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Discussion Starter #1
I know past history often shows one should not panic-sell during times of market downturns. "staying the course" for the long haul usually pays off. will this time be different?
as of today's prices, I could theoretically sell all my stock holdings today & still come out with a small profit between the gains & the losses.
is that a rational thing to consider or do?
 

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If you are in for the long term lets say 3 years or more then NO do not sell. If this money is for your retirement and that is a few years away then NO do not sell. You will get various opinions on this but not knowing your specific background and details this is a general statement I make. Hang in their this is light at the end of the tunnel.
 

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I've questioned myself many times the last couple of weeks. I will likely have to sell a couple of smaller company holdings but with what they have already dropped I will hold to see if there is a way out. If not then cut my losses once I can see actual fundamentals and not just the noise.

Overall i'm sticking with the decision to hold and build my positions.
 

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I sat through previous recessions, collected dividends and in the end came out golden.

It will depend a lot on at just what stage of life you are.

In our own case, with no pension other than CPP/OAS, we need to think about what might happen. Some of us pensionless retirees live off dividends from our taxable accounts. Those dividends hardly changed in 08/09, but this time it could be quite different.

My first thought, is to sell off some higher risk stocks and other securities. Enough to provide cash that we could use to supplement CPP/OAS. I will assume dividend income drops by 75% (partly cuts, partly because I will sell some stocks) I will be left with CPP/OAS + 25% of current dividends. Lets say that causes a $30k shortfall on current living expenses.

If I look at 3 years, that is $90k. So I could put $30k in HISA, $30K in 1yr GIC, $30k in 2yr GIC. Another thought is to have that in TFSAs so we don't pay tax on interest.

If dividends don't drop that badly, we will have cash to re-invest later.

Just thinking aloud here.
 

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This situation is why I always thought that monthly income mutual funds were insane (ie, quarterly not being frequent enough). In my opinion, no one should be living directly off the flow of dividends off their portfolio. If it were me, I would keep at least a year of spending buffered in a savings account, or other highly liquid/non-volatile investment.
 

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So living off a monthly salary wouldn't be good either?

I guess when I worked I should have asked for $100k up front?
 

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Going back to the subject.

I am not going to sell everything, but going to assume a 75% cut in dividends and increase ready-cash supplemental buffer from present ~1 yr to 3 years.
 

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If it were me, I would keep at least a year of spending buffered in a savings account, or other highly liquid/non-volatile investment.

Yeah, I keep between one and two years cash set aside in savings just in case of a catastrophe. The amount finds its way down to one year's expenses when there are so many bargains to be had such as times like this, but I never go below one year's living expenses, even though I do enjoy a fully indexed secure pension along with CPP that easily covers my expenses. But you never know what can happen.

The subject of the thread is "should I sell everything". I think it's a terrible idea. If people keep a few years expenses aside, they should never consider selling during times like this. Every one of these bear markets I've gone through always comes along with the cry that "it's different this time". Yeah, it is different every time, and it will eventually return to normal.

If you start selling depressed stocks and buying fixed income, you've locked in your loses. A couple years down the road you'll be kicking yourself.

ltr
 

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If you start selling depressed stocks and buying fixed income, you've locked in your loses. A couple years down the road you'll be kicking yourself.
Exactly, buy high and sell low is normally not a good thing. If you're got a buffer already (and you should) why not see if stocks will recover before locking in a loss.
 

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Discussion Starter #12
thats exactly what i'm wrestling with. i guess i see the possible implications of this crisis as being a lot worse than most.almost to a point of a possible breakdown in society.hope i'm wrong
 

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The subject of the thread is "should I sell everything". I think it's a terrible idea. If people keep a few years expenses aside, they should never consider selling during times like this.
Without knowing the circumstances of the OP or any investor, you can't really say that. It might make a lot of sense for some, especially if they don't already have a cash buffer.

Regarding not selling in this market. I think you might just as well kick yourself for not selling some stocks. Some may never recover. I have especially targeted Alberta stocks that I own. Don't think I will ever kick myself for selling IPL/PPL and even 1/2 my CU. Luckily hardly lost anything on these sales.

Using the cash from sales to extend cash reserve from 1 to 3 years makes sense for me. Unlike you, we don't all have pensions. But be careful, those pension funds could also be at risk!
 

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thats exactly what i'm wrestling with. i guess i see the possible implications of this crisis as being a lot worse than most.almost to a point of a possible breakdown in society.hope i'm wrong
I don't blame you for thinking that way. That is why I am hedging my bets.
 

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So living off a monthly salary wouldn't be good either?
Uhm... yep?
I have an emergency fund. You should at least have access to credit (like a HELOC).
Now you want the guy living from paycheck to paycheck to borrow against his home that already may be heavily mortgaged? Those homes are why some live from pay check to pay check. And why so many were foreclosed a while back. BofC used a 40% drop in housing prices in their worst case study last year.
 

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We have had this discussion multiple times. Everyone earning income should have about 6 months in an emergency fund to cover rainy days when one is out of a job. Living pay cheque to pay cheque is kind of like clicking the barrel of a revolver against one's head. Rude awakening for those in that situation today.

Retirees need even more of a cash reserve since they need to bridge a bad equity market in the absence of any work earnings. Hard for me to imagine someone risking their financial well being by NOT doing those kinds of things.
 

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Altared sed:
Hard for me to imagine someone risking their financial well being by NOT doing those kinds of things.
There are a lot of people out there that don't read forums like this. And they do live paycheck to paycheck or gov check to gov check. Not everyone has gazillions of dollars and fancy cars.
 

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There are a lot of people out there that don't read forums like this. And they do live paycheck to paycheck or gov check to gov check. Not everyone has gazillions of dollars and fancy cars.

I don't understand your comment. If people choose to live paycheck to paycheck, then they are spending too much for their income. They have to cut back until they can build up an emergency fund to take them through tough times. They are the ones at fault if they don't do that. What does that have to do with fancy cars?

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Now you want the guy living from paycheck to paycheck to borrow against his home that already may be heavily mortgaged? Those homes are why some live from pay check to pay check. And why so many were foreclosed a while back. BofC used a 40% drop in housing prices in their worst case study last year.
He can't use poverty as an excuse, he has savings he is contemplating selling. I'm saying you should not put yourself in a situation that the money that is going to buy the food you stick in your mouth in 2 weeks is invested in something that can drop by 50%. You can't treat dividend payments as a pension. They aren't guaranteed. And the whole idea of using dividends vs selling to raise cash is purely an illusion. You live off the total return of an investment.

Now that OP finds himself in this situation, I would suggest cutting back on spending and only selling what is necessary to fund this lifestyle to hopefully wait out the slump. I am merely commenting that OP may want to review his financial plan if he thinks the lack of cash buffer between his long term investments and his food budget is a safe arrangement. There are any number of emergencies that may arise that could force one to liquidate long term investments at inopportune times. And if one is not willing to do this, at least have access to low cost borrowing like HELOC.
 
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