03-17-2020, 12:38 AM (This post was last modified: 03-17-2020, 12:39 AM by dmonte.)
Say, 3 weeks ago, I have own total $10000 stocks which issue dividend, and the average yield is 3%. So I receive $~300 an year. Today, the market value of the $10000 now remains $5000.
And so far I strongly feel the market will keep going down for probably another 3 or 6 months, and probably won't bounce back to the 3 weeks-ago level in the next couple years.
Based on my assumption, doesn't it make best sense to sell all holding A.S.A.P., hold cash, and then buy back later this year (or next year) while the market stablized?
I cannot make the math work for me for the case to hold and doing for dollar cost average all the way. I am throwing money into void this way (based on my assumed scenario). And the risk of losing money is much higher than make a fortune in this event.
Does there some theory that can make sense Dollar-Cost-Average at this moment?
Note: Of course, there is absolutely some chance that the market will bounce back in one or two quarter. But i just cannot believe that happen any time this year.
The problem with your idea is that it requires a crystal ball.
Sure, you can sell now and hope to buy them back cheaper in a month or two. But there is no guarantees that you can do that. I think it's starting to be quite late for the "sell everything" strategy.
(03-17-2020, 12:38 AM)dmonte Wrote: Say, 3 weeks ago, I have own total $10000 stocks which issue dividend, and the average yield is 3%. So I receive $~300 an year. Today, the market value of the $10000 now remains $5000.
And so far I strongly feel the market will keep going down for probably another 3 or 6 months, and probably won't bounce back to the 3 weeks-ago level in the next couple years.
Based on my assumption, doesn't it make best sense to sell all holding A.S.A.P., hold cash, and then buy back later this year (or next year) while the market stablized?
I cannot make the math work for me for the case to hold and doing for dollar cost average all the way. I am throwing money into void this way (based on my assumed scenario). And the risk of losing money is much higher than make a fortune in this event.
Does there some theory that can make sense Dollar-Cost-Average at this moment?
Note: Of course, there is absolutely some chance that the market will bounce back in one or two quarter. But i just cannot believe that happen any time this year.
03-17-2020, 05:13 AM (This post was last modified: 03-17-2020, 05:15 AM by fenders53.)
Great advice from the guys. Most of us probably agree the market is likely to drop a little more, perhaps even a lot more, but we don't know for sure. Timing your re-entry is where you are highly likely to miss. It is proven the majority of historical stock market gains occur during very short periods of time. Your apprehension is normal. Hindsight is 20/20, and we learn more about investing in times like this. Going forward I build a small cash position of 10% if you are young. I don't feel completely helpless during a downturn if I can buy a few stocks on deep discount.
What you are talking about is capitulation and the delusion you can time the market consistently. Most that give in to the fear regret it eventually. Don't do today what you wish you had done yesterday. The market will flip BEFORE the skies are blue. If you wait for safety, you will miss half the ride The market teaches this lesson over an over. I've usually been very uncomfortable with my best investments. Hang in there and be prepared for it next time. There will be a next time. You will see some of us here trying to trade around this somewhat (including myself). This isn't investing, and most of us will get it wrong, whether this time or next time.
Thank you for the great responses. I totally understand the rationale behind the strategy.
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.
03-21-2020, 05:09 AM (This post was last modified: 03-21-2020, 05:10 AM by fenders53.)
(03-20-2020, 11:40 PM)dmonte Wrote: Thank you for the great responses. I totally understand the rationale behind the strategy.
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.
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.
How large of a loss did you just lock in with the market down 30%?
(03-20-2020, 11:40 PM)dmonte Wrote: Thank you for the great responses. I totally understand the rationale behind the strategy.
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.
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.
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!
(03-20-2020, 11:40 PM)dmonte Wrote: Thank you for the great responses. I totally understand the rationale behind the strategy.
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.
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.
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.
(03-20-2020, 11:40 PM)dmonte Wrote: Thank you for the great responses. I totally understand the rationale behind the strategy.
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.
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.
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.
It was only an instinct against something never heard in my life, now it becomes a global lock down.
But it will still possible that next year I will regret what I'd done this month. No excuse anyway, it was personal decision, and have to look forward.
(03-20-2020, 11:40 PM)dmonte Wrote: Thank you for the great responses. I totally understand the rationale behind the strategy.
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.
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.
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.
It was only an instinct against something never heard in my life, now it becomes a global lock down.
But it will still possible that next year I will regret what I'd done this month. No excuse anyway, it was personal decision, and have to look forward.
At this point I don't think you are going to regret it. Before long it will be fairly easy to see which companies are not going to be affected nearly as much. You should be able to find some outstanding bargains among them and average in. If this goes anything like a typical bear, almost everything will get a haircut. You'll certainly be better off than if you had rode this down. It will be a long time before we have clarity on many industries. I expect those may be in a trading range for a long while. All this free FED money is the wildcard. They will be able to save some, and many will be left behind to struggle for a long time.
03-22-2020, 02:43 PM (This post was last modified: 03-22-2020, 02:45 PM by dmonte.)
The attached CSV file is some data might be interesting.
It presents how each (USA, CA)company's close price on Mar-20 compares to the highest point in Feb, 2020.
Import the CSV file into Microsoft Excel, Openoffice or Google docs. Then you will be able to read them in an easier way and able to manipulate the presentation your own way.
Note: The data is basically based on Yahoo Finance, but I cannot guarantee it will be 100% accurate. Please just use it as a reference.
[edit] it seems CSV file is not permitted to upload. I will figure out the format soon.
