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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?

ltr
This.

Living paycheque to paycheque is like buying stocks on margin. One negative shock away from financial ruin.
 

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@Agent: 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.

That is silly talk. Except for the very low income, people have a spending problem, not an income problem. All middle class and above have an obligation to put aside a rainy day fund for the security and well being of themselves and their family.
 

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Now is the worst time to sell. The recovery has already started. And if this turns out to be a false start, how much lower can prices go? Not much. And this crisis will blow over fast when it ends. There has been no loss of plant or equipment, and the number of deaths is small. In fact the overall death rate is lower than before the corona virus.
If you didn't sell out in early February it is certain you should not sell now. I am getting set to do a lot of buying. Started buying a week ago Friday and added to my position again last Friday.
 

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Now that OP finds himself in this situation,
Who in the heck said the OP was in this situation??? You are making things up. You brought up the subject of emergency fund. That is not what this thread is about. We all already know about that.

What it IS about as gmail said, is - is the whole world going to hell in a basket? And if so should we sell everything??

Not going to comment directly on some of the other posters unfortunate comments, but it is clear that not everyone here appreciates that not every Canadian is as financially well-off as they think they are. Sad really.
 

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Discussion Starter #25
I dont "need" this money to survive the next year or so. i have cushion.
I'm a senior, & last year or so I've been thinking maybe i should just cash out & stay out. kinda wish now i had. still wondering if i should.
 

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I dont "need" this money to survive the next year or so. i have cushion.
I'm a senior, & last year or so I've been thinking maybe i should just cash out & stay out. kinda wish now i had. still wondering if i should.
I fully understand gmail.

If I had hindsight I might have done as you said, at least in part. Only have 10-15 years left (if health holds out) and if fully cashed out, we would have had more than enough to live off. Staying invested, was mainly to maintain a legacy for our kids. Still will, but maybe less. We could have done an annuity too. But Scottish blood said not to hand over our savings to someone else!

I decided to just de-risk portfolio. Not at all worried about it. It's more than we need.

I AM worried about how or when this Covid thing will come to an end.

Take it easy.
 

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I dont "need" this money to survive the next year or so. i have cushion.
I'm a senior, & last year or so I've been thinking maybe i should just cash out & stay out. kinda wish now i had. still wondering if i should.
And that's a judgement call you have to make ... if you truely think the economy isn't coming back, cash out and stay out. IMO, it'll rebound in time and be back to normal.
 

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Now is the worst time to sell. The recovery has already started. And if this turns out to be a false start, how much lower can prices go? Not much. And this crisis will blow over fast when it ends. There has been no loss of plant or equipment, and the number of deaths is small. In fact the overall death rate is lower than before the corona virus.
If you didn't sell out in early February it is certain you should not sell now. I am getting set to do a lot of buying. Started buying a week ago Friday and added to my position again last Friday.
No actually 2 weeks ago would have been the worst time to sell before this latest ~20% rebound.

If the OP thinks the market could re-test previous lows then it is not a bad move at all to sell now, take advantage of this small recovery and wait for a clearer view of when things begin to normalize.

Economic data is not even in yet on impact this global shut down will have on earnings. Markets are far from stable and huge amount of negative news still to come. Or it continues to climb unabated. WTFK.

But I don't think the banks and telecoms in Canada will be cutting dividends. Oil and gas, yes.
 

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Economic data is not even in yet on impact this global shut down will have on earnings. Markets are far from stable and huge amount of negative news still to come. Or it continues to climb unabated. WTFK.
You are right. We are still in first period. Long way to go before we get through this. Everything will get hurt. Some like utilities and grocers maybe less so. There will be volatility. Resolving crude war might give market a small boost, but demand will be low with no summer travel.
Not a good time to predict markets. Any News is likely to be negative, but markets will likely build that in well before we hear it.
Best of luck guys & gals
 

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I'm in the same boat as many of you. Have a lot of investments and a healthy dividend portfolio. Investment values have been hammered and divs are dropping. I have made a few small changes only and am doing my best to sit on my hands and switch off from the markets. My only income is CPP but I have several years of cushion sitting in various cash and savings accounts. It is still hard to watch our future retirement funds taking such a punishing. Keeping ourselves and our loved ones safe and healthy is the biggest concern right now.
 

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Now is the worst time to sell. The recovery has already started. And if this turns out to be a false start, how much lower can prices go? Not much. And this crisis will blow over fast when it ends. There has been no loss of plant or equipment, and the number of deaths is small. In fact the overall death rate is lower than before the corona virus.
If you didn't sell out in early February it is certain you should not sell now. I am getting set to do a lot of buying. Started buying a week ago Friday and added to my position again last Friday.
This is outright speculation, made just like any other, with no basis of anything other than a personal hunch and a conglomeration of various news pieces compiled in your mind.

I don't know how anyone could declare such a thing so matter of factly.
 

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My friend who has two properties in Toronto and is a Real Estate Agent shocked me when he said he sold 100% of his stock holdings a week or so ago.People still forget the stock market is long term investing and you need to forget about it in times like this.
 

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My friend who has two properties in Toronto and is a Real Estate Agent shocked me when he said he sold 100% of his stock holdings a week or so ago.People still forget the stock market is long term investing and you need to forget about it in times like this.
I know of someone that did that too. It is not necessarily the wrong thing to do. If someone has a million dollars in GICs and is say 80 yrs old, they could probably live well for the rest of their life. Add pension income and they would be rich! Add a little income from those properties and they would be really well off.

So, it really depends on just where you are in life and what other sources of income you have. IF you can, staying out of the stock market makes good sense. A lot of people do. For some of us without pensions, it didn't and we are getting hammered :(

If I had known what was coming, I know I would have cashed in in January!
 

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This is outright speculation, made just like any other, with no basis of anything other than a personal hunch and a conglomeration of various news pieces compiled in your mind.

I don't know how anyone could declare such a thing so matter of factly.
You are perfectly correct, I could be wrong. But tell me, how often does the stock market drop more than 30% or 40%? The last time was 1929 - 1932 and they had no government interference or Federal Reserve or Plunge Protection Team propping up the market. Unless you think the S&P is going to zero, it seems a poor bet to bail after a drop like this. The odds favor a recovery if not right away then in a few months. In the meantime how low do you think they can go?
 

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I think selling in a panic is a mistake. Whether it's a virus, or something else, there will always be some catastrophe that knocks the stock market. It happens pretty often.

The problem I have with selling (getting out) is that you then have a difficult problem: when do you get back in? "I will do it by feeling" is not a realistic plan. It's extremely difficult to time both the exit and re-entry, and come out better than passive investing. Even hedge funds can't do it.

I have not sold. I'm still on my passive asset allocation plan, which includes 30% stocks.

I also think we should be careful about the assumptions for how large % a crash can go. Each time is a little bit different, and this time, stocks started from high valuations. The whole stock market was inflated by central bank stimulus so it's possible we could see a greater than 50% crash in the S&P 500. There is no hard rule that says declines stop at 50%.

Today's stock market is very different than previous decades. It's a much more electronic market, with rapid access to information and quotes, and more automated participants. We also have many people with retirement savings in the market (RRSP, 401k, supers) as they amateurly manage their own retirement savings. This is very different than in the past.

Example: today, people have constant, real-time views of their $ total and this changes the psychology. When there was a stock market drop of 48% in the 1970s, people were not logging into brokerages and watching their retirement savings plummet in real time. The information and data moved much more slowly. What if those 1970s investors had seen the same data we see today? What if they had a phone sitting beside them that kept buzzing and showing horrific headlines and saying "the stock market is crashing" all day long?

Perhaps they would have sold more aggressively (more panic) etc. A lot of this comes down to human perception and human behaviour.

Myself, I think it's possible that stocks could decline 50% to 80% but that has nothing to do with COVID-19. If you asked me a year ago, I would have said the same. Yeah, I'm making up the numbers, but I suspect that real-time data and fast information access leans towards greater % decline.

Simply put, stocks are dangerous. They can decline tremendously. Even if I had no concerns about viruses whatsoever, I would keep in mind that stocks can decline 50% to 80% (roughly) and could take many years to recover. That's how stocks are.

Now is the worst time to sell. The recovery has already started. And if this turns out to be a false start, how much lower can prices go?
If this is a false start, I think stocks could possibly drop as much as 70% from today's price, based on my logic above for a 'worst case'.

I don't think that's likely, though. Maybe more like another 40% drop?

Or maybe the bottom already happened. Who knows? Stocks are dangerous... this is the game we choose to play when we invest in stocks.
 

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Or maybe the bottom already happened. Who knows? Stocks are dangerous... this is the game we choose to play when we invest in stocks.
It is a game that many here play. But it is not a requirement. There are many more people out there that don't own individual stocks at all. Perhaps they have or expect to have pensions. Or they just have their savings in bank accounts and GICs. Hopefully not mutual funds, but those too.

Getting 100% out of the stock market IS an option, even now. I know of a few who have done just that. Sold off all their holdings, even at today's prices (which may seem low, but not that low if you consider the recent run-up). If selling allows them to put the proceeds in a safe place, earning interest, that might be the right thing for them to do. I agree that it should not be panic selling.

Could be those considering selling are retired and this will give them enough for rest of life. Or it could be they are young and saving to buy a home. There are no doubt many other scenarios where it is still reasonable to get 100% out of the stock market and join the millions others who don't own stocks.
 

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You are perfectly correct, I could be wrong. But tell me, how often does the stock market drop more than 30% or 40%? The last time was 1929 - 1932 and they had no government interference or Federal Reserve or Plunge Protection Team propping up the market. Unless you think the S&P is going to zero, it seems a poor bet to bail after a drop like this. The odds favor a recovery if not right away then in a few months. In the meantime how low do you think they can go?
I agree it's possible that right now could be something like a reasonably good time to buy. It was worse to buy before, clearly.

But I don' t think it's reasonable to say that things like "how much lower can it go?" "The recovery has already started" and "This crisis will blow over fast when it ends"

To support your point though, here's an interesting figure. It looks like when the drawdown is >30%, it usually doesn't go below 40%.




Of course, the starting point is important, IMO. From the recent peak of 29500, the DOW dropped 37% in Feb - March. But compared to an average of more like 25000 over the past 24 months, it only dropped 20%.
 

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It is a game that many here play. But it is not a requirement. There are many more people out there that don't own individual stocks at all. Perhaps they have or expect to have pensions. Or they just have their savings in bank accounts and GICs. Hopefully not mutual funds, but those too.

Getting 100% out of the stock market IS an option, even now.
I was writing from the perspective of someone already in a certain stock index / asset allocation plan. I think if someone has a plan in progress (has committed to stocks) they should not disrupt it. I'm 30% stocks, so I remain 30% stocks.

But you're right. Playing the crazy game of the stock market is not a requirement and it's totally fine to get OUT of the game.

And if someone decides to change their asset allocation, it is much better to do it today when the market is somewhat calm (vs few weeks ago). At least today, both stock and bond prices are pretty stable.

As with the stock plan though, I think one should approach that as an official plan. This is to prevent a person from constantly changing their mind or having emotional reactions to the mood of the day. Are you in stocks, or not? If you are in stocks, what's the asset allocation?

I think it's completely legitimate for a person to say: my investment plan is 100% GICs with 0% in stocks. They should then stick with that plan over the long term.
 

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To support your point though, here's an interesting figure. It looks like when the drawdown is >30%, it usually doesn't go below 40%.
peterk, putting my computer engineering hat on again and speaking as a data modelling guy, I want to add that these kinds of "statistics" are extremely suspect.

I wrote some lengthy reasons on this a few posts above. But the main point is that the dataset is so incredibly small, that we really can't take away any lesson from those kinds of historical facts. The market is constantly changing, so the scenario today is always unlike the past scenarios. Those few past examples are basically meaningless.

It is fine for Rusty to invest in stocks, if he has decided on an investment plan that commits to stocks (not sure what % stocks and what % bonds or GICs). But he has to be careful to remember that stocks are incredibly dangerous, and could still do something insane like swing down another 50% or 70%. Yes, even if that typically does not happen, or even if it has never happened before.

Stocks do things they have never done before, quite frequently. These events wouldn't be surprises if they could be anticipated! A stock investor must expect the unexpected.
 
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