[tvbound]

While the argument of pushing to "open everything back up and getting back to normal" versus the "let's go slow" rages on, it seems to me that the stock markets are acting like there's no chance a gaping maw may be ahead of our stagecoach.

It made me personally feel better regarding the actions I've taken recently (going all to cash) when I read this article, since I totally agree with the author.

Why I Cashed Out of the Covid-19 Rally

Having a portfolio of long-term stock investments in tax-deferred plans, as well as the proceeds from a recently sold house and anticipating purchasing a home in The Villages in the coming months, I've decided I'm going to sit on the sidelines for a while.

I guess my viewpoint being, that I am concerned that even if this virus were to magically disappear tomorrow (almost a zero chance of that), how in the heck will the worldwide economy just go back to where it was? 70% of our (world) economy is (was?) based on consumer spending, so even with the trillions spent so far (how to pay it back is for another thread) in just the USA, who really expects consumer spending to be "pent-up" so much that it will come back to even close to what it was? I think the more important question is; "how many years will it take to get back to even close to where we were prior to Covid-19?"

Greenspan's famous statement of "irrational exuberance"-keeps running through my head. And if I'm dead wrong, the economy picks up right where it left off, all of the markets continue to grow and I miss out, I personally (especially at this age) will still be satisfied with how things have gone since 2009 and won't miss waking up, wondering if this is the day the bottom falls out.

Thoughts, comments?

[Two Bills]

Been in cash since retired 25 years ago.
No spectacular gains, but no catastrophic losses either.
Just sat back, played golf, travelled, and watched the world go by!

[retiredguy123]

Actually, the S&P 500 Index is only down about one percent over the past 12 months. The only thing that might make sense would be to convert your stocks to cash, because the bond prices are already too high with no place to go but down. I don't plan to do anything because selling stocks would mean paying a huge amount in capital gains taxes, and I don't need the money. Nobody knows where stock prices will go in the future, so I think it is a personal decision to make. I usually don't try to predict the stock market, but it does seem strange to me that the stock market has stayed as high as it has recently.

[Stu from NYC]

I believe in the future of the US and think that in the long run the stock market will continue to go up with peaks and valleys.

Best thing to do is find no load mutual funds and invest for the long run and not to try to outsmart the market.

[Tom52]

Unless you sold just prior to the recent downturn you locked in your loss and have already missed some of the recovery.
Anyone that gets nervous and feels they must sell during a market panic obviously did not understand their risk tolerance. Knowing your market risk tolerance and establishing the appropriate equity percentage is the best way to position yourself to be able to stay the course and still sleep well during market gyrations.

The market goes up and down but over time it has always been an upwards direction. This time it will do the same. Question is how long will it take? If you cannot accurately predict when to time the market you will likely do worse than staying the course. There is much data out there to support this.

[tvbound]

Originally Posted by Tom52

Unless you sold just prior to the recent downturn you locked in your loss and have already missed some of the recovery.
Anyone that gets nervous and feels they must sell during a market panic obviously did not understand their risk tolerance. Knowing your market risk tolerance and establishing the appropriate equity percentage is the best way to position yourself to be able to stay the course and still sleep well during market gyrations.

The market goes up and down but over time it has always been an upwards direction. This time it will do the same. Question is how long will it take? If you cannot accurately predict when to time the market you will likely do worse than staying the course. There is much data out there to support this.

I went to cash last week, which is what precipitated my thought on starting a thread about it now. As I mentioned, I hung on when it went all the way down into the 6,000's and was glad I did as I watched it steadily climb out of the low's of the Great Recession. Ironically though, given that when I started this thread the DOW was almost unmoved at about 24,100 and it closed about 400 points lower after I started this thread, so maybe there's some secret Street followers of this site? lol

I also forgot to mention in my initial post that even before Covid-19 happened, I thought the market was way overvalued and was due for a major correction sometime this year anyway. While we'll just have to wait and see what happens in the coming months, it's comforting to know that even if I miss out on a huge run-up (highly unlikely IMHO) - I'm not going to be checking every day, nor be hurt if the bottom does fall out.

[davem4616]

after the 2008 dip we put enough cash into annuities so that we never had to worry again about where our next hot dog was coming from

I recall one of my doctors equating keeping his retirement money in the stock market as akin to betting in a casino

we have a mixed portfolio...actually more complex than I wanted...but it works for us

we actually believe that things will eventually come back....and we've been cherry picking some nice stocks lately that we believe will weather this storm

it all comes down to how much risk you're willing to take...and how much free cash you actually have

[Stu from NYC]

Important to have a safety net but for us we think we cannot time the market and just invest in good mutual funds with good record of success and if they do not perform adjust portfolio accordingly

[DDVeteran]

Three words...certificates of deposit. Nabbed a 5 year 4.2% in July of 2018. Just hoping 2023 brings back an interest rate normalcy.

[J1ceasar]

Theres a rule of 100 for investing. Take your age subtracted from 100 the remaining amount is what you can invest in the stock market. Or think of it this way if you lost everything you have invested in the stock market what will you have left to live on comfortably.
While it is true the stock market has averaged about 8% over its life there have been long periods of minimum growth. Well most of us no longer will be going to work there is no true opportunity 2 have wages deposited in the future so risk tolerance is truly what you have to think about

[Stu from NYC]

Originally Posted by J1ceasar

Theres a rule of 100 for investing. Take your age subtracted from 100 the remaining amount is what you can invest in the stock market. Or think of it this way if you lost everything you have invested in the stock market what will you have left to live on comfortably.
While it is true the stock market has averaged about 8% over its life there have been long periods of minimum growth. Well most of us no longer will be going to work there is no true opportunity 2 have wages deposited in the future so risk tolerance is truly what you have to think about

When most of us only lived to about 65 the rule of 100 made sense but now that we live longer we do need growth and the vast bulk of money earning 2% or so will not cut it. After inflation and taxes that 2% means over time your funds have less value.

Someone 65 will be around another 20 years or more and their funds must last for at least that much time.

[Rich42]

Every time a stock trades there is a winner and a loser. I love those cash people, they just keep feeding that loser group!

[nn0wheremann]

On March 31 I was down almost 25 percent from December 31. On April 30 that loss was cut to less than 12 percent. Bargains in the Blue Chips. I see no sense in capitalization of that loss.

[La lamy]

Originally Posted by DDVeteran

Three words...certificates of deposit. Nabbed a 5 year 4.2% in July of 2018. Just hoping 2023 brings back an interest rate normalcy.

Wow! Good for you,

[SacDQ]

Albert Einstein said, “When the number of factors coming into play…is too large, scientific method in most cases fails. One need only think of the weather, in which case the prediction even for a few days ahead is impossible.”