You are setting your sights too low.
Prof. Shiller got a Nobel prize.
You are setting your sights too low.
I would guess that it's a combination of 1) gains harvesting in anticipation of capital gains tax increase in new tax proposal, 2) debt ceiling concerns, 3) we just hit new highs a couple of weeks ago so normal pullback, 4) delta variant problems, 5) approaching fed tapering. So in other words, the same old wall of worry that we have been climbing to new highs for the past year. Nothing to see here.
Well said.Triple digit golfer wrote: ↑Tue Sep 14, 2021 3:42 pm "The market" is thousands of companies, each with their own set of books, earnings, news, innovation, technology, product lines, etc.
There are millions of people making purchases, selling, trading, etc. on any given day. These people impact "the market."
"The market" doesn't go up or down by itself. "The market" goes up or down based on the weighted average of the movements of its components.
Asking why "the market" went up or down is asking why each of thousands of companies trended the way that they did.
This is being discussed in another thread. Are you going by a "feel", or something numerical? If the latter, what is it?
The s&p is now down to where it was 8/20 so dca people haven't seen much benefit.Marseille07 wrote: ↑Tue Sep 14, 2021 12:27 pmBuddy, as I mentioned this is actually good for the DCA camp. If you had lump summed, there's no option to buy cheaper.
Who said this downturn has already ended? 9/2 was the ATH, any purchase below that level would thrive when we renew the ATH.placeholder wrote: ↑Wed Sep 15, 2021 1:14 am The s&p is now down to where it was 8/20 so dca people haven't seen much benefit.
LOL. You guys are trying to find stuff where there's nothing. This isn't a "downturn." It's just the market doing what it's always done.Marseille07 wrote: ↑Wed Sep 15, 2021 7:39 amWho said this downturn has already ended? 9/2 was the ATH, any purchase below that level would thrive when we renew the ATH.placeholder wrote: ↑Wed Sep 15, 2021 1:14 am The s&p is now down to where it was 8/20 so dca people haven't seen much benefit.
I posted this in the other thread: last year, September and October were both down:
That would be true if you came into cash to invest since that point but not if you've been holding cash for any length of time.Marseille07 wrote: ↑Wed Sep 15, 2021 7:39 amWho said this downturn has already ended? 9/2 was the ATH, any purchase below that level would thrive when we renew the ATH.placeholder wrote: ↑Wed Sep 15, 2021 1:14 am The s&p is now down to where it was 8/20 so dca people haven't seen much benefit.
That's fair, but it's not like the DCA people are sitting on 0/100 either. Their existing positions are making $ just fine.placeholder wrote: ↑Wed Sep 15, 2021 4:35 pmThat would be true if you came into cash to invest since that point but not if you've been holding cash for any length of time.Marseille07 wrote: ↑Wed Sep 15, 2021 7:39 amWho said this downturn has already ended? 9/2 was the ATH, any purchase below that level would thrive when we renew the ATH.placeholder wrote: ↑Wed Sep 15, 2021 1:14 am The s&p is now down to where it was 8/20 so dca people haven't seen much benefit.
My original point was that dca people who have been sitting on cash (using that definition rather than regular contributions out of pay) didn't get much benefit even if they bought on the day after the "downturn" because it would be a small slice and really that value point is higher than most of the preceding year.Marseille07 wrote: ↑Wed Sep 15, 2021 4:38 pmThat's fair, but it's not like the DCA people are sitting on 0/100 either. Their existing positions are making $ just fine.placeholder wrote: ↑Wed Sep 15, 2021 4:35 pmThat would be true if you came into cash to invest since that point but not if you've been holding cash for any length of time.Marseille07 wrote: ↑Wed Sep 15, 2021 7:39 amWho said this downturn has already ended? 9/2 was the ATH, any purchase below that level would thrive when we renew the ATH.placeholder wrote: ↑Wed Sep 15, 2021 1:14 am The s&p is now down to where it was 8/20 so dca people haven't seen much benefit.
We're not out of the woods yet is what I'm saying. Too early to say the DCA camp didn't get much benefit, DCAing is not a one-day event.placeholder wrote: ↑Wed Sep 15, 2021 4:46 pm My original point was that dca people who have been sitting on cash (using that definition rather than regular contributions out of pay) didn't get much benefit even if they bought on the day after the "downturn" because it would be a small slice and really that value point is higher than most of the preceding year.
What we can say is you have been sitting on a pile for sometime now, and have been using DCA to slowly deploy that into the market, then you have already lost money on the portion that you are buying now relative to the cheaper price you could have paid a year or two ago. Maybe you will be able to buy at such a reduced price in the future that it will make up for it. That depends on what percentage of that pile is still left, and how far the market drops and stays down while you are deploying the rest. But, so far it has been a losing proposition, as it is most of the time, statistically speaking.Marseille07 wrote: ↑Wed Sep 15, 2021 4:56 pmWe're not out of the woods yet is what I'm saying. Too early to say the DCA camp didn't get much benefit, DCAing is not a one-day event.placeholder wrote: ↑Wed Sep 15, 2021 4:46 pm My original point was that dca people who have been sitting on cash (using that definition rather than regular contributions out of pay) didn't get much benefit even if they bought on the day after the "downturn" because it would be a small slice and really that value point is higher than most of the preceding year.
No dca is a psychological move.Marseille07 wrote: ↑Wed Sep 15, 2021 4:56 pm We're not out of the woods yet is what I'm saying. Too early to say the DCA camp didn't get much benefit, DCAing is not a one-day event.
I mean, DCAing is a defensive move. If stocks keep going up then lump summing obviously makes more money.
Nobody is losing money. You'd be crazy to call 60/40 losing money vs 100/0.marcopolo wrote: ↑Wed Sep 15, 2021 5:12 pm What we can say is you have been sitting on a pile for sometime now, and have been using DCA to slowly deploy that into the market, then you have already lost money on the portion that you are buying now relative to the cheaper price you could have paid a year or two ago. Maybe you will be able to buy at such a reduced price in the future that it will make up for it. That depends on what percentage of that pile is still left, and how far the market drops and stays down while you are deploying the rest. But, so far it has been a losing proposition, as it is most of the time, statistically speaking.
Money is fungible.Marseille07 wrote: ↑Wed Sep 15, 2021 5:17 pmNobody is losing money. You'd be crazy to call 60/40 losing money vs 100/0.marcopolo wrote: ↑Wed Sep 15, 2021 5:12 pm What we can say is you have been sitting on a pile for sometime now, and have been using DCA to slowly deploy that into the market, then you have already lost money on the portion that you are buying now relative to the cheaper price you could have paid a year or two ago. Maybe you will be able to buy at such a reduced price in the future that it will make up for it. That depends on what percentage of that pile is still left, and how far the market drops and stays down while you are deploying the rest. But, so far it has been a losing proposition, as it is most of the time, statistically speaking.
I lost a lot of money by not becoming a brain surgeon. I wish the IRS agreed!marcopolo wrote: ↑Wed Sep 15, 2021 5:22 pmMoney is fungible.Marseille07 wrote: ↑Wed Sep 15, 2021 5:17 pm Nobody is losing money. You'd be crazy to call 60/40 losing money vs 100/0.
A: You earn $100 and lose $10. Have $90.
B: You earn $10 less my making a different choice. Have $90.
Sure, B didn't "lose" $10, but it is exactly the same outcome as the better choice and losing $10.
Sure, and people make decisions based on circumstances and not everyone goes 100/0 all the time.
Its not about being 60/40 or 100/0. It is about how you get to your desired allocation.Marseille07 wrote: ↑Wed Sep 15, 2021 5:27 pmSure, and people make decisions based on circumstances and not everyone goes 100/0 all the time.
Sure, if you throw in the notion of moving toward your "desired allocation" then that's a fair claim.marcopolo wrote: ↑Wed Sep 15, 2021 5:33 pm Its not about being 60/40 or 100/0. It is about how you get to your desired allocation.
If you choose to be 60/40, and you have a pile of cash (in addition to your 60/40 portfolio), then you actual allocation to equity is a lot lower than the desired 60/40. You have two ways to get to your desired allocation. You can lump sum your cash into your portfolio at the desired allocation, or you can DCA the cash into your portfolio slowly getting to your desired allocation.
That is the essential choice between DCA and Lump Sum.
And, in this scenario, Lump Sump wins more often.
No one is disputing that. Obviously if you prepare for SORR and the markets just go up, not preparing for SORR is better. That's already well understood and you aren't adding anything new.Triple digit golfer wrote: ↑Wed Sep 15, 2021 6:44 pm Justify DCA any way you want. It's a psychological flaw and marcopolo is absolutely right regarding the opportunity cost.
I'm talking about accumulators, not people in retirement.Marseille07 wrote: ↑Wed Sep 15, 2021 6:52 pmNo one is disputing that. Obviously if you prepare for SORR and the markets just go up, not preparing for SORR is better. That's already well understood and you aren't adding anything new.Triple digit golfer wrote: ↑Wed Sep 15, 2021 6:44 pm Justify DCA any way you want. It's a psychological flaw and marcopolo is absolutely right regarding the opportunity cost.
Kitces' bond tent starts *before retirement* (i.e. accumulators): https://www.kitces.com/blog/managing-po ... -red-zone/Triple digit golfer wrote: ↑Wed Sep 15, 2021 7:19 pm I'm talking about accumulators, not people in retirement.
Also, people with a conservative AA in early retirement are not doing DCA. They're holding a conservative AA for a while.
Okay. I'm not talking about people close to retirement.Marseille07 wrote: ↑Wed Sep 15, 2021 7:24 pmKitces' bond tent starts *before retirement* (i.e. accumulators): https://www.kitces.com/blog/managing-po ... -red-zone/Triple digit golfer wrote: ↑Wed Sep 15, 2021 7:19 pm I'm talking about accumulators, not people in retirement.
Also, people with a conservative AA in early retirement are not doing DCA. They're holding a conservative AA for a while.
Oh, I thought you were talking about me. Never mind then.Triple digit golfer wrote: ↑Wed Sep 15, 2021 7:41 pm Okay. I'm not talking about people close to retirement.
Winner winner. If you're not comfortable with a certain AA now, why would you be comfortable with it after 12 months or whatever? It is so illogical.Beensabu wrote: ↑Wed Sep 15, 2021 8:57 pm DCA (other than regular paycheck contributions) is for people who are forcing themselves to exceed their risk tolerance.
A person's risk tolerance dictates their optimal AA.
If they come into a windfall where the amount of that windfall is so large that they are uncomfortable investing it at their current AA, then that windfall has changed their circumstances to such an extent that their risk tolerance based on their new situation is now different. So they need to figure out what it actually is. It is whatever they feel comfortable investing in immediately.
I agree that every metric we have is screaming Danger Ahead. But bulls don't die on valuation metrics. My subjective perception of investor chatter is that it is not euphoria. So, I have derisked to an appropriate level but not yet sold it all anticipating an incoming correction.HanSolo wrote: ↑Tue Sep 14, 2021 9:00 pm This is being discussed in another thread. Are you going by a "feel", or something numerical? If the latter, what is it?
For a numerical approach, the Citi euphoria metric is interesting ("Our panic/euphoria model remains very elevated and is warning of coming losses"... August 2021, S&P at 4400). More interesting metrics here:
https://www.cmgwealth.com/ri/on-my-rada ... r-returns/
Having some people perceiving euphoria and some not is also something that happens at market tops. So I'm not seeing a differentiator. That's why I prefer numbers over subjective perceptions.
"Not yet"... do you mean that when you perceive euphoria, you will sell it all?000 wrote: ↑Fri Sep 17, 2021 12:39 amI agree that every metric we have is screaming Danger Ahead. But bulls don't die on valuation metrics. My subjective perception of investor chatter is that it is not euphoria. So, I have derisked to an appropriate level but not yet sold it all anticipating an incoming correction.HanSolo wrote: ↑Tue Sep 14, 2021 9:00 pm This is being discussed in another thread. Are you going by a "feel", or something numerical? If the latter, what is it?
For a numerical approach, the Citi euphoria metric is interesting ("Our panic/euphoria model remains very elevated and is warning of coming losses"... August 2021, S&P at 4400). More interesting metrics here:
https://www.cmgwealth.com/ri/on-my-rada ... r-returns/
Having some people perceiving euphoria and some not is also something that happens at market tops. So I'm not seeing a differentiator. That's why I prefer numbers over subjective perceptions.
No current plans to sell it all. It would have to be a truly extraordinary circumstance. The risk of getting the timing wrong and losing to inflation is quite high. As an aside, the fact that most everyone else must be thinking the same thing means that a financial shock could be quite more punishing than recent corrections.
That seems reasonable enough, but I don't understand how that corresponds with your signature "VBIAX and chill".I'm pretty sure I won't ever do that. I'm a fan of Benjamin Graham's 75-25 rule. Since perception of euphoria is subjective, I choose to use that word when stock prices are at 1.5x historical median valuations or higher. We're at about 2x now. I de-risk to different levels depending on whether we're at 1.5x, 2x, 3x or whatever, the floor being 25% in equities. For me, this has nothing to do with predicting the end of a bull. I don't care whether the bull is about to die or not. It has only to do with limiting the amount of risk I'm willing to carry at any given moment. The bull can continue for another 10 years and go to 5x or 10x valuations, and I'll just keep on keeping on with whatever amount of equities that's consistent with my risk tolerance for that valuation level.
Well, just like euphoria is subjective, chill may be subjective as well. VBIAX is what I do in taxable, and I'm hands-off there. AA adjustment happens in tax-deferred, and I'm mostly in fixed income there. So that provides a chill to my overall AA.
Valuations can only be high relatively to an alternative investment. So what I'm missing in that long list is something that compares valuations to interest rates.HanSolo wrote: ↑Tue Sep 14, 2021 9:00 pm For a numerical approach, the Citi euphoria metric is interesting ("Our panic/euphoria model remains very elevated and is warning of coming losses"... August 2021, S&P at 4400). More interesting metrics here:
https://www.cmgwealth.com/ri/on-my-rada ... r-returns/
I found some data on this at YCharts. Looks to me like stocks today are still much cheaper than they were before the global financial crisis.BeansAndPotatoes wrote: ↑Fri Sep 17, 2021 10:41 amValuations can only be high relatively to an alternative investment. So what I'm missing in that long list is something that compares valuations to interest rates.HanSolo wrote: ↑Tue Sep 14, 2021 9:00 pm For a numerical approach, the Citi euphoria metric is interesting ("Our panic/euphoria model remains very elevated and is warning of coming losses"... August 2021, S&P at 4400). More interesting metrics here:
https://www.cmgwealth.com/ri/on-my-rada ... r-returns/
Your meaning is that you don't know of any alternatives to a US broad stock market index fund, like VTI or VOO, other than bonds or a bond fund?BeansAndPotatoes wrote: ↑Fri Sep 17, 2021 10:41 amValuations can only be high relatively to an alternative investment. So what I'm missing in that long list is something that compares valuations to interest rates.HanSolo wrote: ↑Tue Sep 14, 2021 9:00 pm For a numerical approach, the Citi euphoria metric is interesting ("Our panic/euphoria model remains very elevated and is warning of coming losses"... August 2021, S&P at 4400). More interesting metrics here:
https://www.cmgwealth.com/ri/on-my-rada ... r-returns/
Yeah -Triple digit golfer wrote: ↑Fri Sep 17, 2021 12:26 pm When is the last time we had a 2% increase or decrease in the S&P 500 or total market in a day? It seems like it's been so boring lately.
I would add that it appears that China is at the start of what looks like our 2008 financial crisis. Imagine in the US if people were investing money left and right into the largest developer in the country, only a couple months later to have workers for that developer not get paid and lines of people show up outside their buildings to demand their money back - and then they are being told that they can only withdraw their money over 27 months. Its a classic run on the bank scenario. Once it starts with one developer, it will move to others. The CCP government has a greater ability to freeze funds and bail out than the US does, but nobody knows what will actually happen.investorpeter wrote: ↑Tue Sep 14, 2021 7:59 pmI would guess that it's a combination of 1) gains harvesting in anticipation of capital gains tax increase in new tax proposal, 2) debt ceiling concerns, 3) we just hit new highs a couple of weeks ago so normal pullback, 4) delta variant problems, 5) approaching fed tapering. So in other words, the same old wall of worry that we have been climbing to new highs for the past year. Nothing to see here.