(08-29-2021, 06:07 AM)ken-do-nim Wrote:We are getting off topic a bit but it's useful conversation. The actual trigger of a true crash is usually unexpected by the masses. Covid was the trigger, highish valuations and debt accelerated it. Powell and Congress put out the fire with liquidity and stimulus. FAR exceeding previous records. Someday something like inflation and a recession can't be controlled. Recessions are normal business cycle and should be allowed. Otherwise we just fall off a higher cliff. The one thing that usually ends a bubble is excess valuation, speculation and blow off rallies. There are certainly signs of that with crypto, meme stocks, SPAC stocks, excessive use of leverage. I think the Russell 2000 popped 50% in about three months last fall. QQQ had a helluva run but the earnings were there to support it. It could go on a lot longer or not We can't control any of that.(08-28-2021, 10:09 PM)fenders53 Wrote: Ken, I could allow allocation to stress me heading into retirement. I have a cash bucket that could cover three years. Several pensions not counting SS. Most of my stocks are Div players and my option selling game can out income a Div stock if I am smart enough to keep it extremely conservative.
Now of course it would be easier if the market doesn't have consecutive horrible years. I don't think it's paranoid to plan for a rough year fairly soon though. We are all part of a grand money printing experiment. This has never been tried before at this extreme. It may be short in duration but these algos are gonna scare the hell out of the market much like last March. I can't be greedy now and be in a spot I can't fix when retired. Let's hope problems are years away.
Precisely - either inflation or rising rates will flip some sort of algorithmic switch and the selling will be intense. Hopefully it just lasts 3 days like last time.
I suppose if a retirement allocation is in dividend producers that won't cut the dividend in the event of a pullback, and will eventually recover their share price, I'd sleep okay. There's probably a lot more peace of mind to be had with a 2.5% yield portfolio over a 5%er, but of course the income is half.
You'll probably get to watch me and a few others navigate a big correction +/- 2 years from retirement date. I don't use the "bucket strategy" but I do have a cash bucket. I can wait years before I would be forced to sell any shares in a crashed market. With a diversified port it's likely you own something that is not devastated until we get deep into a bear market. You'll have a few opportunities to prepare yourself for hard corrections. If you find yourself in panic mode selling most everything, or losing more money than everyone else then you need a new plan as your retirement approaches. Most people who panic in corrections either do not understand the long-term nature of markets, or they set themselves up for a devastating hit to their port they just can't stomach. The greed-fear thing.