What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

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heyyou
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by heyyou »

Record Stock Market Highs
I don't know and I don't care.
I view stock market fluctuations as being similar to respiration--in and out with minute pauses between the events.

The record high will be followed by a crash, then a slow eventual rise to a new high. I've been in index funds since 1980, so far so good, but the ride has not ever been smooth for very long--something about risk and reward being proportional.

My bond holdings are about 10 years of my portfolio spending. My SS was delayed to age 70, as a buffer for future inflation and for the steady income since my spending method is a longevity based percentage of each recent annual portfolio value (plus dividends and interest). When the crash does occur, I can see in advance, about how much my next year's income will change. Note how adapting my spending, to each recent annual portfolio value, contributes to portfolio longevity.

A sage has written "Accept what is, and do what you can."
Seems like good advice for the current situation.
Last edited by heyyou on Sat Apr 03, 2021 7:39 pm, edited 1 time in total.
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TheTimeLord
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by TheTimeLord »

GoldenFinch wrote: Sat Apr 03, 2021 5:48 pm
TheTimeLord wrote: Fri Apr 02, 2021 1:17 pm I have been becoming steadily more aggressive, although it is getting harder because it has worked well to date. But I also keep a Bernstein size amount in Safe Fixed Income so I have the ability to take more risk. Just don't see any reason to increase the amount I have in fixed income.
What is a Bernstein size amount?
20Xish.
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ajbibi
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by ajbibi »

MrCheapo wrote: Fri Apr 02, 2021 9:56 am
life in slices wrote: Fri Apr 02, 2021 9:50 am
jebmke wrote: Fri Apr 02, 2021 9:20 am I wonder how many all time highs the market hit in the last 20 years?
Good article here:
https://awealthofcommonsense.com/2020/1 ... ime-highs/

"According to my calculations, there have been more than 600 all-time highs since the start of 1988, or roughly 7.3% of all trading days"
Sure, but it's not that we are at high that concerns me, rather it is the quick recovery period that concerns me given the effects of the pandemic have not played out.

Look at the Dow Jones index for the last 25+ years below. You can see the market crashes/corrections in 2000 and 2008. You'll also see it took YEARS to recover to those pre-crash highs. Take for instance the great recession crash in 2008. It wasn't till 2013 that the Dow exceeded the 2008 high.

But here we are just barely a year since the 2020 crash and not even out of the pandemic and we are 15+% HIGHER than before the crash.
And I think we all agree the pandemic of 2020 was more disruptive and destructive to the US economy than the sub-prime crisis.

Image

https://www.dropbox.com/s/lgy5a9vpcszud ... M.png?dl=0
I'm with all those who say stay the course and no one can predict the markets accurately.

But even if you're right, a disruptive pandemic doesn't have to lower the markets? Why? The common consensus is that the big losers were small firms and stores -- those which are not even listed on the market. So the stock surge could be signalling that the US economy may have lost but that the big players stand to gain as restructuring favors larger entities. Furthermore, there is plenty of evidence that the US might do better than Europe and in a world with trade uncertainty, the flight to quality favors the US.

Again, I wouldn't trade based on this analysis, but it gives you a different spin that could be evidence that supports a US market rise, rather than your view that the market shouldn't be positive after a disruptive pandemic.
bdesilusa
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by bdesilusa »

ruralavalon wrote: Sat Apr 03, 2021 10:30 am
bdesilusa wrote: Sat Apr 03, 2021 1:38 am I used to front-load the 401K contributions and be done with the 19.5K + Employer match by March of each year.

Instead this year have spaced out (by reducing the 401K contributions per pay check) to ensure complete money gets in the market over 12 months from Jan-Dec.. essentially relying on DCA.
In my opinion contributions every pay period to reach the annual employee maximum at year-end is a better plan than front loading.
With the philosophy of time in market , I use to front-load pre-tax (19.5K + Employer match) 401K contributions and spread out the post tax ROTH 401K ~$38K over 26 pay check period.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by GoldenFinch »

TheTimeLord wrote: Sat Apr 03, 2021 7:30 pm
GoldenFinch wrote: Sat Apr 03, 2021 5:48 pm
TheTimeLord wrote: Fri Apr 02, 2021 1:17 pm I have been becoming steadily more aggressive, although it is getting harder because it has worked well to date. But I also keep a Bernstein size amount in Safe Fixed Income so I have the ability to take more risk. Just don't see any reason to increase the amount I have in fixed income.
What is a Bernstein size amount?
20Xish.
Thank you!
UpperNwGuy
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by UpperNwGuy »

MrCheapo wrote: Fri Apr 02, 2021 7:18 am I'm curious how people are handling this? I'm tempted to take advantage of this and transition more into cash
I increased my stock/bond allocation from 60/40 to 70/30 in March 2020. The 30% is all intermediate-term bond funds. I definitely don't want to be holding cash.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by abuss368 »

I am doing one simple thing: staying the course.

Owning total market index funds work in good and bad markets.

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ivgrivchuck
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by ivgrivchuck »

MrCheapo wrote: Fri Apr 02, 2021 7:18 am As we all know the 3 major stock market indices are near or at their all time highs DESPITE:
i) the pandemic affects from last year and
ii) the US not even being out of the pandemic as yet!
Don't forget that the stock market value is measured in dollars. And FED has been printing dollars like crazy effectively causing a heavy devaluation of dollar (which shows as high stock prices).

Some people think that holding cash or bonds is safe, but that's absolutely not true.

So the right action in my mind: Do nothing.

- It's true that it's possible that the stock market will come crashing down.
- It's equally true that the money printing might keep going making your dollars worthless in the long run.

Just stay the course.
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
ivgrivchuck
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by ivgrivchuck »

ajbibi wrote: Sat Apr 03, 2021 10:29 pm But even if you're right, a disruptive pandemic doesn't have to lower the markets? Why? The common consensus is that the big losers were small firms and stores -- those which are not even listed on the market. So the stock surge could be signalling that the US economy may have lost but that the big players stand to gain as restructuring favors larger entities.
Also heavy money printing and lowering interest rates to zero, lowers the value of cash/bonds.

So one interesting way to look into this is that this is not about stocks being more valuable, but rather cash being worth less...
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jumppilot
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by jumppilot »

MrCheapo wrote: Fri Apr 02, 2021 8:18 am
David Jay wrote: Fri Apr 02, 2021 7:54 am
jebmke wrote: Fri Apr 02, 2021 7:36 amThat’s what markets do.
+1
I see your point but I disagree as this is different.

You refer to 2013 but that was a full 5+ years after the great recession low. Now we aren't even out of the great pandemic of 2020 and in March 2021 we are at all time highs. In March 2020 the Dow got down to about 18,000 now its above 33,000 a nearly 90% jump in 12 months.

So I do think it's different.
Better get on the train.

My job is recovering from the COVID low and I can tell you I just spent a significant amount of money on home improvements. I actually canceled the job last March when things started getting bad. Now I’m comfortable writing the check.

I also purchased some computer equipment. Again, I wouldn’t have done any of this a year ago but now my confidence is back.

Neighbor bought a new 5th wheel. Etc etc

My opinion is the next few years will be good to the stock market. It seems this pandemic really affected the service jobs, and those people don’t spend $20,000 on a cruise. The people who make the money in our economy were sheltering in place, working from home, and quietly saving while riding this storm out. Now the storm has cleared and the wallets are opening.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by Grt2bOutdoors »

I'm still investing according to my IPS. To be honest, the market has been at a record high pretty much all of my investing life, had I stopped buying equities along the way and the numerous dips I may not have been able to reach my retirement accumulation goals. You are retiring in 5 years you say? But what is your investment horizon? Surely it's not just 5 years, rather it's likely 15-20-25-30 years more plus the 5 you have until your actual retirement date. That's alot of time and the last 25-30 years have had more highs than lows. There will be many more changes along the way to be sure, I don't have the answers and neither does anyone else.
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Grt2bOutdoors
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by Grt2bOutdoors »

jumppilot wrote: Sun Apr 04, 2021 5:22 pm
MrCheapo wrote: Fri Apr 02, 2021 8:18 am
David Jay wrote: Fri Apr 02, 2021 7:54 am
jebmke wrote: Fri Apr 02, 2021 7:36 amThat’s what markets do.
+1
I see your point but I disagree as this is different.

You refer to 2013 but that was a full 5+ years after the great recession low. Now we aren't even out of the great pandemic of 2020 and in March 2021 we are at all time highs. In March 2020 the Dow got down to about 18,000 now its above 33,000 a nearly 90% jump in 12 months.

So I do think it's different.
Better get on the train.

My job is recovering from the COVID low and I can tell you I just spent a significant amount of money on home improvements. I actually canceled the job last March when things started getting bad. Now I’m comfortable writing the check.

I also purchased some computer equipment. Again, I wouldn’t have done any of this a year ago but now my confidence is back.

Neighbor bought a new 5th wheel. Etc etc

My opinion is the next few years will be good to the stock market. It seems this pandemic really affected the service jobs, and those people don’t spend $20,000 on a cruise. The people who make the money in our economy were sheltering in place, working from home, and quietly saving while riding this storm out. Now the storm has cleared and the wallets are opening.
Agree, it's going higher. Lot's of cash is floating around, lots of easy credit, people are going to spend either the cash they have or the cash they don't, but spend they will. I'm seeing it as the weather gets better, there is more spending, there are more cars on the road, the malls are staying fuller and for longer. Even if there is a blip it will not be prolonged, after being cooped up, people want to get out and that means spend......
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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MrCheapo
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by MrCheapo »

Thanks for the replies. I agree in the short term it will go higher due to all the stimulus money to individuals and companies. But I'm talking longer term here. In particular in a 2/5/10 years time when we go to retire and convert to a 60/40 equity/bond split, will I rue that I didn't do the conversion earlier? I'm retiring in 5 years so I am thinking about this a lot, 10-20% capital loss means a big deal in retirement ...
finite_difference
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by finite_difference »

I hope I’ll be FI when the SP500 hits 12000.

So current prices at about 4000 are at a deep discount.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by PDX_Traveler »

MrCheapo wrote: Tue Apr 06, 2021 11:04 am Thanks for the replies. I agree in the short term it will go higher due to all the stimulus money to individuals and companies. But I'm talking longer term here. In particular in a 2/5/10 years time when we go to retire and convert to a 60/40 equity/bond split, will I rue that I didn't do the conversion earlier? I'm retiring in 5 years so I am thinking about this a lot, 10-20% capital loss means a big deal in retirement ...
A 10%-20% 'loss' in the broader market multiple times in your investment life - perhaps even in the 10 year time frame - is a given. I think the various commenters are pointing out that you just have to accept that the market just does this now and then (just like those even larger moves to the upside :-) ) and account for it with your plan. If that means going to 60/40 for you now, well, it is what it is.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by getthatmarshmallow »

I'm procrastinating on writing a presentation. The stock market is not making that go away.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by pasadena »

Grt2bOutdoors wrote: Sun Apr 04, 2021 5:27 pm I'm still investing according to my IPS. To be honest, the market has been at a record high pretty much all of my investing life, had I stopped buying equities along the way and the numerous dips I may not have been able to reach my retirement accumulation goals. You are retiring in 5 years you say? But what is your investment horizon? Surely it's not just 5 years, rather it's likely 15-20-25-30 years more plus the 5 you have until your actual retirement date. That's alot of time and the last 25-30 years have had more highs than lows. There will be many more changes along the way to be sure, I don't have the answers and neither does anyone else.
This.

I started investing not long ago, in 2012 (and really started looking into it in 2015). Since then, the market has been at ATH pretty much all the time, and I can't count the posts here saying it's unsustainable and won't last, get out now, it's different this time. It's always more of the same, really. So I'm doing the same thing I've been doing - throw as much money as I can into it, divided up according to my IPS.

Now, if I were 5 years from retirement, I might start slowly changing my AA, still according to my IPS - not to market valuations. You might need to protect yourself from sequence of returns issues in the first few years of retirement, and insure you have enough safe money to actually pull the trigger. But your investing horizon is NOT 5 years. It's more like 5 + 30 or 40 years.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by Clever_Username »

MrCheapo wrote: Fri Apr 02, 2021 7:18 am As we all know the 3 major stock market indices are near or at their all time highs DESPITE:
i) the pandemic affects from last year and
ii) the US not even being out of the pandemic as yet!
The only time I care about whether or not something is an All Time High is when I'm looking to listen to a particular Rita Coolidge song.

And, I suppose, whenever someone asks the question you did.

Hitting all time highs, time and again, is what I expect the stock market to do.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.
CharlesDickens
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by CharlesDickens »

I absolutely agree within everyone on the "stay the course" philosophy but, constitutionally, I just can't buy in when the S&P P/E is 40+. It is true that I cannot tell when exactly is the right time to buy and so I likely will miss great opportunities, but emotionally I am not able to buy in at a super high P/E. In addition, I believe in the idea that you cannot time to market, and yet I will have no choice but to time the market eventually in that I will need to sell when I need the funds on which to live. So often I hear financial advice suggesting that you should hold onto equities forever, but I cannot do that. I will need to sell at some point, and if I had the misfortune of buying at prices well above the fundamentals, I could take a loss, which again would be a psychological and financial blow. Maybe this time it really isn't different. I have lived through a couple of major high p/e ratio periods, and to my recollection they did not end well. That said, I am a grasshopper at the steep end of the learning curve.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by raiderjkwong »

We are 54 and retiring in 2 years. We have a 3 M portfolio paying us 60,000 a year in dividend income. Our AA is 30/70. We were 100% in stocks until we hit 50, then we went to 50/50 and now 30/70. We will be receiving two pensions (12,000) per month upon retiring. We own our home (1.3 M) and cars and have no debt.

Our AA is very conservative. We want a retirement with stress or worries. Since we don't need to earn more money to have a comfortable life, we don't want to take any more unnecessary risks. When the market tanked last March, we didn't care when many of our friends and family were scared that their retirement portfolios were going to go under. That's the peace of mind we want. When you are young, you invest aggressively to get rich; when you are old, you preserve your wealth aggressively to stay rich.
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MrCheapo
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by MrCheapo »

raiderjkwong wrote: Tue Apr 06, 2021 6:15 pm We are 54 and retiring in 2 years. We have a 3 M portfolio paying us 60,000 a year in dividend income. Our AA is 30/70. We were 100% in stocks until we hit 50, then we went to 50/50 and now 30/70. We will be receiving two pensions (12,000) per month upon retiring. We own our home (1.3 M) and cars and have no debt.

Our AA is very conservative. We want a retirement with stress or worries. Since we don't need to earn more money to have a comfortable life, we don't want to take any more unnecessary risks. When the market tanked last March, we didn't care when many of our friends and family were scared that their retirement portfolios were going to go under. That's the peace of mind we want. When you are young, you invest aggressively to get rich; when you are old, you preserve your wealth aggressively to stay rich.
Wow. So you are going to retire on $17K per month = $200K a year with no home or car payments and not considering SSN?

Am I missing something what on earth are you going to spend all that money on!

I was going to retire on $12K a month at 55 and I thought that was a lot of money. Once I turn 67 that will jump to $16K a month which seems darn luxurious.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by raiderjkwong »

Good question. We do plan to travel extensively when we retire and giving the rest of the money to our kids. That's it!

I did not mention this in my previous comment, but I will be inheriting 2-3 M from my family trust in the future. Since we don't need the money, I plan on giving the money to our kids and their families...
Last edited by raiderjkwong on Wed May 12, 2021 10:49 pm, edited 1 time in total.
BoglePablo
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by BoglePablo »

LiterallyIronic wrote: Fri Apr 02, 2021 10:55 am
MrCheapo wrote: Fri Apr 02, 2021 8:18 am as this is different.
Nothing is ever different because nothing is ever anything. I don't look at past performance and I don't guess about the future and I don't know what's happening or why or when. None of it matters. Every month, $500 automatically goes into my Roth IRA's Target Retirement Fund 2050. And the exact same thing happens for my wife. And, twice a month, 18% of my paycheck goes into my 401k, which is set to a 100% stock index fund.

I check the balances on the first of every month and do literally nothing except write it down. No buying, no selling, no trading, no exchanging.

Nothing is ever different.
:thumbsup :thumbsup :thumbsup :thumbsup :thumbsup

My numbers differ slightly but otherwise same

My IPS says stay the course, rebalance when numbers hit thresholds, adjust AA in a few years...
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by bertilak »

If stock market highs were not common it would make little sense to invest in the stock market. Unless dividends were considerably higher, in which case it would still be a good idea to invest.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by Firemenot »

A lot of fear of heights going around these days.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by ruralavalon »

MrCheapo wrote: Fri Apr 02, 2021 7:18 am As we all know the 3 major stock market indices are near or at their all time highs DESPITE:
i) the pandemic affects from last year and
ii) the US not even being out of the pandemic as yet!

I also buy individual stocks and I can tell you anecdotally SBUX (Stabucks) is trading at 20% above its Jan 2020 price but this doesn't factor in: i) people are spending less and ii) most of their stores are not open. Same holds for DIS, CAT and most fortune 500 companies.

This gets me a bit nervous as my situation is I'll be retiring in 5 years and my pre-tax and after-tax retirement funds are up 20% since Jan 2020.

I'm curious how people are handling this? I'm tempted to take advantage of this and transition more into cash, but then I think I have 5 more years before retiring and some of my money I won't touch for 25 years so the market may recover if it crashes again.
Age 75, retired just over 10 years. Our asset allocation is 50/50. We do not invest in individual stocks, we use only Vanguard index funds:
Vanguard Total Stock Market Index Fund (VTSAX);
Vanguard Small-cap Value Index Fund (VSIAX);
Vanguard Total International Stock Index Fund (VTIAX); and
Vanguard Intermediate-term Bond Index Fund (VBILX).

We are staying with that asset allocation and those funds, reinvesting all dividends and distributed grains.

At 5 years until retirement the most important issue/question is your equity/fixed income allocation. What is that asset allocation? What funds do you use? Will you be eligible for both a pension and Social Security benefits? How large is your portfolio in terms of multiples of your estimated annual retirement living expenses?

If you wish any concrete advice or ideas you need to furnish this information. You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by Mullins »

I think the longer you're doing this stuff, the more times you'll see how "this time it's different" turns out to be not so different. Back in 1999, boy, was it different. A whole new way of doing business - online, no need for brick n mortar costs, dot coms springing up everywhere, all new business models, and all that sure was different, no denying it, it was different. I told my old man, this is different! But then... boom! Suddenly, there were lots of articles after the fact comparing that to the Dutch Tulip Craze. Not so different!

Anyhow, since then, I stay the course, believing that what got me here continues to be the engine that'll take me where I want to go.

Though now it's me who has a child who tells me, "this is different!"
"The Quality of the Answer Depends on the Quality of Your Question."
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by investuntilimrich »

Things I can be pretty sure of 1. The market will crash, but I won't know exactly when. 2. The market will one day go higher after the crash, but I also won't know exactly when. 3. Currencies will lose purchasing power.

For my primary retirement account, I will likely do nothing regardless of circumstances. I only check it once a year to avoid the temptation to do anything. For my trading account, I've already sold off some positions, probably too early but I am OK with that. Real estate I am sold out. Cryptos I am still in and out of. Seems there's always something to make a profit on, just have to be flexible with the times.
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Re: What Are You Doing Given Record Stock Market Highs and What Is Your Situation?

Post by afan »

Purchases are on autopilot, so I don't "do" anything as the markets move.

Our asset allocation has gradually drifted higher in stocks as our short and intermediate term bond holdings increase with respect to retirement needs.

I expect stocks to have poor long term returns from these high levels. But I have no idea whether this will be due to a big decline tomorrow, essentially zero or negative real returns for decades with no big drop, or some combination. Like the markets, the alternatives are bonds and cash, which also have low expected returns.

Half the time, I think that stocks are really high and I should cut back. The other half of the time I think that these are funds to accumulate for decades and it is crazy to have as much as we do in short and intermediate term bonds. So I think where we are, gradually drifting higher, is about right.

If I thought I knew what the markets will do over the next year or two, then I would adjust my allocation accordingly. Since I am sure I don't know, I stay where I am and do not let market levels determine my autopilot investing.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
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