Help a millennial stick to his IPS

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camillus
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Help a millennial stick to his IPS

Post by camillus »

Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.

It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a boglehead seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
Last edited by camillus on Wed Mar 11, 2020 11:38 pm, edited 1 time in total.
51% US / 34% ex-US / 15% “bond”
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Cheez-It Guy
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Re: Help a millennial stick to his IPS

Post by Cheez-It Guy »

I can see what's going to happen too. You're going to lose money. 🎱
inverter
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Re: Help a millennial stick to his IPS

Post by inverter »

I think you might be better off changing your brokerage password and giving it to a trusted loved one.
CoastalWinds
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Re: Help a millennial stick to his IPS

Post by CoastalWinds »

I share your sentiment. I don’t want to sell just to get off the “train”; I want to sell b/c it seems inevitable equities will drop further. So why not sell and get back in in a month? Everyday, the news just gets worse. Following this thread with interest.
Elysium
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Re: Help a millennial stick to his IPS

Post by Elysium »

You guys need to get a grip.

See this chart of S&P 500 from 2008:

Image

By the time you reached September, most everyone was tired of the daily bad news and constant 5% down days, then came October!

Long way to go, hang in tight, and come out at the other end with a story to tell. Focus on physical and mental health, we need those to get through tough times like this. Money will come.
lgs88
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Re: Help a millennial stick to his IPS

Post by lgs88 »

camillus wrote: Wed Mar 11, 2020 9:50 pm Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.

It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a bogleheads seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
Camillus,

It sounds to me like your asset allocation might be a little risky for your preference. I discovered the same thing on Monday, at which point I sold down from 85:15 to 75:25.

That was enough to make the difference for me. It cost me some $$$ to discover my actual risk tolerance in the midst of a market crash, but I've breathed easier and been able to quit obsessively following the markets since I made that change.

If you do change your asset allocation, however, MAKE IT PERMANENT. Maybe you're a 60/40 investor; make the change and leave it there. I recommend you do not try to time the market in the way you're proposing.

lgs88
merely an interested amateur
ScaledWheel
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Re: Help a millennial stick to his IPS

Post by ScaledWheel »

Does your IPS have any rebalancing criteria? Obviously doesn't preserve your capital, but can make the ride down a little more manageable.
WanderingPothos
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Re: Help a millennial stick to his IPS

Post by WanderingPothos »

I am in the same situation as you!! Same age range, same allocation, same thoughts.

However, my concern is: if I did that, what would happen if something happened (e.g. treatment, some other random reason, etc.) that caused the market to spike up while I was sitting at say, 50/50. I would have missed gains. Anyways, I learned my lesson on market timing when I switched to a way more conservative allocation immediately after the last presidential election because I thought the market would tank and definitely missed out on gains. I'm just glad I'm not actually experimenting this time around although it is really really tempting.

How do you know the rate at which you convert back to 85/15 will be "right"? What are you using as the benchmark to sell bonds and buy stocks?
Just my 2 cents.
CoastalWinds
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Re: Help a millennial stick to his IPS

Post by CoastalWinds »

Elysium wrote: Wed Mar 11, 2020 10:04 pm You guys need to get a grip.

See this chart of S&P 500 from 2008:

Image

By the time you reached September, most everyone was tired of the daily bad news and constant 5% down days, then came October!

Long way to go, hang in tight, and come out at the other end with a story to tell. Focus on physical and mental health, we need those to get through tough times like this. Money will come.
Doesn’t your chart make the OP’s point- that it’s not too late to sell and avoid further losses?
SlowlySaving
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Re: Help a millennial stick to his IPS

Post by SlowlySaving »

I totally understand your position! Why not do your own manual portfolio stop loss now before the market tanks another 10-30%? :D No body knows where the market is going. You have past results, but remember past results don't predict future results. I am sure some people got on the side lines on this roller coaster. If you can't sleep maybe sell a percentage of your portfolio?

Good luck!
Elysium
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Re: Help a millennial stick to his IPS

Post by Elysium »

CoastalWinds wrote: Wed Mar 11, 2020 10:07 pm Doesn’t your chart make the OP’s point- that it’s not too late to sell and avoid further losses?
How about this then?

Image

Do you know if we are in Feb 09, or Oct 08?

If you missed getting in March & April thinking it is a fake rally, many thought that way, then most of the big gains were gone already.
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StormShadow
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Re: Help a millennial stick to his IPS

Post by StormShadow »

lgs88 wrote: Wed Mar 11, 2020 10:05 pm
camillus wrote: Wed Mar 11, 2020 9:50 pm Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.

It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a bogleheads seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
Camillus,

It sounds to me like your asset allocation might be a little risky for your preference.
+1

Been preaching for years how people overestimate their risk tolerance.

Where are all the 100% stock folks now?
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bampf
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Re: Help a millennial stick to his IPS

Post by bampf »

CoastalWinds wrote: Wed Mar 11, 2020 10:07 pm
Doesn’t your chart make the OP’s point- that it’s not too late to sell and avoid further losses?
I don't think it makes the OP's point. It might have made the OP's point in June of '08, but, only if the OP could know that October '08 was going to rock.

OP. Think of it this way maybe? Your equity account is there for 10 years from now. 20 years from now. If you were planning on buying something today or tomorrow with that money, you shouldn't have it in the market cause, you know, covid19?

Anyway, my point is, you can't really know what tomorrow will bring. It may be that all of a sudden covid19 is no big deal. Maybe someone announces a vaccine.

Seriously, if your account was up 50% from right now would you go buy a car or a nice island? If not, let it ride.

This is all just tempest and churn. If you think you know how to time the market, you are likely wrong. Unlike others here, I think there are people very very good at predicting the market. But, they don't post here and they don't share "how" to know. They simply make buckets of money and wait for the next time to make more buckets. If you are not that guy (or gal) <and you likely aren't> the only thing you can know is that markets have always gone back up. Always.

If you were lucky, you might be able to get a spin up by getting in or out, but, that is essentially gambling. I made my plan. I don't need the money for a while (hopefully a long while). I am going to let it ride, probably add to my buys and look for a time when I have so much $$ that the ups and the downs don't matter much to me. I am pretty close (not cause I have a lot) because my needs are few. Anyway, do what you need to do, but, chances are, you are better off just walking away. Anyway, good luck and party on!
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LiterallyIronic
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Re: Help a millennial stick to his IPS

Post by LiterallyIronic »

StormShadow wrote: Wed Mar 11, 2020 10:18 pm
lgs88 wrote: Wed Mar 11, 2020 10:05 pm
camillus wrote: Wed Mar 11, 2020 9:50 pm Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.

It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a bogleheads seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
Camillus,

It sounds to me like your asset allocation might be a little risky for your preference.
+1

Been preaching for years how people overestimate their risk tolerance.

Where are all the 100% stock folks now?
I'm right here. 401k at 100/0.
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Cubicle
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Re: Help a millennial stick to his IPS

Post by Cubicle »

I'm 100% equities. It would have been nice to sell on February 19th. It would have been nice to sell this morning. But I have no idea when the market will turn upwards. And no one will tell me either. I too am a millennial.

I'm certain, 100%, that the market will suffer more losses. So I should definitely cash out tomorrow morning. But without knowing when to get back in, I will not gain as much as I could. And buying back in over the next x months will lead me to "tomorrow I'll buy, I think today its going down again".
"Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓
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Re: Help a millennial stick to his IPS

Post by MoneyMarathon »

camillus wrote: Wed Mar 11, 2020 9:50 pm Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.

It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a bogleheads seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
It always feels like this, even if tomorrow is the absolute bottom. Always.

Check how well this strategy did in 1987, 1990, 1994, 2011, 2016, and 2018.

Apologies if they're hard to see when zooming out.

Image

Everybody thinks they're a prophet when the market's down 20%.

As an investor who is ordinarily long, things like outbreaks and oil shocks come across as things to be worried about. This is a natural attitude. Aside from generally being a losing bet, the attitude of a bear doesn't come natural to most people. The fears are all inverted: fear of earnings being lower but not as low as expectations, fear of economic stimulus, fear of rate cuts, fear of industry bailouts, fear of medical innovation, fear of the rate of new cases hitting a plateau, fear of people just getting tired of fear and going about their business, fear of a single quarter GDP drop that doesn't get declared a recession, even the fear of a humid summer putting a stop to the transmission rate. There are lots of things to fear as a bear in these woods. But most people aren't usually bears, they don't even know how to be a bear. As the adage goes, they're just pigs, and they get slaughtered.
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Re: Help a millennial stick to his IPS

Post by BlueMoonXD »

camillus wrote: Wed Mar 11, 2020 9:50 pm Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.

It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a bogleheads seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
You are apart of a cult. The cult is based around trusting guaranteed market dynamics over the long run rather than your own fleeting judgement.

I think 99% of cult members here also agree that the market is likely going to go down. But on the day we hit the bottom (which could very well be today) that same 99% of people will probably think that there is further to drop. No one can predict the future, but you can certainly lose a lot of money trying.

Just because things getting worse seems inevitable doesn't mean it is.
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Re: Help a millennial stick to his IPS

Post by dru808 »

Go for it. It’s your future you’re putting at stake or not. If you’ll sleep better, sell it all.
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LFKB
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Re: Help a millennial stick to his IPS

Post by LFKB »

StormShadow wrote: Wed Mar 11, 2020 10:18 pm
lgs88 wrote: Wed Mar 11, 2020 10:05 pm
camillus wrote: Wed Mar 11, 2020 9:50 pm Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.

It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a bogleheads seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
Camillus,

It sounds to me like your asset allocation might be a little risky for your preference.
+1

Been preaching for years how people overestimate their risk tolerance.

Where are all the 100% stock folks now?
I’m 90%+ stocks now, have been buying on the way down and may shift to 100% if things get worse. Maybe I’m foolish, but if things go down 40-50% from the peak I’ll likely be taking out a HELOC to buy stocks or finding any other means necessary to. I’m also of the mind that we’re gonna have a bad quarter or two and then come out of this just fine.
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Re: Help a millennial stick to his IPS

Post by Peculiar_Investor »

camillus wrote: Wed Mar 11, 2020 9:50 pm Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.
You might want to read Miss the Worst Days, Miss the Best Days - The Irrelevant Investor, which although it is over a year old, looks at the question of market timing and time in the market. Here's a chart from the article, Image
And the article concludes with a good reminder to ponder.
Michael Batnick wrote:Investing is all about tradeoffs and it’s the investor’s job to find the ones they’re willing to make.

When looking at things like this, it’s important to keep in mind that back tests are easy, the real world is hard.
If you Google or search the Bogleheads I'm sure you'll find other studies that show the impact of missing either the best days or the worse days in the market. The bottom line is these days do happen, we just don't know when, and the impact of being out of the market when they do occur is significant. Timing the market requires you to be right twice, once to exit and then again when to re-enter. It is very hard, near impossible actually, to get both right.
camillus wrote: Wed Mar 11, 2020 9:50 pm It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a boglehead seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
If you find that you're uncomfortable with the state of the market, then perhaps your risk tolerance isn't as high as you thought and a more conservative asset allocation choice might be more appropriate.
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams
ScubaHogg
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Re: Help a millennial stick to his IPS

Post by ScubaHogg »

camillus wrote: Wed Mar 11, 2020 9:50 pm
I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
You can’t see what is going to happen, you only think you can. I would say don’t do anything. Don’t watch the markets, don’t log into your brokerage account, etc.

In time though, I think it’s safe to say your risk tolerance isn’t as high as you thought and once all this passes you might want to reconsider 85/15.
“Unexpected Returns dominate the Expected Returns” - Ken French
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camillus
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Re: Help a millennial stick to his IPS

Post by camillus »

I want to thank you all for your wise advice, particularly from posters with high post counts and good rationale. Thank you. I’m going to stay in the market and put my energy into other things.

It’s weird. I both want to sell and buy badly at the same time.
51% US / 34% ex-US / 15% “bond”
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camillus
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Re: Help a millennial stick to his IPS

Post by camillus »

I just made an unplanned contribution 😊
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camillus
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Re: Help a millennial stick to his IPS

Post by camillus »

camillus wrote: Wed Mar 11, 2020 9:50 pm Hi all. It’s Wednesday night. My AA is 85:15. Anyways, it sure seems that the market is going to continue to crash and burn. By selling everything and then slowly buying back in over the next 6 months, I think I stand to do better than if I just held on for the ride.

It’s like this: I’m quite sure that the market is going to nosedive and all of a sudden being a boglehead seems cult like. I can see what’s going to happen, but my “financial philosophy” won’t let me do something that sure seems to be in my self interest. (Sell.) Why shouldn’t I do it?

Just wanted to be honest. I’m tempted.
I had remembered that I posted something like this in March. I found it and wanted to check the actual date and what happened the few weeks afterward. I posted the above on March 12. Eleven days later the market hit bottom. By the end of March, the market had rebounded to levels on March 12 (my OP) and has risen ever since. I stuck with my AA.
51% US / 34% ex-US / 15% “bond”
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jason2459
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Re: Help a millennial stick to his IPS

Post by jason2459 »

Thanks for the update. It is hard when things look bad. I just hope you do realize the market does not always go up. And can go down rather dramatically. Also know it can stay down for long periods of time. Talking months and years not weeks. Stay the course.

This past March was quick and supported back up by the fed. This will not always happen. Stay the course.

But in the long run it pays to stay the course. Do exactly what you just did. Nothing different. Keep investing as normal. Ignore the talking heads on TV. Don't even go on sites like redit or this forum as there will be many threads talking about pulling out. Just like this one. Stay the course.

As an accumulator a crash or depressed markets are not entirely bad and makes for a good value as you are investing for the long run. Stay the course.

Ultimately, the best thing to do is Stay the course.
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
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Re: Help a millennial stick to his IPS

Post by grabiner »

One of the most important parts of my IPS is the last section:

This statement will be reviewed whenever there is a substantial change in my financial situation, and annually when I rebalance. If there is no substantial change in my financial situation, I will wait at least three months between changing the asset allocation in my statement and changing the asset allocation of my investments, and review the change in the statement at that time.

This protects against making hasty decisions, whether for emotional reasons or otherwise. The only time I made an immediate change to my asset allocation was under the "substantial change" rule, when I bought a home. All the other moves I have made are the result of decisions made at least three months ago, and often longer.

For example, my IPS has said since 2013 under what conditions I would pay off the mortgage (muni rates lower than after-tax mortgage rates, and little capital-gains cost for paying it off) and how (sell stocks to pay off the mortgage, then buy an equal amount of stock in my employer plan to keep stock-market exposure). This happened in March 2020, and that is what I did; I sold stocks for capital losses, paid off the mortgage, and sold bonds in my employer plan to buy more stocks.
Wiki David Grabiner
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