03-21-2020, 09:00 PM
(03-21-2020, 08:47 PM)dmonte Wrote:(03-21-2020, 05:09 AM)fenders53 Wrote:(03-20-2020, 11:40 PM)dmonte Wrote: Thank you for the great responses. I totally understand the rationale behind the strategy.Are you willing to re-enter before the skies are actually blue? If not it will cost you. I did just as you did with half my port in 2007. I got lucky and it worked out. If you get it right this time it will empower you to believe you have the ability to time the market going forward. You'll miss much of the ride when the market shows you what 0% interest does for a recovery.
Crazy busy week, everything changes rapidly now, and finally have time to surf here.
I did sold almost everything and hold cash at this moment.
My move was based on a few things:
1. The DG+Growth portfolio (70% CA) was relatively new (2 years), which means its cost was pretty high compares to a decade old portfolio. Therefore the portfolio had very little buffer to deal with this level of market crash.
2. I don't foresee strong future personal cash flow increase. That means it will spend too many years for the portfolio to reach a meaningful cost-average (to me. means it becomes even to what I invested).
Therefore I took the path to turn everything to cash. And one thing i didn't foresee before sold my positions: there are too many dividend cut recently and many of them were in my portfolio. I think I was just lucky and did the right thing for my own assets.
I plan to take a pause, study the new landscape slowly, and will have to pick a timing to rebuild a portfolio.
How large of a loss did you just lock in with the market down 30%?
The portfolio's market value is now ~55% of the cost if let untouched. I sold everything ~2 weeks ago since there were two options to me at the moment:
1) keep contribution as usual and reduce the average cost.
2) hold cash.
I took #2 as lower risk to me, since knowing my cash flow won't reduce the average cost much if not spend 5+ years (in the case market will not come back in 5 years).
There is no plan to re-enter the market at least not in Q2 since my own hypothesis does not toward to the direction of rapid recovery. Will wait for 2 indicators before start a new portfolio: 1) borders generally reopened by the major economics or 2) the cure will be in sight.
Hope everyone stay home, enjoy the extra family time, and be healthy!
IIRC when I got lucky and dodged much of the GFC I waited about six months then started averaging back in. Don't wait for too much good news is all I am suggesting. Don't overestimate your ability to time this anywhere near perfectly. In a matter of a few weeks the market will run enough to hurt your return for years. That us a well documented statistic coming out of recessions. The market will likely bounce a number of times and it's impossible to know which one is real, but it consistently occurs well before the sky appears blue. I'm on your side, just be careful with it. Over confidence is often expensive.
Good luck to you, and I really mean that. Dodging just one beat down was very helpful to my net worth now, but I know I got lucky.