Gyroscopic Investing

Kriegsspiel wrote:This pleases me. I sold all my non-PP stocks in my taxable account just before 2018 in order to buy real estate.

Congrats! (I also bought a home just before 2018.) Too bad residential real estate prices tend to be highly correlated with the stock market

Real estate price movements tend to be dampened relative to those of the stock market, but on the other hand, most first-time home purchases are made with at least 5x leverage (assuming 20% down payment or less). Maybe it's a wash...

Tortoise wrote:

Kriegsspiel wrote:This pleases me. I sold all my non-PP stocks in my taxable account just before 2018 in order to buy real estate.

Congrats! (I also bought a home just before 2018.) Too bad residential real estate prices tend to be highly correlated with the stock market

Real estate price movements tend to be dampened relative to those of the stock market, but on the other hand, most first-time home purchases are made with at least 5x leverage (assuming 20% down payment or less). Maybe it's a wash...

Hah, well IIRC you bought a house in SoCal, which is waaaaaaay different from what I'm planning to do, which is buy a fixer-upper in the Rust Belt for, say, $30,000 in cash.

But yes, if I sold stocks and the peak, then bought a property after everything crashed... I'd probably write a book about how my strategy is the shit and make a bunch of money. Hell, if real estate prices crashed by the time I'm buying, I'd just buy a non-fixer and plug the rehab money back into the stock market.

ochotona wrote:Schwab is trying to prepare clients for a bear market. It's pretty obvious from their client communications in the last few weeks.

@LizAnnSonders

"We have been writing about the “risk” of a melt-up for a while now- becoming clearer that’s what we’re experiencing- discipline, rebalancing, diversification all crucial"

Liz Ann is Chief Investment Strategist, Charles Schwab & Co., Inc.

US stocks up 1% today. My EM ETF up 1.5% in one day. This is nuts. It's got to snap back like a rubber band stretched too far. Trees do not grow into outer space.

My International Growth fund is + 6% YTD, not including today which will be another 1%+

Budd, you'll be retiring by March...

Fear Of Missing Out. Heard a story that more retail investors are starting to get in. Now. Finally. Hah.

Three things:

1) The PP has kept me in stocks. I either still would have never gotten back in from 2009 if it wasn't for the PP, or I would have gotten in and bailed early again. I guarantee it. Instead I get to enjoy it.

2) It looks like these tax cuts are working at least for now, with Apple bringing back money and jobs, various companies giving pay hikes and bonuses, etc.

3) When it happens, this is going to be the mother of all crashes taking everyone down that doesn't have some gold in hand. Or at least that's what I think.

Haha, I was thinking for my birthday in Feb.
Agree, I would have sold to cash to “lock-in” profits countless times between 2009 and today. PP has kept me in stocks too.
It’s certainly been more challenging to stay in Gold and Bonds.
Nevertheless, I am happy with the PP’s performance and combined with a stock heavy global PP the combination has been rewarding.

ochotona wrote:US stocks up 1% today. My EM ETF up 1.5% in one day. This is nuts. It's got to snap back like a rubber band stretched too far. Trees do not grow into outer space.

https://en.wikipedia.org/wiki/Yggdrasil

dualstow wrote:

ochotona wrote:US stocks up 1% today. My EM ETF up 1.5% in one day. This is nuts. It's got to snap back like a rubber band stretched too far. Trees do not grow into outer space.

https://en.wikipedia.org/wiki/Yggdrasil

Uh oh

dualstow wrote:

ochotona wrote:US stocks up 1% today. My EM ETF up 1.5% in one day. This is nuts. It's got to snap back like a rubber band stretched too far. Trees do not grow into outer space.

https://en.wikipedia.org/wiki/Yggdrasil

I love it! Ha!

This run up is amazing. Obviously it has to end at some point, but you gotta love the ride!

Some of the year-end 2018 S&P500 targets called by various analysts were in the 2850 range, we hit it today. Weird.

Messy Monday coming. Shanghai -1.46%, Hang Seng -2.72% right now. I want to see what Europe is doing when my alarm clock goes off.

I put a Standing Liberty quarter dollar on the corner of my computer just now. The date? 1929.

Friday was really really bad. I need more "really"s in there, but you get the point.

I have half an urge to sell everything and go straight cash for a bit... bah. I hate feelings like that, because I can't be the only one thinking that, right?

Eufo if you hold the PP, don't sell stocks. Your allocation is already low. 25% is a hunker down allocation for most people.

ochotona wrote:Eufo if you hold the PP, don't sell stocks. Your allocation is already low. 25% is a hunker down allocation for most people.

I'm actually a modified GB allocation. 40% stocks. I still probably shouldn't sell...but I sure feel like selling.

When do you need the money?

ochotona wrote:When do you need the money?

About 2/3rds is locked away in a Roth, so that's going to be there for awhile. I may not touch that at all. The rest is in a margin account that I've been using to save up for a house. I've been looking for 2 years and don't like the housing market at all right now, so who knows?

The right move here is to stay the course, I think. I'd love to sell everything but gold and cash in my margin account and then start nibbling back in as things get worse. The obvious problem with that is that it may not get worse and V back up. Beyond just missing out on the move back up, I'd also take a tax hit.

I'm not great at separating my emotion (gut feelings) from trading. I sold all my VTI back in 2014 (edit, not 2016) after a bearish drop. I then nibbled back in as the market came roaring back... missing out and paying the taxman.

Maybe this time is different... maybe it isn't. The graph sure looks different... it looks bitcoin toppy.

If you believe stocks will be higher than they are today, and in your lifetime, before you really need the money, then that should help. I might sell a tiny amount, just for psychological purposes. Won’t change anything.

The hard part, as you already know, would be getting back in.

Amazing the emotions brought up by "small" 1-2% downward moves in the stock market since people have gotten accustomed to it never going down...

You never hear about similar moves in bonds on the news. Or gold generally. But the sky is falling if it happens to stocks.

I guess a lot of people worry “if this is it.” Is it the edge of the precipice. Will other people think similarly, panic-sell, and make it a self-fulfilling prophecy.

Well, if this keeps up, the cash allocation is what's going to kick me into rebalance land. No hesitation in doing so once that happens. I love a good sale! (Just say that to yourself 10 times before hitting the "buy" button.)

Eufo, if you want to buy a house then I would have cash on hand because we never know the price of housing. It may go down in the next few years. As to the Roth IRA, I wouldn't touch it.

What I'm saying is this, you wouldn't want the house prices to go down and then take a big loss in your house buying account at the same time. That would be disappointing.

Where are the tweets? Where is Trump? Aren't the democrats, illegals, someone somewhere responsible for this HUGE stock market drop?

This is what is supposed to happen, stocks crushed, bonds and gold are making up for it today!