Question: What will you do if the market pulls back by over 20% slowly, suddenly or a combo of?
Which funds will you sell, buy, keep for the long run etc? I saw some of my cohorts have that deer in the headlights, forlorn look during last March's market Scheisse fest. Or are you already sitting mostly on the sidelines already? I do remember some on this board like Mr Rono and others were stepping in and buying in steps which depending on how much and at what level was very likely an excellent move looking back at it.
I'm heavy in PMEFX Penn Mutual 1847 Income. Fund mgr's have pulled back on their equity holdings and have stated they would step in with purchases if there is a market dislocation. They are former fund mgr's of BERIX Berwyn Income and over the time period there have shown the ability and willingness to do so. Kind of comfortable with FEVAX First Eagle US Value as well. Both those I would be buying...I think...maybe...
I'm starting to formulate my strat of what stonks I would buy in a downdraft of 20-25-30% and will be placing limit orders for the HD's, JNJ's, BRK-B's, ACNs, CLs at those lower levels...
Like they say...the time to buy an umbrella is when it is sunny out, no?
Good Health and Good Luck to all,
*favorites on this list.
Hopefully my own free cash stash will have grown enough to be useful, by the time a correction or a bear shows up.
My AA is almost 70% equities, all in mutual funds and ETFs. I keep 5 years of expenses in my credit union savings account. I am a low spender.
March 2020, I sold some ETFs in my taxable account where I could TLH. Anything that had gains, stayed. Within a few weeks, all that loose money was invested in new ETFs. So I'm fiddling with my taxes.
Since I likely won't need the money in my investment accounts, it doesn't matter what they do in the near term. I'm able to weather the storm, it seems. In March 2020, the value of my portfolio went down by more than my house is assessed, and I shrugged and did something else. This was part of my written plan. In late 2019, after a great year, I restated what do when the Scheiß hit the fan. Didn't know I would have to implement it so soon.
So, essentially, no changes anticipated for this 48 y/o. (nb: said plan subject to change as necessary, of course - I'm not dogmatic or fire-and-forget.)
To answer the questions , I'd be a buyer on the way down or possible on the way up. Time will tell.
Have a good weekend, Derf
It hurts a little when markets tumble, but in recent memory it’s always proven a great buying opportunity. Who knows about next time?
Couple tidbits from some of the bubble-vision gurus:
- Gundlach commented that The Dow and other averages don’t mean much if we get runaway inflation. His comment (rough approximation) - “If inflation takes off you can tack another zero onto the end of all those averages.”
- Another guru (name unknown - sounded pretty intelligent) suggested more frequent rebalancing during the current exuberant markets. Instead of quarterly rebalancing, do it monthly or whenever things get unbalanced. I kind of like that one.
Personally - So diversified and conservatively set that it really doesn’t matter much what markets do. You younger & cleverer ones can make the big bucks.
Gains have already been harvested a couple of times this year to get back to the January allocation %'s. That has resulted in significant increases to the $'s allocated to cash and bonds . That process will continue as the year progresses if the risk markets continue to shine.
It is possible that it will take five or more years for losses to recover, even after a modest bear market.
QQQ didn't hit it 2000 peak until 2015. DJIA lost 40% in the 1930's, was up only 5% in the 1970's and many of us can remember the loss of 10% in the 2001-2010.
Having just entered retirement without a pension, I can ill afford to loose 30% of my savings nor wait ten years for it to come back.
To answer your question, if there is a substantial drop, I might DCA back in to about 50% of where I was at the start but little more.
@carew38. Do like thinking of more tax efficient ETFs. Can get out without exit fees of many mf's. Which one's? Nobl? Dstl?
BTW. Nice article in Barron's today. Associate at Bridgewater had comments about old 60\40 I'll recap and ping out when I get the chance
@Derf do you think politically they would allow something like an old fashioned multi year drawdown? I'm not sure. I see more extreme downs, ups, vol, you know Vegas type of excitement.
My thinking aligns with yours ('ill afford to lose...') and is what caused me to leave the market altogether 1y ago plus a couple other breakeven selling points. (Except for the occasional rally play since.) I have missed out on some hundreds of thou solely for the sake of protective decisionmaking at age 74. I shoulda stayed the course and left DSEEX and PONAX and FRIFX completely alone, but did not. Yet as the saying goes, Was it the right decision at the time? Sure.
A small correction about QQQ: its breakeven after the 9/1/2k plummet came during July '14. Still, your general point is altogether taken.
Fidelity eliminated short-term (under 60 day) fund trading fees from their own FIDO mutual funds years ago. Did you mean from all of their 3rd party fund offerings?
"Short-term trading fee: Fidelity charges a short-term trading fee each time you sell or exchange shares of a FundsNetwork NTF fund held less than 60 days. This fee does not apply to Fidelity funds, money market funds, FundsNetwork Transaction Fee funds, FundsNetwork load funds, funds redeemed through the Personal Withdrawal Service, or shares purchased through dividend reinvestment. In addition, Fidelity reserves the right to exempt other funds from this fee, such as funds designed to achieve their stated objective on a short-term basis."
Regarding the assumption that inflation will kill the golden goose because of monetary and fiscal stimulus, one word--Japan. It could just as easily go the other way when the stimulus and "handouts"--somehow what happened last March with the Fed for the stock market wasn't handouts, but now that the money is for working people it's "handouts"--stop. We could have unemployment and deflation. But markets are overvalued either way.
So we've got room to run.
Someone posted recently the decade-plus it took for breakeven from that peak (for gogo tech anyway) ... only (only) 6y+ for SP500.
Completely OT --- can anyone explain why M* gives 4* to FXAIX and 5* to the faintly underperforming VOO?