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Sell everything: talk me down

6K views 57 replies 20 participants last post by  potato69 
#1 ·
Damn I am close to breaking my investing plan. There seems to be such little upside to the market right now with a massive downside.

It really feels like selling everything seems like at worst a 'meh choice' and at best a genius move.

Any one else struggling with this?
 
#3 ·
I agree with Cainvest. I don't know what the market is going to do, but I do know it's better to buy low and sell high than the reverse. Are prices right now high or low? Well they are lower than they were. Where they will be next year or 10 years from now, who knows?
I got panicked out of buying in January and started buying in March, so far am up for the year.
 
#5 ·
My view is it is going to be a rather bumpy ride through at least the end of 2020, and more likely most of 2021, depending on the size of Wave #2, and maybe Wave #3. There is no way of knowing how and when the saw tooth will resolve itself, but by the time one recognizes the planets have lined up, markets will already be substantially higher. I simply can't guess any better than random chance.....so as a retiree, I am doing and continue to do nothing.

Like Cainvest, anyone into long term accumulation mode should be buying during this 'suppressed' period. This is a 10-20-30 year journey.
 
#7 ·
Depends on just where you are in life. Some ideas from someone who is a rank amateur at this ;)

For someone in retirement with a substantial nest egg, maybe they could sell everything, put proceeds in GICs or similar and just draw down their savings while hoping that the GIC yield will cover inflation. Depending on balance between registered and unregistered, if retiree needed, say, $50k pa plus CPP/OAS with very little taxation, they could draw $50k pa for 20 years if proceeds of sale was $1Million.

A younger family saving for a home, might also think about cutting their losses. No doubt there are also other personal situations where selling might make sense. Markets at the moment seem higher to me right now than circumstances dictate.

For a younger person, it might be an idea to eliminate any index type equity etfs like XIU/XIC that give you the good with the bad. Buy a dozen or more blue chip stocks from various sectors that will hopefully pay dividends while you wait. Eventually markets should come back, but it could be 5 or 10 years before we get back to where we were 3 or 4 months ago.

Personally, I am in the retired category. I started to sell off our more risky and more complex holdings early this year (for health reasons). That turned out to be fortunate. After the initial crash, I did more weeding. I used the cash to buy a series of bonds and gics with very short to medium term maturity. Cash just in case dividends were cut. The rest, I used to buy a mix of perpetual and rate-reset preferreds. They were basically on-sale! Some still are. Yields in the 5-7% range, some perpetually.

So, no panic selling, just de-risking.
 
#11 ·
There seems to be such little upside to the market right now with a massive downside
On what basis do you say that? Even professionals have no idea which way the market is headed. Why are you so certain there is 'little upside'? Have you considered the possibility that the Federal Reserve could print $10 trillion of new money in the next couple years, making stocks soar to new heights? It absolutely could happen.

For context: I'm probably one of the more bearish people on this board. I don't particularly like stocks.. and I'm not selling anything. And yes, I'm aware that I could see my stocks plummet by 50% to 70%. I hope they don't, but it's always possible.

First, there's no way to know if stocks are going up or down from here. They could go either way! This whole scare could turn out to be overblown... we don't know. Yes, stocks could go down a lot still. But they could also go up on a sooner-than-expected recovery and normalization. They could go up on massive inflation and currency devaluation. There's no way to know what's coming in stocks.

More importantly, one has to stick with existing plans. The whole point of plans is because of situations like we have today!! This is the whole point of asset allocation, couch potato, investment policy statement. You can't throw away plans because something scary came up. What I've learned in 20 years of investing is that something scary or weird always comes up.

Since I started investing, I've experienced a brutal tech crash, then 9/11 terrorist attacks, endless terrorism paranoia and middle east wars, then the 2008 crash which they say 'nearly destroyed the whole financial system'. This stuff happens all the time - and it will keep happening!! Just give it 5 or 10 years.

If you feel uncertain about your plan, maybe you should revisit your plan and adjust the plan. Make sure it's conservative enough for your taste; for example, I'm 30% in stocks. But I think it's really important to use a plan as a framework and stick with the plan.
 
#12 ·
Since I started investing, I've experienced a brutal tech crash, then 9/11 terrorist attacks, endless terrorism paranoia and middle east wars, then the 2008 crash which they say 'nearly destroyed the whole financial system'. This stuff happens all the time - and it will keep happening!! Just give it 5 or 10 years.
Yep, and us old guys can come up with even more situations than James has already mentioned where everyone, including the financial media would have you believe that "it's different this time!".

OK, maybe it is different this time, just as it was every other time through history (2008 being the worst in my experience), but this time it's a very specific reason, and if they come up with a vaccine, then that's the end of it - case closed..

Don't under-estimate the power of money, especially in USA and how it can make things happen. I am confident they will create a vaccine and this will be over. Others may disagree. We'll see who's right.

ltr
 
#13 ·
Generally, I would say keep an emergency fund, maintain your asset allocation, and stay the course.....

Nonetheless, if you can reach your financial objectives by investing in safe assets, then you did not need stocks to begin with and you have the option of dumping them any time. Just don't expect that you can get a better price in the future; that may or may not happen.
 
#15 ·
Best way to invest, or at least the most common , is to lock in your losses as often as possible. Don’t follow my lead, I made tuition for my kids in a couple of weeks by stock picking my buy and hold Strategy, I’ve got the Worst strategy according to the talking heads. So sell, sell, sell, until you're out of money.
 
#16 ·
Very good points by all !

I sold all equities (little while back) as I think we are in a bear market rally - I see lots of turbulence and think it will end around Q3.

the markets fundamentals are zippo and i struggle to wrap my head around current valuations.

yes, I will miss the rest of this rally... but i am up this year 6.2% ytd and if I dont face another drop head on ill look at buying in on the next drop.

I believe more in capital preservation than capital appreciation - and the coming risks are notable....

yes not having equities is against my plan but we are in a deflationary market and i want to see this happen from the sidelines & i think speculators are rampant, not long term investors.

if the music stops do you got a chair ?
 
#18 ·
The stock market likes to anticipate events. Notice that the crash began in February when experts were just beginning to think the corona virus might be serious.The bottom came in early March when doom and gloom was all around. Now all the talk is when the quarantine will be lifted or at least eased. I don't believe the world is ending - I think this thing will blow over eventually and the world go back to normal and the stock market reflects this.
 
#21 · (Edited)
A chart of the DJI is a digital recording of the mood of the masses


For the really paranoid, instead of getting out, why not implement stop losses? Then you could actually make money and be somewhat protected if your fears of a crash come true.
For emotion to be in harmony with trading do the opposite of the masses only play the short side. When optimism is high people buy when fear is high people sell. To make emotion In harmony with investing buy puts when optimism is high sell your puts when fear in the streets. By only playing short side your buying when everyone else is buying & selling when everyone else is selling only thing is your buying & selling puts.
 
#20 ·
Thanks for the feedback everyone. Seems like the market though I actually did sell everything yesterday - hence the big bump today.

Only thing I went out of my investing plan was to buy some REITS a couple weeks back. Up 4% so far so I guess that's good. It's only a small part of my full allocation. I was just playing a little bit. That $$$ should have gone to my bonds allocations and although REITS are not a full replacement for bonds at least they're not equities.
 
#24 ·
The FANGS are holding up the entire market.... the SP500 has like 300 zombie co's.... another 100 that are useless and 75 that are mediocre... you do the math.... I have no idea how this market is where it is....

Apparently today Scotia announced a 40% loss in projected profits.... now, that might not seem bad but the real losses / impact wont surface till Q3 after all the skipped payments are defaulted on..... No thanks.... right now it is speculators and the Fed buying stocks... lots of money on the side lines... Ill wait....
 
#26 ·
The banks made some strong predictions about future loan losses. They are not solely based on Q1 performance, that is a mistake. They are balancing scenarios out for the next year or more. So their projections are already in for Q2 and Q3. And the banks are willing to be aggressive to get the bad news out there quickly.

Cdn banks are already moving off their massive discounts. They are institutionalized money making machines. I made 5 buys over the last 6-7 weeks: BMO @ $63, BNS @ 50, CM @ $77, RY @ 87, TD @ $54. And MFC @ $16. Some of these at dividend yields above 7%. Just like in 2008-09, when none of them cut dividends, other than MFC which now actually has the lowest payout ratio of all of those listed, and yields soared above 8% and in some cases 10%.

And these are some of the lowest returns I've had in the last few months. I believe they are going to move up ahead of the market as the multiples catch up. The bank index is clearly at a post-COVID-19 high, which is very positive.
 
#27 ·
I think that the Ruling Class are preparing for the collapse of empire.
When the Federal Reserve is purchasing stocks, they are actually purchasing companies and in doing so all public owned companies are being privatized.

Central banking is a privately owned outfit. It is not owned by governments.

As it is, the Federal Reserve has nationalized the banking system.
 
#28 ·
I personally like to have control when it comes to my money, and therefore, I am not a fan of the stock market. Money is supposed to provide peace of mind and security. I find that the stock market, by and large, works against that goal. Sure people make great gains in the market, but then they suffer great losses. Smoke. Mirrors. Smoke. Mirrors.

We are living in an age of disrupters. Who is to say that those safe blue chips are not slowly becoming dinosaurs? Maybe your portfolio will not bounce back anytime soon. When it comes to stock market investors, I see a whole lot of chicken little's and very few Warren Buffets. Hm. Interesting, isn't it?
 
#34 ·
There is this perception that Buffett runs a 'stock portfolio' but that's really not how it works. Buffett and Munger make all the really big capital allocation decisions. I'm sure he's involved with the stocks, sometimes.

But they have a full time manager, a younger man I believe, who is in charge of the equity portfolio. And remember that their stock portfolio is only a small part of Berkshire overall. The biggest part of BRK are the insurance business and the various other fully owned & controled businesses.

As far as market investments, they also have a significant bond portfolio. 'Stock picks' are just one part of their big picture, and Buffett is not sitting there all day picking stocks.

In fact, you have to go back to his early years to really get Buffet's stock picking. And he was a very speculative investor, making some enormous, lopsided (non diversified) positions on things that were probably very high risk. He didn't get rich by buying stable old mature stocks.
 
#35 ·
How do you make money in the stock market"

Good decisions!

How do you make good decisions?

Experience!

How do you get experience?

Bad decisions!

It's normal to be scared when things go wrong. That is where experience comes in. This sort of thing has happened before, some kind of panic or bear market is a normal part of the game. The market will recover, it always has. I don't expect it to go down to zero and stay there. Eventually you learn to plan for it, take it in stride and roll with it. Whether you do that by waiting it out, or bailing at the first sign of trouble, is up to you. But dumping everything when it is down 30% or 40% is almost always a bad idea. At that point you might as well sit tight.
 
#36 ·
The stock market is a total fabrication.

Plunge Protection

The Federal Reserve has been manipulating stock prices for an eternity.

Every single market component has been manipulated. (Forex, Precious Metals, Libor Rates to mention just a few)

Most importantly .....The rating agencies, the crux of the capitalist system have proven to be fraudulent.

I have studied this issue for 20 years or more. I have a database with all the instances.

The American Capitalist System is a complete fraud.
 
#38 ·
You said it. This is why the rational or fundamental approach no longer works. Markets no longer react to reality the way they used to. And there is no way to know for sure what the manipulators are doing until afterwards, sometimes long afterwards. This is why I prefer the technical approach. You can dissemble the manipulation but you can't dissemble the effects of manipulation.
 
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