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Is it wise to be a little cashy going into an election or do most of you stay fully invested?
If I recall correctly in 2016 there was a "flash crash" then the market quickly recovered, does the market typically dip a little following an election or was that because the outcome was unexpected?
I would not want to guess as to who will win which is why I am wondering about the possible volatility following.
What was market volatility like 2000 Bush v Gore as a lot of the news media is predicting a similar situation.. 
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(10-09-2020, 05:03 PM)john Wrote: Is it wise to be a little cashy going into an election or do most of you stay fully invested?
If I recall correctly in 2016 there was a "flash crash" then the market quickly recovered, does the market typically dip a little following an election or was that because the outcome was unexpected?
I would not want to guess as to who will win which is why I am wondering about the possible volatility following.
What was market volatility like 2000 Bush v Gore as a lot of the news media is predicting a similar situation..
All you will get here are opinions of course. I never ever let fear "cash me out" but there are times I like to be a little cashier than usual and this is one of those times. Too many strikes against us right now. The market valuation certainly does not match economic reality. A stimulus at some point will come, but is one more enough? I actually doubt that it is an we can't print unlimited money. I think the market has accepted the reality that Biden is the favorite right now. If he wins it certainly wouldn't be a shock to the market. The drama that follows an election almost sure to be contested won't be good in the near term.
So I predict volatility but no crash in 2020. Let the election calm down and some reality to set in early 2021, then I will be concerned the market finally corrects. I just make lemonade when I can. Stocks run up stupid I sell a few shares here and there. (which I did this week) Add a few on a bad down week. And I knew firearms stocks would do well so I flipped enough of them this month to buy my wife a pistol. She expects the election zombie apocalypse lol. That's fine, we like to target shoot anyhow so I made the market buy her an election pistol lol.
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Interesting that since October the market is on an epic run, change of party running the government regardless.
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(02-13-2021, 09:15 AM)ken-do-nim Wrote: Interesting that since October the market is on an epic run, change of party running the government regardless.
History says allowing politics to overly affect your short term investing decisions isn't prudent. It's actually not that rare. Most new administrations are met with a few months of bull run. While the other side ALWAYS predicts a crash is surely coming immediately. I usually adjust sector allocations if I think I know the election outcome and adjust from there. The past month or so is about the best on record for Russell 2000. My best ETF performer by a margin. Midcaps growth did well also. Market was more than fine under Trump, Obama and Clinton as well.
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(02-13-2021, 10:12 AM)fenders53 Wrote: (02-13-2021, 09:15 AM)ken-do-nim Wrote: Interesting that since October the market is on an epic run, change of party running the government regardless.
History says allowing politics to overly affect your short term investing decisions isn't prudent. It's actually not that rare. Most new administrations are met with a few months of bull run. While the other side ALWAYS predicts a crash is surely coming immediately. I usually adjust sector allocations if I think I know the election outcome and adjust from there. The past month or so is about the best on record for Russell 2000. My best ETF performer by a margin. Midcaps growth did well also. Market was more than fine under Trump, Obama and Clinton as well.
Which reminds me I've been meaning to pick up a Russell 2000 index fund. I wonder how it stocks up against my SOXL (semi-conductor x3).
Yeah, I see so many articles predicting crashes and it never seems to come. I think those article are just click bait at this point.
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It won't outperform a 3X leveraged fund focused on one of the hottest sub sectors. It won't crash like it either. Chips look strong for 2021. That's not what the Russel 2000 is. I was about 40% in it for 30 years. SPY outperformed it the last 3+ years until very recently
If the market were to pull back soon SOXX might be the best idea for 2021 IMO. Until then it looks a little stretched but who knows?
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I do think I will pick up SOXX in addition to my SOXL. Right now my portfolio is way too leveraged.
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(02-14-2021, 10:38 AM)ken-do-nim Wrote: I do think I will pick up SOXX in addition to my SOXL. Right now my portfolio is way too leveraged.
I am getting that impression from conversing with you. When you score big there is nothing wrong with protecting part of your profit in something boring. That will look brilliant at some point. Giving most or all of it back in a few weeks or months is unpleasant. 
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(02-14-2021, 12:55 PM)fenders53 Wrote: (02-14-2021, 10:38 AM)ken-do-nim Wrote: I do think I will pick up SOXX in addition to my SOXL. Right now my portfolio is way too leveraged.
I am getting that impression from conversing with you. When you score big there is nothing wrong with protecting part of your profit in something boring. That will look brilliant at some point. Giving most or all of it back in a few weeks or months is unpleasant.
Agreed I would get slaughtered in a market pullback. I'm a bit glib about it all because even though my ROTH IRA was cut by 2/3 in March of last year, it bounced back in less than 4 months and is now doing great.
In my taxable account, I had a real lucky accident happen. So I had signed up for my bonus to be paid into my 401k, but for some reason my company screwed up and sent the money to my bank account instead. I didn't complain, because right then the market tanked due to Covid. I took my $8k and invested in leveraged funds at bargain prices. Now I've made 6x on that money since then.
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(02-14-2021, 04:17 PM)ken-do-nim Wrote: (02-14-2021, 12:55 PM)fenders53 Wrote: (02-14-2021, 10:38 AM)ken-do-nim Wrote: I do think I will pick up SOXX in addition to my SOXL. Right now my portfolio is way too leveraged.
I am getting that impression from conversing with you. When you score big there is nothing wrong with protecting part of your profit in something boring. That will look brilliant at some point. Giving most or all of it back in a few weeks or months is unpleasant.
Agreed I would get slaughtered in a market pullback. I'm a bit glib about it all because even though my ROTH IRA was cut by 2/3 in March of last year, it bounced back in less than 4 months and is now doing great.
In my taxable account, I had a real lucky accident happen. So I had signed up for my bonus to be paid into my 401k, but for some reason my company screwed up and sent the money to my bank account instead. I didn't complain, because right then the market tanked due to Covid. I took my $8k and invested in leveraged funds at bargain prices. Now I've made 6x on that money since then.
That was such a beautiful story.  I often say it's better to be lucky than good.
My luck has been all over the place. Got killed in the tech bubble crash. Went all in the SPY and Russell 2K with my actual retirement money in my 401K. 95% in stocks and added as fast as I could all through the bad market years when W was the Prez. I got this bad feeling in 2007. Transferred 2/3rds to a GOV bond fund and decided I should just start averaging back into stocks soon. The big hit happened soon after. The market got hammered and I transferred some back every month or so and kept adding new funds. I dodged a huge loss and was back in the green quickly. MAR 2020 came and I was invested conservatively by anyone's measure. Got steam rolled anyway and lost just as much as the SPY overall. It's all good now and I didn't do anything crazy to make it happen.
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When a BIG drop comes along, just about everything become correlated and diversification becomes but an investing theory.
What's needed is a better timing component to avoid the massive drawdowns. Outside of DGI my other 2 portfolios barely got nicked in the 2015, 2018 and 2020 swoons.
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02-14-2021, 08:04 PM
(This post was last modified: 02-14-2021, 08:06 PM by fenders53.)
(02-14-2021, 07:37 PM)NilesMike Wrote: When a BIG drop comes along, just about everything become correlated and diversification becomes but an investing theory.
What's needed is a better timing component to avoid the massive drawdowns. Outside of DGI my other 2 portfolios barely got nicked in the 2015, 2018 and 2020 swoons.
That comment would have made a great thread of it's own. I couldn't agree more, especially as it pertains to equities. Owning a couple stocks from all 11 sectors spares you VERY little pain when the entire market drops 30% or much worse. Add in some high yielding CEFs and those will get whacked too. Will precious metals help? Maybe, maybe not. Some cash and a VERY short-term bond fund might give you a chance to buy the equity bottom. It sure won't keep a diversified port from getting slammed. Add some leverage in any form and oh boy!
Diversification among stocks saves you from getting killed because you over invested in a bad sector or a few stocks that get crushed in an otherwise OK market. Hedging with options can help if you don't repeatedly get the timing wrong, which most of us will if we make it a regular practice.
I'll continue to run about three different strats and we'll see you all on the other side. I suspect some quarter or year soon you better be ready to react quickly if you are heavy into normal long positions and might need the money in the next five years.
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