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For those with high cash levels, when will you start to buy?

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  • Reply to @Maurice: Too late to bail. Should have a couple of months ago. About four months ago I posted asking whether anyone was thinking of getting out in anticipation of the potential debt ceiling standoff, but no one else seemed to be too worried about that so I stayed. Stupid me!
  • need advice,12% I-bonds, small % in VZ & T . also small % inFTBFX, FBNDX
    and FGMNX, all other monies in FDRXX at 0%. 78 years
    of age no debt but need more income. hope this is not the wrong way
    to ask the Question.
    regards to all
    Bill potato head 83301
  • edited August 2011
    Buying a bit more of an MLP fund (SMF) that is actually up slightly today (at least as of this point.) Really pulling together around the most high conviction ideas and things I'm most comfortable with as long-term holdings - a good portion of which falls within the "real asset" category. Not really interested in buying anything else at this point, although I do see a lot of things that look appealing if this doesn't get worse - and I certainly think it could - Leucadia (LUK) at $27, Loews (L) at $35 and Greenlight RE (GLRE) at just under $22. I continue to think that one can't just sell and go to cash, but it becomes trying to figure what works best in this environment in the meantime.
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  • edited August 2011
    Reply to @Maurice: No one learned anything from 2008. Our banks are soooo much better than everyone else's is the constant refrain on CNBC - it's a wonder why Bank of America is trading at less than half of reported joke "book value"), so on and so forth - didn't Citi reverse split to $40-45 from around $4-$4.50 and now it's $27 and change? I've said it for quite some time - no one learned anything from 2008. One can only hope that we don't enter into another, similar situation because I don' t know how we get out of it. Berkowitz better get started on another thank you letter to the government for when the bailouts begin anew.

    "Prosperity is just around the corner." And if it isn't, you'll hear a legion of people go, "We could NEVER have seen this coming!"

    RRPSX/TBT now lower than worst point in 2008.
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  • Hi Maurice,

    I thought I would make a comment in response to your post.

    Perhaps you missed my post where I began to scale back in March, April and May on my equity positions as called for in a seasonal strategy that I follow. During this period I raised my cash allocation form 5% to 20% while reducing equities by a like amount. Currently, my portfolio’s asset allocation is 15% cash, 25% income and 55% equity and 5% other. In addition, I catch about a 1.25% yield per quarter off of my portfolio. Since, the latter part of June I have been scaling back into equities and I plan to keep doing so until I reach an equity allocation of about 60%.

    I follow the S&P 500 Index rather than the DOW 30. During the Great Recession of 2008 stocks bottomed at about a forward P/E Ratio of 11. That is the current P/E Ratio range of the S&P 500 Index as I write. So with this I feel there is good value in stocks.

    I have linked Morningstar’s Market Valuation for your and others to review. Currently it is showing about a 13% discount on the stocks they follow as of Wednesday August 17th. No doubt with the pull back in the markets today that discount will widen.

    Today, I added a little in to a couple of my large cap blend funds, a little to a small cap equity fund, a little to an equity income fund, and a little to one of my commodity funds. Combine all the purchases came to about ½ of one percent. With this, you can see I am scaling in during this stock market down turn.

    Good Investing,
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  • edited August 2011
    Reply to @Maurice: Preferred, fine (and glad you didn't take that "opportunity")
  • Reply to @Maurice: Don't have a lot of cash in my taxable account, but I am thinking of buying at around S&P level of 1000. Most of my taxable account is invested in balanced funds like OAKBX and FPACX, with smaller amounts in 'exciting' funds like FAIRX, OAKGX, WAGOX, etc.

    For my tax-sheltered account, I am still in GLD (1/3rd) and rest in cash. The portfolio value has actually increased during this stock market downturn. No chance of buying anything which is below 200 day moving average. Watching the momentum every week and besides gold bond ETFs are doing OK (IEI, BIV, etc.).
  • Reply to @Old_Joe: Well my reply to that is: Never underestimate the stupidity of politicians! Call me Pollyanna, but in April I never could have foreseen them torturing that poor dead cat the way they did. Commend you OJ for raising the question back then. Linked that thread if anybody wants to read a "blast from the past.". Take care.

  • edited August 2011
    FWIW (not much): many years ago we absconded by going heavy into variety of balanced and hybrid funds. This to keep us from shooting ourself in the foot on days like this. However, still retain 35-40% that am allowed to monkey around with. That was tilted towards stocks until the April-June period when the high market caused me to scale back by 4 or 5 % and increase cash. Couple weeks ago I reversed that when DJI slid below 11000 and added couple %. Today took us back to same point so doin nothing. Next buying would be at around 10000-10300, but just a percent or two shift. No special insights here nor is this meant to be instructive to anyone else. Perhaps however there is some wisdom in the aggregate. As to return, we track our benchmark TRRIX quite closely. Yesterday we were break even for the year. Down a percent or two today.

    We gotta keep a long term focus. Days like this might mean having to live a few extra years to achieve them long term returns. Work out. Cut back on the fatty foods & alcohol. Turn off cnbc and listen to some good music. (-: (-:
  • Reply to @Maurice:
    Hi, Mo. I did a little bailing several months ago, dumping about half of our Terra Nitro TNH after it doubled, and about half of GE after it lost half its value.
    Am sitting at about 20% cash and making a shopping list for DJIA 9000 or below. The list includes another MLP (KinderMorgan KMP), and divys CenturyLink CTL, Abbott ABT, maybe Duke DUK. Trying to figure out what's up with Emerson EMR - its taken a drubbing lately. Always wanted Pepsi PEP and MickyD MCD also.
    Our sole remaining mutual fund is Oakmark OAKBX which treated us the best in '08. I like the 10-yr figures, and use it to give it a haircut when it gets over a certain $ amount.
    Bought into physical gold last year, and physical silver more recently.
    Basically, we're watching and waiting. Bought a little too early in Spring of '09 and will try to develop more patience this time. I think we're headed down the rabbit hole.
    best, hawk
  • Reply to @Anonymous:

    Hi skeeter. Just want to say that I've been impressed with your disciplined investment style. You don't seem to be prone to knee-jerk reactions, but always take a measured approach. Thanks for sharing.
  • edited August 2011
    good afternoon, what a massacre the past few weeks. Looked at my tsp today and my gain is 0% over the past 3 months [although should be extra 10K put it there the past 3 months that vaporized]. I may consider changing the distributions to 70s% equities/30s% fixed income in US Govt bond + MM...just some food for thoughts. still distributions are 80s% equities and 20s% into fixed income...
    Old joe had it right, SHOULDA SOLD 4 MONTHS AGO!!...LOL

    IMHO - too late to bail anyways

    anyone buy today? I bought a little of us steel bond [x] last week but kept most of my powder dry. thinking of buying wife more high quality diamonds w/ some available cash once get more paychecks rather than gold [probably worth something long run since she does not want me to buy gold anyways... lol] probably keep some peace in the family

    rono and catch has it right - need to diversified into other vehicles like art, gold coin, real estates, wine, diamonds, physical bar golds, cars/large houses

    anyways, have a great weekend!
  • edited August 2011
    Reply to @johnN: Maybe I'm crazy, but I think in terms of real estate, you don't want to go for opulent, you want to view it as "utility". Places (condos/homes) in highly convenient areas with good schools and other services (near transit, etc.). Places that could be perfectly livable, but would be in high demand if rented. If we stay around this level or things get worse, I think houses will not be going up in value anytime soon and could drop further, but the houses with the most demand will be the ones that are most conveniently placed and easiest/least costly to maintain, no one's going to want the giant McMansion. A return to house as utility (that is, for those who can get financing/even want to buy/etc. etc. etc.)
  • edited August 2011
    Hi Scott, I think Buffett may have a better views on housing than what we think about, but he is usually right if we have a long term horizon

  • Reply to @scott:
    Hi Scott. There is something called 'intrinsic value' also. A small farmhouse (ca. 1790) with self-sustainability: hand dug well, large root cellar, small stream, barn, fireplace, 25-acre wood supply. The rest of the family (metro kids) won't touch it; I'm buying the the place (I already own half of it). Cash.
    Call me crazy.
    best, hawk

  • Reply to @hawkmountain: No, I call you friggin' awesome.
  • Reply to @Maurice: I added $130,000 more to my DBLTX bond fund today.
  • Reply to @MikeM: Hi Mike, Thank you for the words. Someimes, I wonder if "some" investors figure the cost of trading in and out of securities from taxation on the profits and the associated trading cost. A lot of my invested assets are held in a taxable account so I have to consider these things before making short term moves, although I do make them from time-to-time. This is one of the reasons I lean towards the good dividend paying stocks and mutual funds of same. In this way, when the market pulls back, I look at it as a buying opportunity to buy more of them. I have found that over time many of the stocks I own have increased their dividends paid. That is something that I have yet to discover with my fixed income assets. The bottom line though is that by taking at total return approach to investing when the dividends are grown over time and is also complemented with some capital appreciation on the assets held is a good way to offset inflation through a simple and conserative approach.

    Many seasoned investors know that historically stocks go soft in the summer months and this is a good time to add to ones favored positions. This is what I have been doing over the years ... accru cash and then deploy it when there are good buying opportunities. Many times when some investors are selling, when the markets are depressed, I am buying ... and, when the markets are peaking and they are buying and feeling good about it I am trimming some positions back, booking the profits and then accruing cash to deploy later.

    I also employ a seasonal strategy that calls for one to increase their equity holding during the fall on into spring. Then one trims the allocations back at the beginning of summer and then to start over again to load equities again towards fall. Recently it seems the loading part has now started earlier during mid to late summer. At least it has form my experience over the past couple of years.

    Thanks again for the comment. It was indeed appreciated.

  • Howdy folks,

    circa33 - check out NCV for dividend stream.

    When to buy? er, ever hear of trying to catch a falling knive? This could be a bloody axe right now, so I'd be very much against setting some numeric buy level for the DOW 'going down'. I never buy on the down side. You start to buy when the trend 'turns up' and then you start buying slowly and see if it continues to gain. You only add to your play if your initial play makes money. If it idles, you wait. If it loses, you sell when it breaks your 'stop loss' - say 10% or so. If your play wins and the trend continues UP, you continue to scale in to your total intended play (e.g. initial play of 25%, next step 25%, final 50%). You scale out in the same manner if your investment starts losing money.

    Where to play? Other than diversification to a fault, I like all commodities, real estate - particularly farmland with most things ag and water - er, Ma isn't making any more of most of this stuff and us humans seem to breed like rats. I like asia and most emerging mkts and countries that have commodities. Dividend payers [this would be one specific area where you can start shopping when a stock price on a good company is depressed sufficiently to give you a great yield].

    just some ramblings,


  • Reply to @Skeeter: Hi Skeet. Just to second Mike M's comments. I enjoy and benefit from your posts. I'd just add that stocks/stock funds are a truly long term investment and thats easy to overlook in this amped up "instant everything" world. So, a month's or year's returns don't really amount to a cup of warm spit over the long run. Read enough prospectuses and you'll see even some of the best funds experience occasional double digit losses over short time frames. Take care.
  • Reply to @johnN:
    john....not to you and thanks for the links. I have heard Mr. Buffett speak to both topics in the links. I do not agree with what he sees/finds; although he seems to be a down to the earth thinker. I feel he has underestimated the nature of the current situation; not unlike all too many whose main profession is to study and/or trade the markets.
    Just my 2 cents. As I have stated many times before; depending on one's age; this is not your parents, grandpartents or their parents economy.
    Heck, it is not even the economy I have known from 5 years ago.
  • edited August 2011
  • edited August 2011
  • Reply to @hawkmountain: Hey there Hawk- I might have a year or so ago, but not now. I'm with Scott all the way... this country is falling apart- the disintegration rate is getting faster and faster. I think that government/corruption by special interests has totally spiraled out of control, and that nothing short of a small revolution is going to make any difference.

    JR (Fundalarm) recently mentioned "yes, this is a good time to get something physical of value", and sounds to me like you are surely doing just that. Good luck!
  • I don't believe the answer is when to buy, its how. I'm cost-averaging in, buying small slivers for now. Keeping powder dry. Buying a low risk balanced fund like VWINX, and if/when we reach levels of hopelessness ("blood in the streets"), buy riskier funds.

    Easier said than done, but its my plan.

    I've been reading many posters chime in that Dow 9K is expected - seems to be a popular target. And that means 9K is either way too high or way too low. The mean, the markets.... aren't rational and will always overshoot or undershoot.

    We are just gambling. There is no more investing. Computers own the markets. And politicians will do their best to derail it all. My rant for the day.
  • I ended up with a lot of cash when I consolidated retirement accounts recently. I'm gradually moving that cash into emerging market equities and bonds. I also like ag funds, mainly MOO. Bought some LatAm (ILF). For the rest I'm adding mainly to existing positions in Matthews funds. The only individual stock I'm accumulating is Nestle. Don't really care if we haven't hit bottom; still have plenty of dry powder.
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