11-03-2013, 10:24 AM
Sorry to hear about the job news -- it sounded like you really enjoyed it. Absolutely great that you are in a position to take the change in stride, however.
I agree that you'd want to roll it into another tax-deferred account, but what to do with the proceeds is a tough call. Ultimately, it comes down to a question of whether you want to use this as a market timing opportunity. If you park all or most of it in cash for a while, you are betting that the market is frothy right now and will be giving you better opportunities in the future.
I keep seeing a smattering of headlines about people saying that the market is in another bubble now, which I personally think is nonsense. It has definitely been on a great run, but in my opinion prices are not in any way decoupled from fundamentals as you see in a proper bubble. I think people get freaked out about the market making new highs, thinking that a new high must mean a top. Of course that is silly, as the market has has an upward bias for the last 100 years or more, so it will continually make new highs.
But that said, it is just guessing in the short term. We could get a correction that gives you a better entry point, or it may just march upwards from here for another year or five.
I'd say choose a middle approach. Deploy a third or a half of it right away, and then use the rest to make regular monthly or quarterly buys as you find good ones over the next year or two or three.
I agree that you'd want to roll it into another tax-deferred account, but what to do with the proceeds is a tough call. Ultimately, it comes down to a question of whether you want to use this as a market timing opportunity. If you park all or most of it in cash for a while, you are betting that the market is frothy right now and will be giving you better opportunities in the future.
I keep seeing a smattering of headlines about people saying that the market is in another bubble now, which I personally think is nonsense. It has definitely been on a great run, but in my opinion prices are not in any way decoupled from fundamentals as you see in a proper bubble. I think people get freaked out about the market making new highs, thinking that a new high must mean a top. Of course that is silly, as the market has has an upward bias for the last 100 years or more, so it will continually make new highs.
But that said, it is just guessing in the short term. We could get a correction that gives you a better entry point, or it may just march upwards from here for another year or five.
I'd say choose a middle approach. Deploy a third or a half of it right away, and then use the rest to make regular monthly or quarterly buys as you find good ones over the next year or two or three.