We are in the midst of one of the longest bull markets in history. I can’t predict how the stock markets will behave in the future but there is one thing I can predict with 100% accuracy- the bull market will not last forever. Eventually good times will end and the nasty bear will appear. Stock markets will fall and people will freak out.
My personal experience with the nasty bear market
I was in high school during the dot com bubble so I don’t have much recollection about this particular crash. The only bear market I have experienced as an investor was the financial crisis in 2008/2009. Back then I saw my company cutting 10% of work force overnight and then another 15% a few months later. I had a few managerial changes as my manager and people above him were let go during this time. As a new grad that had just entered the work force, I had no idea if my job was safe or not. I updated my resume and looked for possible job opportunities almost every month just to keep my options open.
Before the financial crisis, I had just started investing in individual stocks. Like many people, I felt uneasy holding on stocks during uncertain times. My investment portfolio value took a major hit, went down by more 50% at one point. However, because I didn’t have any short term needs for money, I thought I would hold onto these individual stocks and invest in more stocks when opportunity presented itself.
An example of this was when I purchased 100 shares of Royal Bank at $26.92 on Feb 26, 2009. I thought I had purchased at an all time low and patted myself on the back.
The stock recovered a bit in early March but then the markets started dropping again. I panicked and decided to liquidate all my shares at $29.05. I thought I was a genius for making over $300 in less than a month.
Little did I know, the drop was just momentary. Royal Bank stock price would continue to climb after my sell.
Today the stock worth around $81. In addition to the 3x price appreciation, I would have received about $2,000 in dividends. My yield on cost would be over 10%.
A missed opportunity? Perhaps.
Instead of being resentful, I decided to use this experience as a value lesson.
What did I learn from the financial crisis?
I learned taking advantage of any market down turns if crucial if I’m investing for the long run. This is exactly what I have been doing since the financial crisis, whenever there was a market correction (i.e. 5% or 10% drop). I would buy more stocks that I deemed were on discount, whether the stock paid dividends or not. This required having some cash on the sideline.
Essentially I was deploying the buy and hold strategy. Continue to hold whatever stocks we had and add more stocks to our investment portfolio.
But is buy and hold strategy the right strategy? Or is it better to go with time the market and capital appreciation?
I think that decision comes down to what investing strategy you are comfortable with. It also comes down to your risk tolerance.
When I first started investing, dividend growth investing wasn’t my focus. I was looking for making quick bucks when it comes to stock investing. I was not afraid to trade leveraged ETFs like HNU, HND, UWM, TQQQ, SQQQ, and etc. I also took some investing courses and learned to use trading techniques and indicators to determine when to buy and sell. The basic concept was to buy based on stock momentum and sell when the momentum was gone. Essentially buy high, sell higher. Furthermore, all the trades were done with 1% risk each. To be more specific, every trade I executed was only 1% of my portfolio value.
How did this work? For example, if my portfolio value is $100,000, the first trade I would buy $1,000 worth of a particular stock. If the portfolio value increases to $150,000 with 1 open position, I would buy $1,500 worth of a particular stock for my next trade. Now if the portfolio value dropped down to $95,000, the next trade would only be $950.
Did these techniques and risk management made me some quick money?
Yes and no.
The 1% risk management was an excellent practice in theory and the trade techniques worked well. What was the catch? Well, because I had a small portfolio, my 1% trades were very small in value. I was only able to trade 10 or 20 shares each time. Even if the stock price went up by $10 or more, the absolute capital appreciation wasn’t big due to the small number of shares I owned.
What kind of stocks was I trading?
Alexion Pharmaceuticals (ALXN) ~$120 today
I traded ALXN when it was around $30.
Priceline (PLCN) ~$1,470 today
I traded PLCN when it was around $400.
Ulta Salon, Cosmetics & Fragrance (ULTA) ~$240 today
Started trading ULTA when it was around $80.
Questcor Pharmaceuticals (QCOR)
Started trading around $40. Questcor was acquired in 2014. Stock was around $90 in 2014.
Qihoo 360 Technology (QIHU) ~$76 today but was trading ~$100 in 2014
Started traded QIHU in 2012 around $24.
Yes I did made a few bucks but I could have made more if I simply held onto these stocks and sold them later.
The two lamest excuses when it comes to investing.
Don’t get me started on my missed opportunity of Google, Apple, and Facebook. 🙂
Pending market crash? What to do?
Currently, we have quite a few hundred thousand dollars invested in the stock market. Part of the portfolio, the dividend portfolio, yields about $1,000 of dividend income per month.
If we take a look at the stock markets, it’s easy to predict that a pending correction is coming.
What fueled the current second longest bull market in history? I believe the bull was fueled mostly by multiple QEs, super low interest rates, and governments continue pumping money into the markets.
Is the bull market going to end? Is a correction coming soon?
Yes I think a correction is coming soon.
But when? And how big is this correction?
I have no idea. There have been a few times in the past 5 years I though the bull market was going to end and a major correction was on the horizon….
But instead of markets tumbling down, the bull simply rested for a short period and the run continued.
The drops were short lived.
Would we continue to see such trends? Or would we finally see a major bear market?
I can’t predict the future, hence I do not know that answer.
In the last while, I have noticed a number of bloggers liquidating their portfolio and started holding more cash or investing in precious metal sector. A few examples:
- Jay at FI Fighter liquidated his dividend portfolio late last year and start investing in precious metals.
- Sabeel at Roadmap2Retire recently sold about 1/3 of his dividend portfolio and started to invest in some precious metals.
- Tyler at Dividend Hustler had a reset and sold off all $600k (!!!) of dividend stocks
Now there’s nothing wrong with changing your investing strategy. In fact, I applaud all three bloggers for not following the herd. In Jay’s case, he was buying gold and silver stocks when the sector was near the bottom but not quite a the bottom. In January his precious metals portfolio was down around 14% (~$36k). He stuck to his guns and continued adding more precious metals stocks. Why? Because he believe in his investing thesis. Quickly the gold & silver markets turned and now Jay is up by over 100% (~$404k). This kind of performance is life changing. Although people may think Jay took on quite a bit of risk with his precious metals play, I disagree. Jay is not completely all in with his money on precious metals as he owns real estates in the Bay area.
When it comes down to it, it’s all about how you manage and mitigate your investment risks. Do you own real estate? Do you own other assets? Do you own non-dividend stocks? Do you own bonds? Do you own GIC’s? How much cash reserve do you hold? All these need to be considered when you decide to switch your investment strategy.
Given that we have a large sum of money already invested in the stock market, what will we do on this impending correction?
- Do nothing, continue buying stocks periodically as what we have been doing
- Liquidate all of our holdings and start holding cash
- Liquidate some holdings and start buying other assets like gold and silver
- Start holding on a larger reserve of cash and wait for an opportunity
As mentioned, I did a combination of option #1 and #4 in the past number of years – simply continue buying stocks whenever they went on sale. But now I’m at a bit of a crossroad. I’m not as gutsy as Tyler so #2 is a no go for me (plus unlike Tyler, we have no intention to buy another property). Should I continue with option #1? Or should we start doing option #3? Or should we start doing option #4? Or a combination of them?
I don’t know what the correct answer is. Perhaps we will hold a larger cash reserve and be more patient (option #4). Since we also own some non-dividend paying stocks, perhaps we can start buying more of these stocks that are undervalued. Or perhaps we can start doing more research and start investing in precious metals like gold and silver.
It’s important to always considering stock valuation and fundamentals. If a stock’s PE is at 50 and the historical average is 13, it’s probably not the best time to buy this stock. It doesn’t matter if everyone you know if buying this stock. When the valuation is this poor, you should stay away. If you ignore stock fundamentals, you will most likely get burned down the road.
Don’t be scared to not follow the herd. Think for yourself. Question authorities.
For Mrs. T and I, our goal is to reach financial independence sometime in the next 10 years (or less). Right now the plan is to be financial independent when our dividend income is greater than our expenses. But it doesn’t mean we can’t shift our focus to the capital appreciation portfolio that we haven’t paid as much attention to lately.
Which option(s) will we use? Stay tuned. 🙂
67 thoughts on “Stock investment – my thoughts on the impending doomsday aka bear market”
Nice article Tawcan. This is one of those times where cash on the sidelines seems like an attractive proposition. Part of me thinks that in 10 or 20 years time, the main issue will be – did we all sell out in the next crash and buy half way through the recovery, or did we selectively add to our portfolios when the opportunity arose, even if it was imperfectly executed, incurring a short term loss for a longer term gain. Your 4 options are interesting and a combination of them might work well. Looking forward to any follow-ups!
Timing the market is pretty much impossible so I keep plugging away with the monthly contributions. I’m in that mid 30’s range for age so I think that is the best strategy for me. Selfishly I wish the market would head lower for a few years so my dollar goes further for accumulation but that’s life.
Monthly contributions is a great idea, especially if your investment timeline is very long. 🙂
I was invested in the last recession it was tough but that’s when I put a lot of my money in so part of me wants to continue to save for another downturn but I also want to continue building now so I sometimes hold back unless I see a steal.
It would be nice to buy some cheaper stocks and ride them up. I’ll continue to invest a little here a little there and become hopefully better situated for a downturn.
I think periodically investing money in the stock market is a great idea. Cost averaging is a very powerful tool.
This has been the topic of the day in recent weeks as you mentioned some of our fellow dividend bloggers partially or totally liquidating their portfolios. I plan to hold steady. I became a dividend growth investor in 2007. What followed in the next year and a half was one of the worst market corrections ever. What did I do? Continue buying stocks periodically as what I have been doing all along. At times, I gorged at better prices, values and yields and other times I nibbled but I always remained consistent with my buying.
Nothing wrong with hold steady. If you have time I believe buy and hold strategy is a good strategy to deploy.
hmm what to do? very interesting topic..
I’ve been liquidating winners slowly and paying off mortgage on the home. You can’t lose when paying debt off
Can’t lose by paying debt off that’s for sure.
Interesting discussions, Tawcan. I too think that Deutsche Bank could cause some large ripples, plus the actual triggering of Brexit in March 2017. I don’t intend to sell, will just make my regular purchases.
It will be interesting to see if Deutsche Bank will create some ripples or not.
I haven’t sold anything yet but I’m not putting any new money into the market. I’m currently doing a lot of option 4. I’m hoping that after the US election that we’ll see some pull back in the market so that I can buy some stocks on sale. I think I read a stat the other day that the US stock market drops on average 10% every 11 months. So hopefully based off February’s drop that I can buy again in December or January 🙂
I think we’ll have a bit higher cash reserve than what we typically comfortable with in the next little while as well.
Buy and holder here, one of the big reasons I love companies with long histories of dividend increases. I’ll weather the storm, hopefully with few if any dividend cuts, and keep ploughing more and more money in until I’m ready to check out of the working world 🙂
Timing is super tempting, but most research I’ve personally done on it shows that it’s difficult to get right and ridiculously easy to get wrong. When you’re only a few years away from retiring, it doesn’t make much sense to risk it just to shave off a tiny bit of time.
To me, as long as companies continue to pay dividends and do not cut or freeze their dividend payments, it doesn’t really matter if the stock price drops. It just allows me to buy more shares at a lower price. But it really depends on the companies. Companies like TD, Royal Bank and BNS have a long dividend paying history, so I feel better with these companies compared to ones that do not have as long dividend history.
It really depends on what your investing timeline is. If you will be in the market for the next 20 years, you will most likely come out okay. You never know what the stock market is going to do. It might go up for 2 more years. For us, we are contributing to our 401k every month and kept invested in most of our accounts.
I’m holding off on dividend reinvesting and adding new investments, though. This is a small portion of our net worth, but it let me feel like I’m doing something…
Very true, time is your ally if you are in the market for the next 20 years. I might look into holding of on dividend reinvesting.
Very interesting post. I did read Jay’s (FI Fighter) recent post and it did get me questioning the buy and hold forever…and don’t touch your stocks ever. But it’s tough not to try and time the market when there seem to be so many signs that we’re at the top or near the top of the market. When I first started investing, I was in college and everyone was making money on tech stocks…EVERYONE. Of course, I jumped in at the exact moment of the internet bust. I also had a lot of missed opportunities in 2008…I regret not buying more at those bargain prices.
It’s tough not to try and time the market but it’s tough to say when you’re at the top or at the bottom. I think to be conservative you can have a core holding using buy & hold strategy and have a “fun” portfolio for timing the market.
If we were potentially buying, I think we’d be a mix of #1 and #4. If we were at your stage of wealth and age, we’d be firmly in stage #4 and maybe a tiny bit of #1. If you always keep your portfolio to good quality companies, should be alright.
There will DEFINITELY be a crash – but who knows when? Or how bad? Or how long? I think it will short lived until interest rates are back to normal rates..and the world can’t handle normal rates for a long time. Good on Jay for making a killing!
I think the key is to make sure you are comfortable with the evaluation of the stocks that you own…. and most importantly whatever you buy now needs to have good evaluation. It doesn’t make sense to buy something at 100 PE when it’s typically trading at 20 PE. If you pull the buy trigger now, for sure you’ll get burned.
I think we are all wondering when this bubble will burst–thanks for sharing your detailed thoughts on it! I agree that the “right” investment strategy depends a lot on the individual. Same goes for whether rental properties are a good investment–depends on the personality of the investor, as well as the property in question.
Exactly! Bubble will get created and will burst. It’s a natural cycle.
Thanks for the mention Tawcan. I received a lot of messages, emails about how regretful I’ll be for what I did. What these people failed to realize is that personal finance is and will always be personal. They don’t even know my overall picture in finances. I will write a post shortly but I did it just not only for myself but really for my kids and wife. Im taking calculated risks and every year, as long as our net worth and overall wealth is trending upwards with an increasing passive income stream, it’s all good.
Do what you gotta do Tawcan. At the end of the day, just look at your wife and kids and tell me that you don’t want to give them a wonderful life?. Cheers bro.
Everyone has their opinion. You’re doing what you feel is right for you. Personal finance is personal, you can’t base your financial decision on what other people tells you to do.
Tawcan, around 4 years ago I came across a book at a used bookstore I frequent, that was written by a super smart lawyer turned investment advisor. It was well written and made a lot of sense to me at the time. After finishing the book I started reading the authors blog where she warned of an imminent catastrophic market correction. This was well before I started DGI and just had a group RRSP with work. So naturally I sold off all my equity funds and moved the money into safe money market and bond funds. So in that account I’ve basically missed the bull market of the last 4 years. The lesson to me is that no one, regardless of how smart they are can predict where the market is going. In fact she’s still predicting an imminent catastrophic market correction. Furthermore this DGI community stresses that investing and early retirement is all about base hits not home runs. In my opinion selling everything and waiting for a market correction to get back in is trying to hit a home run. I think your approach is bang on, continue hitting base hits and carry a little more cash for the odd double or triple. Just my thoughts of course.
I remember hearing the same message a while ago. Like you said, if you were holding on cash and waiting for the crash, you’d be missing out on the bull market. Nobody can predit the future, that’s why we need to continue with our investment plan. 🙂
Meb Faber has a good tweet out today on CAPE ratios and value. He referenced his own research. Certain markets like Russia and Brazil look great value based on CAPE. The US is expensve but not yet in bubble territory. Canada interestingly reasonably valued on par with Hong Kong, New Zealand and France.
Basically saying there is value out there if you care to look.
Interesting point, should take a look at Russian and Brazil then.
I continue to do what I’ve always done, stick to my investment plan. This could be the top or it could be 5 years in the future. There is no way of knowing. As long as I’m within my risk tolerance and have a emergency fund it doesn’t really matter based on my time horizon for when I need the money.
Very true, that’s what we’ve been doing the last little while too – stick to our investment plan.
I sold a lot of my dividend payers last week. I thought I would hold them forever but the prices have shot up so I took a profit. I am hopeful there will be a dip so I can buy more shares at a reduced price and get the dividend stream flowing again.
Looks like you’re doing a reset like Dividend Hustler. Kudos to you for taking some profits. Hopefully there will be a dip coming up.
Very interesting thoughts. The bear is waiting to come out probably. But this also depends a lot on all the financial aids/structures which are being used nowadays. In Europe we notice that the QE is far from gone and is just being more intensified. Although it might create a bubble, it will keep the bear away for a while.
As far as the right investment strategy, I agree with a lot of the other commenters. This will be different for every type of investor and person. The most important thing is that you support your own decision and feel satisfied with it.
For us, we recently decided to look for more value next to our dividend stocks. For now we try to aim at an portfolio with 75% of dividend stocks and 25% with value stocks. Our risk appetite is getting a bit larger and by doing so we also give ourselves the opportunity to look into broader opportunities.
Interesting note about Europe and QE. That should hopefully keep the bear away for a while… but it just might create a bigger bubble down the road.
The idea of 75% dividend and 25% value stocks seem reasonable. It really depends on your risk tolerance which is going to be different for each individual.
I was worried that the issues with Deutsche Bank might cause a bear market…similar to how Lehman Brothers brought the 2008 recession.
It may very well cause a bear market. I think it’s still too early to see what will happen with DB’s issues.
It sounds like you might be thinking about timing the market to sell at the top. If you can do this with proficiency, I’d like you to share your secrets! 😉
Hardly anyone can do it with proficiency.
I think you’ve got the buying part down – you wait for the right valuation and the buy. But when to sell is harder.
I’ve been thinking about writing a post about ‘When to sell” lately. I think it could be useful to people that are considering similar thoughts.
Hi Mr. Tako,
Didn’t I say we’re not liquidating our portfolio? :p I might sell some but it’s not 100% decided. It’s impossible to sell at the top and buy at the bottom. I’m not going to even attempt.
I think evaluation is the key. If you ignore evaluation that’s when you’ll get burned.
Interesting indeed and on a lot of other bloggers minds lately. My strategy is to continue to buy with my regular monthly deposits, but also keep cash on hand for when a drop occurs. I certainly wont be selling if we get a major drop. I think the only important thing to do is to NOT purchase heavily into overbought stocks at this point, as they really have no place to go but way down. These stocks will be the major movers when a correction comes, whenever that may be.
We’ll probably just continue doing what we’ve been doing – buying periodically but probably will try to build more cash reserve and wait for the opportunity. The important thing is indeed not to buy overvalued stocks.
I’ve personally made two adjustments to my dividend portfolio. First of all, I’ve opted out of all dividend re-investment plans. This means my dividend are building up a cash hoard in my brokerage account to use in the next downturn. Secondly, I am not buying anything else with my future contributions. Markets are just too over-valued right now.
It’s a funny phenomenon, because once you find yourself holding a lot of cash, it’s easy to say “I hope something gives soon. I hope the markets drop so I can use all this cash I’ve been hoarding.” But then you realize – you don’t REALLY hope the markets drop!
Great post as always Tawcan!
Opting out of DRIP might be a good idea to get more cash reserve. Something to think about perhaps. I do like the idea of just letting things DRIP and put investing on auto-pilot.
Excellent post! I think a correction is coming, but I’ve thought that for years. I’ve long since stopped trying to predict the whims of the market. Even with insane amounts of QE, negative interest rates, and the like — things that would seem to set up a big collapse — the market could keep going up for many years to come. I say pick an asset allocation that you’re comfortable with in good times and bad and stick with it.
Me too Matt. I just keep executing our investing strategy. It’s hard to say that the economy is really strong & healthy when we often see drops whenever there’s a talk about raising interests rate or poor job number. If the economy is strong & healthy, the market would be more sustainable to these “bad” news.
I’m not getting ready to jump off any bridges or sell my portfolio, as I don’t know when or how much the markets will correct. White noise is the investor’s worst enemy, and if you listen to the predictions of a bunch of market guru’s, financial writers, bloggers, BNN experts & even Buffett and Soros, you will get so many varied opinions, you will want to keep your money under the mattress. I ( for what it is worth), keep 40% in Canadian equities, 40% US index and 20% cash. I don’t buy emerging markets or even Europe for that matter directly, because the multi- nationals in my US index have exposure in those markets and I don’t want to concern myself with currency risks either. The one change I am making in this extended bull market is trimming a bit off each to take me to 33% in Canadian, US & Cash, which gives me a buffer to buy opportunities as they arise, but not take me out of the game.
We never know when or how much the markets will correct and you’re right, everyone has their views of how the market will perform. I think the best thing you can do is to have a bit more cash reserve than usual for a buying opportunity.
I’m a boring investor that collects high quality dividend paying stocks like I used to collect baseball cards as a kid. I’m more focused on cash flow than capital appreciation so if the dividends remain intact I’m really overly concerned with where the market goes at any particular moment. Will build up my dividend cash balance and purchase additional shares if there is a correction. I still generate active income which allows me to follow this strategy.
That’s my view as well. If a dividend stock can continue paying dividends in bad times (and not cut or freeze dividend payments), they I’m golden. The drop in price will simply allow me to buy more shares with the same amount of cash.
After converting my assets in my 401k my plan is for #1 and #4, but I don’t know what is the right answer. I am sitting at on a lot of cash now.
Nothing wrong with sitting with a lot of cash. Cash is king in bear market. 🙂
Just for us, we are just staying the course and doing our annual rebalance to help cope with the future, inevitable bear market. And we’re boring old index investors, but I always have a fascination with those who pick single stocks. At $1000 a month in dividends from just part of your portfolio, you seem to be doing pretty darn well!
Annual reblancing is a good way to go if you’re doing index. I suppose for DGIs you can rebalance across the different sectors too.
Great post! It does feel like there’s a correction ahead, doesn’t it? My strategy will be to continue to buy periodically. If I had a crystal ball then I’d of course go crazy with options and buy all the dips, but if that ball exists no one is going to tell anyone about it! One thing that I do know is that the US economy and companies will continue to be the strongest or at least one of the major players in the world economy for the remainder of my lifetime. Since I don’t need any of my investments to live on for at least the next 25 years, I’m happy to just accumulate shares in solid companies regardless of what happens in the near term. Any money needed in the next 5 years should not be in the stock market.
That said, I am going to be devoting roughly 10% of my portfolio to more speculative invests. So far I’ve done quite well with the recent up tick in the resource/mining sector. It will be interesting to see what happens to Bitcoin as well. My fellow blog writer, Johnny, has a huge position in that. (He gets part of his paycheck in Bitcoin!)
I finally have a good income and would actually look forward to a correction. It would be an opportunity to significantly reduce cost basis in a couple of stocks that I’m up big in. Of course, paper losses would be tough to swallow until things turned around. Also, increased volatility is great for options’ pricing! I just sold some puts in GILD and KO thanks to that!
Another problem with selling everything would be taxes. I’d owe about $7600 at the long term 20% tax rate. Doesn’t sound like too good of a deal to me.
People have been talking about a correction for so many years. As we have demonstrated over the years, we have been buying periodically as well. I don’t have a crystal ball so I can’t determine when is the best time to buy for maximum profit. Good call on not investing with money that you need in the next 5 years. Unfortunately so many people do that, investing with money they need in the short term. That’s when they get caught and have to sell when they don’t want to.
I’m all for having opportunity to buy stocks on discount and get crazy good entry price.
Nice post, Tawcan. And like you said, I think it’s all about keeping to your strategy and understanding your goals. My strategy has always been buy and hold since I know historically that has always panned out. While we could be in for a correction, we may just flat line for a while and bounce back up, and as a long-term investor I can’t afford to miss that and try timing the market.
Hi The Green Swan,
Understanding your goals is very important, both short term and long term goals. Buy and hold have panned out over the course of history but perhaps a little bit of market timing could increase the total return. But when is it a good time to sell and when is it a good time to buy? That’s really tough to determine.
Thanks for the mention and discussion Tawcan. These type of reflection posts are always a pleasure to read and I think the ones that help everyone learn/grow the most.
When it comes to investing, there are so many different options available to take and what one person does in a particular situation isn’t always well suited for someone else. It’s quite fascinating to observe, especially in times like right now when a lot of us see a giant storm fast approaching.
Like most things in life, I believe the “right answer” is usually found somewhere in-between two binary extremes… Life isn’t black and white, and most things don’t have to be an all-or-nothing proposition. Even though I did bet big on precious metals, like you mentioned, I also kept 7 cash flowing rental properties around to support me now that I’ve quit my job…
No one can predict what will happen next, so you just have to do what you think is best for your own unique situation. Glad you are taking a good hard look at valuations and fundamentals though, they will always matter, in any market environment.
All the best!
It’s always good to start a healthy discussion. I’m not here to criticize. There’s no right or wrong way when it comes to investment. As I said, it really depends on your personal situation. I think it’s unfair to call out someone that’s selling right now as “making the biggest mistake in your life.” What if this person needs to money for other use? Unfortunately there’s often no binary answer in life, it’s more an analog like answer.
Thx for this view on Tawcan the trader. Nice to know some additional background.
You suggest 4 great options. I think about them as well. We are more in option 4 right now, mainly due to the increased job insecurity that I have.
That makes sense to be on option 4 given the job insecurity.
Nice discussion Tawcan. There isn’t one answer, but thinking for ourselves is a great place to start! I’m inclined to think the bull market will end sooner rather than later, but I’ve thought that for several months. That being said, what Mrs. IS and I are doing fits in well with our objectives/goals. Plus, when opportunities do present themselves….like in Late January….we were able to put a ton of capital to use in a very short time. While not Jay’s kind of returns….that money returned 30+% over the last 8 months. More importantly, we continued building long term positions we wanted…..in this case in Union Pacific and Vanguard’s Emerging Market ETF.
I hope you guys had a great weekend, and I appreciate the fair/balanced discussion. There are too many zealots afoot lately.
There isn’t one answer for sure. For us I think it’s probably going to be a combination of a bunch of these options mentioned. Building long term positions is the way to go.
Thanks for the mention, Tawcan.
These are really tough questions and what it all boils down to is your personal situation and take on things. For me, over the course of summer, it resulted in a lot of sleepless nights as I weighed on what was best for our family’s future. Eventually we came to the conclusion that we dont want to sell 100% of our portfolio and go to cash waiting for a correction, but we also knew that we did not want to be 100% invested. In the end, a middle ground suits us best. The selling has continued over the last couple of months and I have to say that my overall stress has gone down considerably now that we are comfortably sitting on a decent chunk of cash. This is the classic Sleep Well At Night (SWAN) scenario and definitely recommend it — do what you are more comfortable with and improves your overall life and financial situation.
Now, I own a smaller group of companies that I intend to hold through the next recession — higher quality in my opinion than owning a larger group mix of high, medium and low quality companies.Quality over quantity.
I look forward to see what your overall strategy is.
Exactly, it boils down to your personal situation and what you’re comfortable with. If you are being kept awake at night then it’s probably a good idea to sell some or all of your investments so you can sleep better at night.