angle than most of the 'traditional' FIRE people), I am strongly considering the Golden Butterfly portfolio for my long term assets as I near the time when I stop working, which is likely in the next 10 years sometime.  This would be, at an average, in my late 40s, so I need to have a stance against sequence of returns risk, of which I think the Golden Butterfly is a strong consideration to guard against even over the 3-fund approach I currently employ.

Disclaimer: All speculative and near term trading I do not participate in, so those that wish this discussion to go I will not participate in, but I wish those all the best!

[nobluffme]

As a former money manager with Fidelity, it was always ingrained in me that we've been here before. In any given 10 year return, you'll get bull, bear and sideways markets. Peter Lynch always said it is about "time in the market, not timing."

My portfolio has not changed one iota in three years, and will not change because of this past week and upcoming recession.
I take a bottoms up approach to investing: investing at the company level, focus on company and industry fundamentals.
Forget about trying to predict interest rates, whether the Fed will cut rates or the economy.

I'm retired and still have 85% in equities and will probably always be heavy in stocks.

[Cecil Harvey]

Mar 7, 2020 9:15:32 GMT -5 nobluffme said:

As a former money manager with Fidelity, it was always ingrained in me that we've been here before. In any given 10 year return, you'll get bull, bear and sideways markets. Peter Lynch always said it is about "time in the market, not timing."

My portfolio has not changed one iota in three years, and will not change because of this past week and upcoming recession.
I take a bottoms up approach to investing: investing at the company level, focus on company and industry fundamentals.
Forget about trying to predict interest rates, whether the Fed will cut rates or the economy.

I'm retired and still have 85% in equities and will probably always be heavy in stocks.

Am still working and in my 40s with a lower asset allocation due to my risk tolerance, but I think the 'Time in the market beats timing the market' mantra holds supreme. The rest is short term noise.

[nobluffme]

Mar 7, 2020 9:26:30 GMT -5 Cecil Harvey said:

Mar 7, 2020 9:15:32 GMT -5 nobluffme said:

As a former money manager with Fidelity, it was always ingrained in me that we've been here before. In any given 10 year return, you'll get bull, bear and sideways markets. Peter Lynch always said it is about "time in the market, not timing."

My portfolio has not changed one iota in three years, and will not change because of this past week and upcoming recession.
I take a bottoms up approach to investing: investing at the company level, focus on company and industry fundamentals.
Forget about trying to predict interest rates, whether the Fed will cut rates or the economy.

I'm retired and still have 85% in equities and will probably always be heavy in stocks.

Am still working and in my 40s with a lower asset allocation due to my risk tolerance, but I think the 'Time in the market beats timing the market' mantra holds supreme. The rest is short term noise.

Yep, that noise unfortunately sways many an investor.
I've always said the best thing that could happen to an investor: invest in the market, then hope to get stranded on an island with no tv, internet, or next door neighbour/friend giving advice...
Get rescued in 10 years...your portfolio will be up.

[donkeypuncherben]

I agree with everyone saying just buy index funds when you can and forget it except for the occasional rebalance to your asset allocation if things get out of whack. It is one of the few things in life where the less you follow the news and think about it the better off you are even for very smart people.

Just wanted to make the point that if someone is trying to time the market off of the current downturn, stocks are not yet historically cheap, and we are pretty early in the news cycle of this virus which seems to be the catalyst.