What Will You do When the Bear Arrives? Well ... If everyone buys, than the market won't go down. Will it?
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Edit: The above was a quick shoot from the hip reaction to the thread. No intent to disparage anyone.
Truth is, you really don't know what you'll do until it happens. In '08 the picture was bleak. Hank Paulson, Treasury Secretary, was on TV trying to reassure a panicked public. Lehman Brothers - a giant financial institution - had crumpled in days. Money market funds, previously considered safe, were on the ropes and might well have collapsed without emergency government backing. As bad as it was here, international markets plummeted even more. I saw people who were retired and thought they were smart investors literally in tears after watching their retirement nest egg disintegrate 50% in a year's time.
There are options other than simple buy or sell. If you think the sell-off is overdone consider rotating out of conservative funds and into more aggressive ones at a slow and steady pace. Also, if your money is in Traditional IRAs, consider converting to a Roth while markets are depressed. Personally, I'm mostly buy and hold, but do adjust cash position upward or downward a bit as markets evolve (risk on/risk off). Generally, cash stays between 10% and 25% - so there's not a lot of leeway there to buy equities.
Just some rambling thoughts.
Bond desk questions @johnN: Sorry, but you've hit on a sore spot with me. Unlike stock, where it it easy to get a quote the vast majority of bonds sell on the over the counter market at whatever price bond traders can get for them. A lot depends on how many individual bonds you want to buy, generally in $
1,000 denomination, and their grade from junk to investment grade. When I buy bonds I make a bid and it is either excepted or rejected by the the bond house. I use Morgan Stanley who has the largest bond trading desk among the various brokerage houses, and since I'm a client I usually get a cheaper price if the bonds I want to buy a held in-house. If MS has to go on the street for what i want the price will generally be higher. The mark-up in bonds can be as high as 4%. Example, a bond a trader paid $960 might try sell at par, $
1,000. Today I bought
18 HTZ
1/2
1 7.375% coupon
10 for $979.97 and 8 at $980.04
Regards,
Ted
Bond desk questions Hi fundalarm: I've worked w/ edward jones before but IMHO the firm is a rip off. the advisors charge 2% annually and every bonds I find /they sell ~ 1% more more than other firms. The little guy like myself keep loosing $$ at the firm for advisor fees. Stopped using them since 4 years ago. Edward Jones can give you good analysis regarding bonds you want to buy, and most of them are safe BBB- or higher rated but you probably can do all the research yourself about bonds and set up a google.com/alert the tell if the bond will bankrup or go to moodys.com- very simple things to do to find research about the bonds. you can also ask schwab-bond specialist to do research about the bonds before you buy. Most bonds at schwab are very good ratings but sometimes I want to buy bonds are little junky higher yields BB or higher. If you buy good companies risks of bankruptcy is very low. I think bonds maybe more attractive than stocks, Funds/ETFs because you dont pay a fee, you still make little money if market is up or down and you can sleep better at night.
Pimco Has A Manager Who Tops Dan Ivascyn. His Name? Dan Ivascyn PCI is still retains a discount although. Narrower than in the past.
Separate question: Do folks regard PONDX/PIMX/PONAX as a core holding or a high yieldly satellite? Just curious what folks like
@junkster,
@davidsnowball,
@mikem,
@oldskeet think?
Regards,Mike
Mike I can't help you because of the short term nature of my methodology. I was in PONDX in 20
12 and a few months in early 20
13 but not again until this year. Its returns from 20
13 through 20
16 were not inspiring. Much of this year's returns are from its exposure to rmbs primarily non agency. I read somewhere PIMCO and Ivascyn are buying all the legacy non agency rmbs from before the crash they can get their hands on. I am 55% IOFIX and 45% DPFNX now which is primarily all non agency but with a heck of a lot less AUM. How long this ultra steady rise in that market can continue there I have not a clue. But the strong housing market has helped immensely.
What Will You do When the Bear Arrives? "If you're "nearly 100%" equities"@JoJo26: That's
not what he said. Read it again: "nearly
100%
of my investments in equities". Obviously he does not consider his cash to be "invested"... a perfectly reasonable perspective.
But then the performance of your "investments" is not an accurate representation or apples to apples comparison to how it stacks up versus broader index performance... If you have cash that you'd actually deem as investible, then it should be a part of your portfolio, and be a boon in down markets and drag in up markets.
What Will You do When the Bear Arrives? To understand how speculative stock investing really is, I always find it instructive to look at the par value of a company when it's issuing shares of stock. This is for Facebook in 20
14 when it was going to list some shares:
https://sec.gov/Archives/edgar/data/1326801/000132680114000059/prospectussupplementwhatsa.htmClass A Common Stock, $0.000006 par value
Amount to be Registered
162,698,
114
Maximum
Offering Price
Per Share
$75.
19
The par value of a stock is basically nil because unlike a bond it has no par value. Nothing whatsoever is legally promised to investors. The whole stock market is built on a hope and a prayer, and on relative valuations to bonds that can disappear like vapor the moment a company misses an earnings estimate. To me bond investing is far more rational. You know exactly what you're legally promised via covenants before you invest. You just have to analyze the balance sheet and think about where interest rates are heading. That's it.
Stocks by contrast are mysterious. "Mysterious" could be a euphemism for much more malevolent terms to describe how the market functions. How did the issuers of Facebook come up with a $75 maximum offering price when the par value is nil? I imagine they got together and plugged in various models and projections and price-per-click calculations to speculate that it should top off at $75. Is that what it was worth then? Is this what the stock market is worth in total today? Anyone who says they have a definitive answer is lying.
What Will You do When the Bear Arrives? It sounds simple to buy during a bear market, but the facts are that people buy during the bull market, and will sell during and after a decline. I heard that a guy by the name of Robert Prechter has an amazing history, so he says, of predicting the stock market collapses.
A June 2015 profile of Robert Prechter, the world’s foremost proponent of Elliott Wave technical analysis, turned out to be the most popular investing story on MarketWatch for the week in which it was published.
One of the reasons is that, at the time, Prechter said the bull market in U.S. stocks was in a “precarious position” as a “mania” gripped investors, who pushed stocks to sky-high levels of overvaluation. The market has only risen since then, and it even got a bump from the November 2016 election of businessman Donald Trump as president.
The Depression is just around the corner
Prechter has the distinction of being bearish since late
1987. His fame came from some prescient bullish calls in the mid 80s. Since then he has been among the most vociferous bears on the planet.
True story and I am NOT referencing Prechter here. I once spoke at a seminar. One of the other speakers was a well known perennial bear. He told me in private that he actually was never as bearish as his public persona just that doom and gloom sold more subscriptions.
What Will You do When the Bear Arrives? "If you're "nearly 100%" equities"@JoJo26: That's
not what he said. Read it again: "nearly
100%
of my investments in equities". Obviously he does not consider his cash to be "invested"... a perfectly reasonable perspective.
What Will You do When the Bear Arrives? As someone in their mid-40s with nearly 100% of my investments in equities, now that it's no longer needed for parental care purposes, I will happily deploy my large cash pile to opportunistically pick up stocks I want to own or add to as they "go on sale." But since I'm already comfortably in the markets, I'm in no rush and won't just pay any price!
If you're "nearly
100%" equities, how do you have a large cash pile.....
These Funds Are Tops In 3-Year Returns At this point I think the 10 year returns are probably more relevant as it has gone through 08, 09 dip. I dont think the next three years will be like the past three :)
Art Cashin: "Divergence Between Dow And Dow Transports 'Worrisome' "
Technical Analysis Tip of the Month for August, 2017 Hi again
@Tony and others,
I edited my first comment of August
1st with an additional comment note. With this, I am bringing this thread back to the top of the stack. Any thoughts and or additional comments would be welcome?
Skeet
