Sell S&P500 indexes and wait out the selloff?

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MadAsgardian
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Re: Sell S&P500 indexes and wait out the selloff?

Post by MadAsgardian »

retire2022 wrote: Thu Jan 06, 2022 11:17 am
mikejuss wrote: Thu Jan 06, 2022 11:02 am DJIA has been down since 9:44 a.m. EST. Every moment it remains down is intolerable to me. I've instructed my broker to move my entire portfolio to cash. I will periodically report back with results over the next few years. This is how real wealth is built, folks.
Real wealth is being out of the market?

I respectfully disagree.
Bogleheads are not fans of sarcasm, I've gathered. :)
bondsr4me
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Re: Sell S&P500 indexes and wait out the selloff?

Post by bondsr4me »

MadAsgardian wrote: Thu Jan 06, 2022 12:09 pm
retire2022 wrote: Thu Jan 06, 2022 11:17 am
mikejuss wrote: Thu Jan 06, 2022 11:02 am DJIA has been down since 9:44 a.m. EST. Every moment it remains down is intolerable to me. I've instructed my broker to move my entire portfolio to cash. I will periodically report back with results over the next few years. This is how real wealth is built, folks.
Real wealth is being out of the market?

I respectfully disagree.
Bogleheads are not fans of sarcasm, I've gathered. :)
:happy
tibbitts
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Re: Sell S&P500 indexes and wait out the selloff?

Post by tibbitts »

sizzlefuzz wrote: Thu Jan 06, 2022 12:08 pm Sounds like market timing.... let it ride and add more $ if you see a dip and have the cash to spare.
As I mentioned earlier in the thread, "buying on dips" isn't consistent with the "don't try to time the market" and "invest when funds are available" approach, so it's not the clearest message.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by sizzlefuzz »

tibbitts wrote: Thu Jan 06, 2022 12:12 pm
sizzlefuzz wrote: Thu Jan 06, 2022 12:08 pm Sounds like market timing.... let it ride and add more $ if you see a dip and have the cash to spare.
As I mentioned earlier in the thread, "buying on dips" isn't consistent with the "don't try to time the market" and "invest when funds are available" approach, so it's not the clearest message.
Okay, guilty. But I stand by not taking big swings with your invested assets. I invest whenever I can, if it happens to be a dip that day? Bonus, I guess? In the long term, market indices go up. There is a great instagam post by Personal Finance Club (I think that is the account) about addressing buying when the market is a "all time highs"---I suggest you check it out. Additionally, sounds like a reevaluation of risk tolerance could be in order for OP.
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rob
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Re: Sell S&P500 indexes and wait out the selloff?

Post by rob »

Absolutely best to sell before the market goes down and buy before it goes up.... The "what" part is easy... The "how" part can be tricky....
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an_asker
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Re: Sell S&P500 indexes and wait out the selloff?

Post by an_asker »

veggivet wrote: Thu Jan 06, 2022 9:38 am What selloff?
When selloff?

My crystal ball is fogged up! :oops:
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Re: Sell S&P500 indexes and wait out the selloff?

Post by an_asker »

rob wrote: Thu Jan 06, 2022 12:40 pm Absolutely best to sell before the market goes down and buy before it goes up.... The "what" part is easy... The "how" part can be tricky....
How ain't difficult either. It is the two "when"s that are tricky, especially when you've a fogged up crystal ball!
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Re: Sell S&P500 indexes and wait out the selloff?

Post by an_asker »

MadAsgardian wrote: Thu Jan 06, 2022 12:09 pm [...]
Bogleheads are not fans of sarcasm, I've gathered. :)
That's because of the sarchasm ;-)
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Re: Sell S&P500 indexes and wait out the selloff?

Post by livesoft »

A question for the OP: When the drop or correction or lower prices finally arrive, are you prepared to buy more shares at that time? That is, say you stay invested through it, where are you gonna get the money to buy more shares when they go on sale?

After I read your answer, then I will tell you where I am going to get more money to buy more shares on sale.
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Wiggums
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Re: Sell S&P500 indexes and wait out the selloff?

Post by Wiggums »

Barto10 wrote: Thu Jan 06, 2022 9:35 am Hello,

I have about 40% of my IRA portfolio in VFIAX (S&P 500 Index) which I make no new contributions to and 100% of a 403b in Fidelity in FXAIX (S&P 500 Index) which I make biweekly contributions to. I'm mid-career so longterm horizon.

Question is whether to sell off these 500index funds (full or partial) while this current correction (or whatever it will turn out to be) occurs?

Should I rotate into other index sectors? If so which ones? Stay the course? Just wonder if I can save on losses by selling and buying back in later (market timing) or into other sectors?
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alfaspider
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Re: Sell S&P500 indexes and wait out the selloff?

Post by alfaspider »

Every few months, someone posts that they are planning of getting out of the market because:

1) They think the market value is too high and a crash is coming soon
2) They are spooked by a recent downturn
3) They think they can do better than an index fund in XYZ investment

While some folks have undoubtedly won that gamble, I'd recommend digging through some of those posts to see how people faired. Quite a few end up with the OP looking at a market that's 10%+ higher than when they sold wondering when/how to get back in.
Shallowpockets
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Re: Sell S&P500 indexes and wait out the selloff?

Post by Shallowpockets »

It’s simple. Do you believe this will be an up year or a down year?
An up year is statically more likely.
Since S and P is usually gauged by its rise or fall in the calendar year, then it stands to reason that it will be up from Dec 31. So, if an up year, it will rise above that number. Therefore any drop back from that number will most likely return to at least that number.
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mrmass
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Re: Sell S&P500 indexes and wait out the selloff?

Post by mrmass »

OP,

Have you cleaned up things from your prior post from the summer? If yes well done.

viewtopic.php?f=1&t=354773&p=6148097#p6148097
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Taylor Larimore
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Re: Sell S&P500 indexes and wait out the selloff?

Post by Taylor Larimore »

Barto10 wrote: Thu Jan 06, 2022 9:35 am Hello,

I have about 40% of my IRA portfolio in VFIAX (S&P 500 Index) which I make no new contributions to and 100% of a 403b in Fidelity in FXAIX (S&P 500 Index) which I make biweekly contributions to. I'm mid-career so longterm horizon.

Question is whether to sell off these 500index funds (full or partial) while this current correction (or whatever it will turn out to be) occurs?

Should I rotate into other index sectors? If so which ones? Stay the course? Just wonder if I can save on losses by selling and buying back in later (market timing) or into other sectors?
Barto10:

As you described, what you are considering is called "market-timing." Please read what experts say about "market- timing":

https://www.bogleheads.org/wiki/Taylor_ ... ing_quotes

Best wishes.
Taylor
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strummer6969
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Re: Sell S&P500 indexes and wait out the selloff?

Post by strummer6969 »

2% is not a selloff. You won't know it's a 10% correction until after it happens. It happens fast, especially with all the algos trading. Do you want to be a trader or investor? Investors don't do what you are proposing. If you want to be a trader, good luck.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by Makaveli »

As a pure Boglehead, I would not act on it, but I will admit that I have thought of market timing ONE time and ONE time only. Probability wise I believe we are closer to a correction than a further run. If someone had the will power to market time only ONCE then the thought is appealing to become more defensive in the near-term and have a strict plan of re entering. Say 50% on first 10% decline, remaining 50% on 15-20% decline.

Then never market timing again. :twisted:
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Re: Sell S&P500 indexes and wait out the selloff?

Post by antwerp »

Stay invested. If you are mid-career keep buying. You have the time to ride out any potential storms.
elnegativo
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Re: Sell S&P500 indexes and wait out the selloff?

Post by elnegativo »

This is going to sound smart-alecky but I don’t mean it that way at all. If a 2% drop has you second guessing yourself, I’m not sure you should have any money whatsoever invested in equities.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by 3000 »

Stay the course. I made my annual contribution to my Roth IRA, which is also FXAIX (Fidelity 500 Index Fund), on January 3rd and look what happened on January 5th. I would liked to have known the market would be down but I didn't so I shrugged and went about my day.
strummer6969
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Re: Sell S&P500 indexes and wait out the selloff?

Post by strummer6969 »

Makaveli wrote: Thu Jan 06, 2022 1:21 pm As a pure Boglehead, I would not act on it, but I will admit that I have thought of market timing ONE time and ONE time only. Probability wise I believe we are closer to a correction than a further run. If someone had the will power to market time only ONCE then the thought is appealing to become more defensive in the near-term and have a strict plan of re entering. Say 50% on first 10% decline, remaining 50% on 15-20% decline.

Then never market timing again. :twisted:
A more likely scenario...he sells at a 10% decline, then the market goes back up and he buys back in at a higher price, then goes it back down again 10%.

Or it can turn out like you say. It's a high risk, high reward move. But you don't get rich without taking risk :twisted:

I say just keep buying the dips.
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corn18
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Re: Sell S&P500 indexes and wait out the selloff?

Post by corn18 »

Looks like we have chased off another heretic. Good job.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by veggivet »

Either that or he's too busy liquidating his current holdings to go all in on SDS.
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calmaniac
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Re: Sell S&P500 indexes and wait out the selloff?

Post by calmaniac »

I would ask Carnac the Magnificent regarding the upcoming market downturn.
Sadly, since I can't read the future, I just buy and hold.

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Re: Sell S&P500 indexes and wait out the selloff?

Post by carminered2019 »

correction ?? :oops:........ stay the course, I have done it over 25 years and have not loss one penny yet.
Last edited by carminered2019 on Thu Jan 06, 2022 3:08 pm, edited 2 times in total.
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Barto10
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Re: Sell S&P500 indexes and wait out the selloff?

Post by Barto10 »

Thank you to all for the comments, wisdom, brow-beating, and even sarcasm. Point(s) taken and I realize that my OP had a touch of unnecessary panic. To answer a few questions:

1)Whether I cleaned up my portfolio since summer post? YES AND NO. Yes, I sold off a few beaten down higher P/E stocks (tech and speculative), and bought a bit more S&P index with that. I also moved out of AXA/Equitable for my 403b and into Fidelity for low cost/fee and transparent funds, Fidelity's FXAIX (With that entire 403b portfolio). No, in that I held onto certain beaten down stocks because they may well recover (some have) and hesitant to take a loss. True, may well be "anchoring" but it seems if mistake #1 was buying them in the first place over better plays, might be a mistake #2 to sell only a year or so into owning, therefore at a loss.
2) Whether I have funds available should a market downturn occur? NO, other than pay period contributions. That's partly why I asked the original question, so as to have cash ready or if people believe in sector rotations for reallocation of funds.

I truly appreciate the wisdom from all, and know it's in my best interest. I'm here to learn and will admit to having made some mistakes before, leaning on some sound guidance from Bogleheads, and that my post was more hyperbolic than needed to be.
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retiredjg
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Re: Sell S&P500 indexes and wait out the selloff?

Post by retiredjg »

Barto10 wrote: Thu Jan 06, 2022 2:44 pm Thank you to all for the comments, wisdom, brow-beating, and even sarcasm. Point(s) taken and I realize that my OP had a touch of unnecessary panic. To answer a few questions:

1)Whether I cleaned up my portfolio since summer post? YES AND NO. Yes, I sold off a few beaten down higher P/E stocks (tech and speculative), and bought a bit more S&P index with that. I also moved out of AXA/Equitable for my 403b and into Fidelity for low cost/fee and transparent funds, Fidelity's FXAIX (With that entire 403b portfolio). No, in that I held onto certain beaten down stocks because they may well recover (some have) and hesitant to take a loss. True, may well be "anchoring" but it seems if mistake #1 was buying them in the first place over better plays, might be a mistake #2 to sell only a year or so into owning, therefore at a loss.
2) Whether I have funds available should a market downturn occur? NO, other than pay period contributions. That's partly why I asked the original question, so as to have cash ready or if people believe in sector rotations for reallocation of funds.

I truly appreciate the wisdom from all, and know it's in my best interest. I'm here to learn and will admit to having made some mistakes before, leaning on some sound guidance from Bogleheads, and that my post was more hyperbolic than needed to be.
Thanks for talking it all in a good natured form. Not every response was particularly kind.:happy

You are making progress with your portfolio. And it can take quite a bit of time to actually see market timing in a true fashion.

Careful with the anchoring....you can sell those suckers at a loss and reduce your taxable income with the losses (save money on taxes!)...and get the money better invested.
Whether I have funds available should a market downturn occur? NO, other than pay period contributions. That's partly why I asked the original question, so as to have cash ready or if people believe in sector rotations for reallocation of funds.
The answer is still "no". :sharebeer
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Barto10
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Re: Sell S&P500 indexes and wait out the selloff?

Post by Barto10 »

Careful with the anchoring....you can sell those suckers at a loss and reduce your taxable income with the losses (save money on taxes!)...and get the money better invested
.
These bad picks are in a Traditional IRA so my understanding is the tax loss benefit doesn't apply to me. If I'm wrong please let me know. Still, I agree on the anchoring as a behavior to avoid. Thank you and others for taking the time to respond, much appreciated.
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retiredjg
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Re: Sell S&P500 indexes and wait out the selloff?

Post by retiredjg »

Barto10 wrote: Thu Jan 06, 2022 3:12 pm
Careful with the anchoring....you can sell those suckers at a loss and reduce your taxable income with the losses (save money on taxes!)...and get the money better invested
.
These bad picks are in a Traditional IRA so my understanding is the tax loss benefit doesn't apply to me. If I'm wrong please let me know. Still, I agree on the anchoring as a behavior to avoid. Thank you and others for taking the time to respond, much appreciated.
You are correct. You cannot tax loss harvest a loss in an IRA.
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mrmass
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Re: Sell S&P500 indexes and wait out the selloff?

Post by mrmass »

calmaniac wrote: Thu Jan 06, 2022 2:14 pm I would ask Carnac the Magnificent regarding the upcoming market downturn.
Sadly, since I can't read the future, I just buy and hold.

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drk
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Re: Sell S&P500 indexes and wait out the selloff?

Post by drk »

Barto10 wrote: Thu Jan 06, 2022 2:44 pm True, may well be "anchoring" but it seems if mistake #1 was buying them in the first place over better plays, might be a mistake #2 to sell only a year or so into owning, therefore at a loss.
Think about it another way: if you didn't already own these stocks, would you buy them today? If not, it's best to sell them because every day you hold them is effectively a decision to buy them again. We don't get extra credit for holding onto bad investments. It's entirely possible that they will come back to your original purchase price, but there is no centripetal force pulling individual stocks back to the market average return.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by MTF »

LeeAtlantica2020 wrote: Thu Jan 06, 2022 9:56 am
But I don't get why those questions keep popping up on a message board literally named after a guy who spent his entire life telling people to NOT ask those types of questions in the first place, and filled with people drawn to that philosophy. It's almost as if this message board needs an automatic Bot poster (like Reddit has) that detects those questions and simply says, "No, please read the book / wiki on this."
What I don’t get is why you all get so worked up about this. If everyone who posted on this forum already had a Bogle-approved three fund portfolio, and was staying the course, what on earth would you talk about?
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CyclingDuo
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Re: Sell S&P500 indexes and wait out the selloff?

Post by CyclingDuo »

Barto10 wrote: Thu Jan 06, 2022 9:35 amI have about 40% of my IRA portfolio in VFIAX (S&P 500 Index) which I make no new contributions to and 100% of a 403b in Fidelity in FXAIX (S&P 500 Index) which I make biweekly contributions to. I'm mid-career so longterm horizon.

Question is whether to sell off these 500index funds (full or partial) while this current correction (or whatever it will turn out to be) occurs?

Should I rotate into other index sectors? If so which ones? Stay the course? Just wonder if I can save on losses by selling and buying back in later (market timing) or into other sectors?
If you look at the S&P 500 - even just since the beginning of 2018 - we've had 6 times that qualify as dips/corrections and even one bear in the past 4 years time frame:

-10.2% (13 day correction)
-19.8% (92 day correction)
-6.8% (34 day dip)
-33.9% (33 day Covid Bear Market)
-9.6% (21 day dip)
-5.2% (32 day dip)

Image
https://www.yardeni.com/pub/sp500corrbear.pdf

Are we due for another dip? Correction? Sure, why not? How many days is this one going to last? 12? 21? 32? 92? 200? What will the percentage loss be? When will you know to get back in? What if you just rode it out and let it be?

CyclingDuo
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Re: Sell S&P500 indexes and wait out the selloff?

Post by brawlrats »

MTF wrote: Thu Jan 06, 2022 3:57 pm
LeeAtlantica2020 wrote: Thu Jan 06, 2022 9:56 am
But I don't get why those questions keep popping up on a message board literally named after a guy who spent his entire life telling people to NOT ask those types of questions in the first place, and filled with people drawn to that philosophy. It's almost as if this message board needs an automatic Bot poster (like Reddit has) that detects those questions and simply says, "No, please read the book / wiki on this."
What I don’t get is why you all get so worked up about this. If everyone who posted on this forum already had a Bogle-approved three fund portfolio, and was staying the course, what on earth would you talk about?
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Re: Sell S&P500 indexes and wait out the selloff?

Post by 000 »

If I were going to guess my guess would be the selloff that began a week ago is over and soaring will resume soon.

At some point in the future, possibly this year, we will see a crash, possibly larger than most would anticipate, so one should have an allocation or plan to set one's risk tolerance for such a thing appropriately.
LeeAtlantica2020
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Re: Sell S&P500 indexes and wait out the selloff?

Post by LeeAtlantica2020 »

MTF wrote: Thu Jan 06, 2022 3:57 pm
LeeAtlantica2020 wrote: Thu Jan 06, 2022 9:56 am
But I don't get why those questions keep popping up on a message board literally named after a guy who spent his entire life telling people to NOT ask those types of questions in the first place, and filled with people drawn to that philosophy. It's almost as if this message board needs an automatic Bot poster (like Reddit has) that detects those questions and simply says, "No, please read the book / wiki on this."
What I don’t get is why you all get so worked up about this. If everyone who posted on this forum already had a Bogle-approved three fund portfolio, and was staying the course, what on earth would you talk about?
There are hundreds of viable topics because finance is a complicated world and simply picking a 2/3/4-fund portfolio and then staying the course is step one of a Bogle-style pathway to potential viability. That pathway is littered with lots of smaller, important, and often obscure decision points and issues. EG:

-Tax loss harvesting
-Optimal AA curves
-Vanguard v Fidelity usability
-Complicated transactions due to work-life changes
-Rollover difficulties
-Retirement questions
-Alternative fixed-income/bond-like instruments that MIGHT be appropriate based upon personal context
-Type of RMD's to take
-Ideal tax-efficient funds for taxable accounts
-Etc. etc. etc.

OP has a perfectly legitimate set of questions and concerns. My point is that there are dozens of personal finance and retail investment forums online whose users ask similar questions and who are NOT Bogleheads, and who could offer far better advice than most users here can simply because they are geared towards thinking in terms of market timing, immediate leverage, etc.

It's like asking how to root my Google Pixel 6 to install a custom ROM... on an Apple IPhone forum.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by muffins14 »

Barto10 wrote: Thu Jan 06, 2022 9:35 am
Question is whether to sell off these 500index funds (full or partial) while this current correction (or whatever it will turn out to be) occurs?
Why do you think you would be able to time this correctly?
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muffins14
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Re: Sell S&P500 indexes and wait out the selloff?

Post by muffins14 »

MTF wrote: Thu Jan 06, 2022 3:57 pm
LeeAtlantica2020 wrote: Thu Jan 06, 2022 9:56 am
But I don't get why those questions keep popping up on a message board literally named after a guy who spent his entire life telling people to NOT ask those types of questions in the first place, and filled with people drawn to that philosophy. It's almost as if this message board needs an automatic Bot poster (like Reddit has) that detects those questions and simply says, "No, please read the book / wiki on this."
What I don’t get is why you all get so worked up about this. If everyone who posted on this forum already had a Bogle-approved three fund portfolio, and was staying the course, what on earth would you talk about?
Increasingly small improvements on the margin
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MTF
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Re: Sell S&P500 indexes and wait out the selloff?

Post by MTF »

LeeAtlantica2020 wrote: Thu Jan 06, 2022 4:28 pm
MTF wrote: Thu Jan 06, 2022 3:57 pm
LeeAtlantica2020 wrote: Thu Jan 06, 2022 9:56 am
But I don't get why those questions keep popping up on a message board literally named after a guy who spent his entire life telling people to NOT ask those types of questions in the first place, and filled with people drawn to that philosophy. It's almost as if this message board needs an automatic Bot poster (like Reddit has) that detects those questions and simply says, "No, please read the book / wiki on this."
What I don’t get is why you all get so worked up about this. If everyone who posted on this forum already had a Bogle-approved three fund portfolio, and was staying the course, what on earth would you talk about?
OP has a perfectly legitimate set of questions and concerns. My point is that there are dozens of personal finance and retail investment forums online whose users ask similar questions and who are NOT Bogleheads, and who could offer far better advice than most users here can simply because they are geared towards thinking in terms of market timing, immediate leverage, etc.

It's like asking how to root my Google Pixel 6 to install a custom ROM... on an Apple IPhone forum.
But if you believe in the Boglehead’s ‘mission’, wouldn’t you prefer the OP asked here? Then you can tell them they never should have bought the Google Pixel 6 and should just buy an iPhone instead. Or do you just want to tell people who already own iPhones that they made the right choice?

P.s. it’s also your choice which posts to engage with. If you get annoyed with the perfectly legitimate questions the OP asked, just scroll past them.

P.p.s. You’ve also got a short memory. In your first posts on the forum, less than a month ago, you were seeking advice about investing $300k you had to ‘play with’. Although you settled on a Boglehead-approved approach to investing that money, it is clear from your posts that you were looking for and open to alternatives.
Last edited by MTF on Thu Jan 06, 2022 5:20 pm, edited 1 time in total.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by crossbow »

veggivet wrote: Thu Jan 06, 2022 9:38 am What selloff?
I am 100% confident that there might be a selloff some time in 2022. Might or might not. 100% confident. Mark my words.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by bberris »

MrJedi wrote: Thu Jan 06, 2022 10:11 am If you are spooked by a less than 2% drop, you should reconsider your risk tolerance.
I don't think one can change their risk tolerance any more than one can change their height. It is the portfolio that has to fit the risk tolerance, not the other way around.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by Yarlonkol12 »

No, although if you hold any meme stocks, arkk funds, or meme coins id get out of that stuff asap and buy the S&P
My posts are for entertainment purposes only.
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CyclingDuo
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Re: Sell S&P500 indexes and wait out the selloff?

Post by CyclingDuo »

bberris wrote: Thu Jan 06, 2022 6:02 pm
MrJedi wrote: Thu Jan 06, 2022 10:11 am If you are spooked by a less than 2% drop, you should reconsider your risk tolerance.
I don't think one can change their risk tolerance any more than one can change their height. It is the portfolio that has to fit the risk tolerance, not the other way around.
I sort of like JL Collins take in his Stock Series...

From Part 1...

https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/

After pointing out all the crashes in point #1 for the past 40 years, he says under point #2 regarding growing your wealth...

All you would have had to do is Toughen up and let it ride. Take a moment and let that sink in. This is the most important point I’ll be making today.

Everybody makes money when the market is rising. But what determines whether it will make you wealthy or leave you bleeding on the side of the road, is what you do during the times it is collapsing.


Later on in point #6 he says...

6. This is why you have to toughen up and learn to ignore the noise, stay the course and ride out the storm.

There is an element of "when the going gets tough, the tough get going" to JL's take on it all, but it doesn't bother me.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
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retiredjg
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Re: Sell S&P500 indexes and wait out the selloff?

Post by retiredjg »

JL Collins rocks!

:D
NuBogleHead
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Re: Sell S&P500 indexes and wait out the selloff?

Post by NuBogleHead »

Do you mean the 10% sell-off that will take place after the market goes up 15%?
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canadianbacon
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Re: Sell S&P500 indexes and wait out the selloff?

Post by canadianbacon »

The GAFYX fund mentioned in the postscript of the Collins article has badly trailed the index.
Bulls make money, bears make money, pigs get slaughtered.
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Re: Sell S&P500 indexes and wait out the selloff?

Post by MTF »

bberris wrote: Thu Jan 06, 2022 6:02 pm
MrJedi wrote: Thu Jan 06, 2022 10:11 am If you are spooked by a less than 2% drop, you should reconsider your risk tolerance.
I don't think one can change their risk tolerance any more than one can change their height. It is the portfolio that has to fit the risk tolerance, not the other way around.
I disagree with this. I think a person’s risk tolerance can easily change or at least they can become more informed about the actual risk they are taking rather than their perception.

I know lots of people who don’t really understand and worry about ‘all time highs’ and investments losing value, and I’m sure their tolerance for the (perceived) level of risk they are taking could be changed if they could just zoom out on a graph of the market and look at long-term performance and see that, over time, the daily and weekly and monthly fluctuations are basically irrelevant.

That’s not to say that with a little bit of market education everyone could weather a bear market 100% stocks, but it is a nonsense (and not helpful) to say (as another, earlier poster said) that a person who thinks a 2% dip may signal a coming bear market does not have the risk tolerance to hold any stocks in their portfolio.
Last edited by MTF on Thu Jan 06, 2022 10:49 pm, edited 1 time in total.
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ruralavalon
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Re: Sell S&P500 indexes and wait out the selloff?

Post by ruralavalon »

Barto10 wrote: Thu Jan 06, 2022 2:44 pm Thank you to all for the comments, wisdom, brow-beating, and even sarcasm. Point(s) taken and I realize that my OP had a touch of unnecessary panic. To answer a few questions:

1)Whether I cleaned up my portfolio since summer post? YES AND NO. Yes, I sold off a few beaten down higher P/E stocks (tech and speculative), and bought a bit more S&P index with that. I also moved out of AXA/Equitable for my 403b and into Fidelity for low cost/fee and transparent funds, Fidelity's FXAIX (With that entire 403b portfolio). No, in that I held onto certain beaten down stocks because they may well recover (some have) and hesitant to take a loss. True, may well be "anchoring" but it seems if mistake #1 was buying them in the first place over better plays, might be a mistake #2 to sell only a year or so into owning, therefore at a loss.
2) Whether I have funds available should a market downturn occur? NO, other than pay period contributions. That's partly why I asked the original question, so as to have cash ready or if people believe in sector rotations for reallocation of funds.

I truly appreciate the wisdom from all, and know it's in my best interest. I'm here to learn and will admit to having made some mistakes before, leaning on some sound guidance from Bogleheads, and that my post was more hyperbolic than needed to be.
Congratulations on getting out of AXA Equitable and into Fidelity in your 403b account using Fidelity® 500 Index Fund (FXAIX).

I suggest increasing your contributions to the Fidelity 403b account. If under age 50 the maximum annual employee contribution is $20.5k. Establishing a high rate of contributions is the most important investing decision you can make, forum discussion.

In the IRAs at Vanguard I still suggest switching everything to very diversified index funds (to decrease risk) with very low expense ratios (to increase your net returns), examples are:
2) Vanguard Total Stock Market Index Fund (VTSAX)ER 0.04%;
2) Vanguard Total International Stock Index Fund (VTIAX) ER 0.11%; and
3) Vanguard Total Bond Market Index Fund (VBTLX) ER 0.05%.

You should consider the asset allocation (stock/fixed income mix) you want to use. A fixed income allocation can reduce portfolio risk. Wiki article, Asset allocation
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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CyclingDuo
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Re: Sell S&P500 indexes and wait out the selloff?

Post by CyclingDuo »

canadianbacon wrote: Thu Jan 06, 2022 7:05 pm The GAFYX fund mentioned in the postscript of the Collins article has badly trailed the index.
Yup. Appears JL and his VTSAX is easily smoking Dr. Lo's fund... :beer

Image

Love JL's graphic at the top of his stock series part 1 page: "Toughen Up Cupcake"
https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
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Re: Sell S&P500 indexes and wait out the selloff?

Post by newfydog »

“If you’re not willing to react with equanimity to a market price decline of fifty percent two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre result you’re going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.”

— Charlie Munger
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Re: Sell S&P500 indexes and wait out the selloff?

Post by Booogle »

Move it all into long term treasuries.

Bonds got annihilated this week, so you are buying in low while the stock market is still high.
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