Stock Market
No_one21
Posts: 2,182 ✭✭✭
Well, the stock market sucks right now. Figured we could talk about it here.
Quick question from me as I'm relatively new, but do have a good percentage of my non-retirement savings in the market. What's your threshold before you sell and accept losses? I was trying for long term, but recently I'm down like 6%. I realize that I'm not actually losing any money if I don't sell, but if this storm goes critical I don't want to just lose everything I put in.
Quick question from me as I'm relatively new, but do have a good percentage of my non-retirement savings in the market. What's your threshold before you sell and accept losses? I was trying for long term, but recently I'm down like 6%. I realize that I'm not actually losing any money if I don't sell, but if this storm goes critical I don't want to just lose everything I put in.
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"The short answer is, “I don’t know.” The longer answer is, “Neither does anybody else.” Given the doom and gloom of the prediction, I was surprised that the piece said equities could fall only 10% to 20%.
I remember the mid to late ‘90s when stocks rose by 20%+ a year for five years in a row. After the first three, a lot of investors thought stocks were too pricey, and broadly sold, missing the compound appreciation of 52% during the next two years. True, stocks fell by half during the next three years, before recovering, and rising by 25% in the year following, and then resuming an upward trajectory. The point is if investors tried to time all of that, and missed good parts of the rises, their portfolios could suffer negative long-term performance consequences. The problem with market timing is that you can guess right once, twice, maybe even or three or four times in a row. But when you miss on the fifth try, you could wipe out all of the benefits of the previous correct guesses. There’s also the psychology of when to re-enter after exiting. It goes something like this: the market bottoms, but timers fear it will drop even further, so they wait. Then the market begins to rise, but now those same investors want those just past low prices, so they wait for the market to retrace. It doesn’t. And they end up throwing in the towel, and buying back in after the market has risen by 20 or 25% - all of which they’ve missed. Then there are the taxes on realized capital gains and transaction costs to do all of the in and out trading.
So we look at longer horizons, satisfied to be the tortoise, rather than the hare. Stocks have grown by an average of 10% over the last 100 years+. That’s partly because of increased productivity, increased standards of living and increasing population, all of which is growing the markets for goods and services. But to actually realize that benefit, you need to suffer the stock market declines that happen along the way, and weather them. Markets don’t move straight up.
That said, we do hedge a bit. We’ll raise a little cash when stocks we own appear fully or over-valued. That of course happens more when the markets are broadly highly appreciated. In practice that means is we usually target about 3-4% in equity earmarked cash in portfolios. About a year ago, we lifted our target to 4 to 6% or so. And now we’re at 7-9%. That’s mainly to have some cash available to buy when there are declines in stocks we want to own or own more of. You and Rachel are currently at 9.7% in cash, although we’re likely to spend some of that soon, given the recent broad market pullback.
I suppose it’s a form of guessing, but we do it only a the margins. We don’t sell everything or even a quarter or a half of equity holdings. We’re not that smart. And we’re confident no one else is either. The same goes for the price of oil. Twenty dollars a barrel? Could happen, but I don’t know. Sixteen dollars a barrel? I’d be surprised, but it could happen. What I do know is that, despite all of the alternative energies coming into use, global oil consumption is still rising. Eventually supply and demand will sort out, and oil prices will rise. I just don’t know when."-- Winston Churchill
"LET'S GO FRANCIS" Peter
I'm not specifically in any of the sectors with the worst drops, but I have some ETFs that follow the S&P, healthcare, and cyber security. I guess we'll see.
My main reason for even getting in the market was to beat not only my savings account, but also my car payment. I was doing that quite well until maybe November.
That being said, I am in it for the long game. Retirement age is a ways off. God willing, it'll rebound just fine
¨Only two people walk around in this world beardless - boys and women - and I am neither one.¨
Curious to see what your thoughts on the market are before the election? I know of some older folks saying they are wanting to sell and get out in case Biden get in office. I do think the market is overvalued by a little but not much.
I have a QRP and am required to withdraw from it each year (RMD). It gets taxed regardless of who gets in office. Historically, equities return about 7%/year. Banks are paying near-zero and the bit they do pay is eaten by inflation. You have to park your savings somewhere. If you aren't risk-averse there is really no other choice but equities. Nevertheless, at 72 y.o. I am slowly increasing an allocation into short-term bonds, but only 10% or so. Who knows what is going to happen to social security....
You guys keep an eye on this one. Its been fire for a while.
-- Winston Churchill
"LET'S GO FRANCIS" Peter
^^^ That's one spendy fund!
I try to put a fair percentage into physical metals shipped to me & stored in my safe. It's a hedge against the chance of all the 1's & 0's getting turned off. Unless you can get an actual no kidding grasp on things, it's just pixie dust and can vanish just as quickly if things go south.
Our investment is in acres.
Anyone been paying attention to this Gamestop short squeeze? I'm really enjoying the hypocrisy. Now that average Americans are manipulating the market, the hedge funds are seeking regulation. Yet when they were selling a stock more than 100% short, that's perfectly fine. If hedge funds are going to take risks like that, they need to live with the consequences, not whine to the SEC. I'm really happy that investing is shifting to individuals like this, instead of these hedge funds that are secretly playing games with people's retirement funds.
For anyone wondering wth is goin on: https://www.vice.com/en/article/pkdvgy/send-this-to-anyone-who-wants-to-know-wtf-is-up-with-gamestop-stock
Yup, people like Michael Bloomberg have been doing that to the American people for years, making Billions of dollars.
Can you imagine the manipulationif he had become POTUS?
equities, despite booms and busts, have historically returned about 7%. Compared to banks they are a good long-term investment for retirement savings.
I ran across an abandoned retirement account so threw it down on GME
There's a group of people about my age on TikTok who are using Nancy Pelosi as an investment analyst. They're taking all of "her husband's" trades and tailing them. Apps have been created where you get notified of each trade "her husband" makes as soon as it's disclosed. You can also tail other spouses of senators or congressmen.
https://www.npr.org/2021/09/21/1039313011/tiktokers-are-trading-stocks-by-watching-what-members-of-congress-do
That’s actually a great idea
Follow the untouchable insiders, good plan. Of course, if anything goes wrong they can always send Martha Stewart back to jail.
"If you do not read the newspapers you're uninformed. If you do read the newspapers, you're misinformed." -- Mark Twain