going back to 2016 there has been all this panic about reaching the top of the bull market, disaster around the corner, etc. It is my understanding that Saul stays fully invested regardless. And history supports this, if one holds real and legitimate best of breed companies with real and legitimate businesses that are not stuck in a bubble.
So to get to the gist of these conversation, to see if it is even worthwhile I am going to ask in this poll:
I plan on selling and going cash when I think the economy will go into recession
I plan on selling and going to cash when I think the market turns bear
I am just going to continue to remain invested and invest monthly w long term perspective
I will continue to hold what I have, but put new money into cash until a market crash
<<<You are missing the option, “I am going 1/3 cash right now, the rest damn the torpedoes in it for the long haul.>>>
Vote for holding what I got but putting all new money into cash. Not quite the same, but practically speaking, will probably be when/if the time comes.
Nervous with the market at these levels but pretty slow mover here, in 2008-9 by the time I realized it was a serious bear I had another revelation that it was too late to sell. I do keep a cash/ or cash equivalent cushion of about 15% at all time. I am more diversified than many here. Was able to raise some cash and buy equities in 09 that still have today. After that experience I would lighten up on stocks that I was not strongly committed to if we entered a bear market.
Yes…when a bunch of green suddenly turns to much red.
I have a sister (husband works at a investing letter) that sold Everything at the bottom and Never got back in to this day. I Never mention it to them…(or politics).
<<<I have a sister (husband works at a investing letter) that sold Everything at the bottom and Never got back in to this day.>>>
Seems to me these people would have been much better just doing nothing and adding money each quarter, than what they did, which was to sell, sell, sell, and never return thereafter.
Of course circumstances vary each time, but this would seem to be, in my opinion, the eventual outcome in most every cycle.
Does anyone think tax cuts not factored in to all the forecasts by now? The $1.3 trillion dollar budget deficit. Larry Kudlow.
41 million people on Goldilocks food stamps.
Got to about 40% cash during January exuberance and posted such on Macroeconomic Risks!! Board. Can’t sell beloved Google and some others.
Can someone PLEASE explain to Neil Cavuto Fox News that the 20% prime rate 1980s was accompanied by 14% wage settlements and 14% inflation? Babbling on unawares of the concept of real interest rates. Fox!
So 2.5% barn burner GDP Q1 and 17 multiple. Oh yàaaa. I like that
First point to note is that most of the news is about “the Dow” and almost none of us invests in the Dow. What matters to me is not what happens to “the market” but rather what happens to the stocks that I own.
Usually these fears come from news media talking heads who have nothing else to talk about. So they talk about “the market”, its history compared to something or other, or some textbook theory, etc, etc. Most of it is worthless and is best ignored.
When markets get nervous, I do notice, and my usual strategy is to trim the most speculative holdings, and keep the quality holdings. They might get thumped but most will recover in reasonable time frame. Worrying about the future is a waste of time. Respond to the numbers when they happen.
I find it amusing that this question comes up so frequently in reaction to so many different market conditions. Since I have been following this board in late 2015, I have seen some variation on this poll/question in reaction to the market going up, the market going down, and the market staying stagnant but our own portfolios (“Saul Stocks”) are going up or down “too fast”. I am certain I could find more examples, those are just what come to mind. Always the same question:
When do I sell and put (some percentage) of my portfolio into cash?
I don’t mean to belittle the question, thinking about when to sell and how much to hold in cash is just as important as learning when to buy. Yet the fact that it is asked in response to so many varying and contradictory market and portfolio conditions is worthy of note and careful consideration.
It seems to me, perhaps this very good question is being asked in response to the wrong stimulus. Asking the question in response to large movements in the market or a portfolio gives the question a basis in fear: either that I am actively loosing money or that I could possibly loose money in the near future. Fear is a very weak foundation for investing. Far better to ask this type of question from a perspective that is not linked to stock price by fear. Personally, I use risk management as the basis for asking this question (which has no link at all to portfolio or market performance) though I have no doubt there are many other successful strategies.
Wondering why so much in cash waiting for a downturn. Wouldn’t you miss the upside while you’re waiting for the market to head south? In my limited experience, holding too much in cash would’ve cased m to miss several doubles and triples. Even if they lose in a downturn, I’d still be way up wouldn’t I? Just some thoughts that I hope are helpful.
I don’t sell during the these downturns, however, I do keep a sharp eye on those spec stocks and other stocks that I’ve shown extreme patience with. :). I’m not one to get freaked out by these things, keep my eyes for news on my stocks.
Having a cash cushion to buy more, to pay for expenses is part of my overall plan so I don’t have to worry about that.
None of the above apply to me because I don’t know what I’m going to do. Time will tell. In principe I remain fully invested keeping a sharp eye for a market top which are very hard to spot except in hindsight. What that means is that a fairly good “top spotter” will be down quite a lot before taking action. One alternative is accumulating cash which will help down the line when the top arrives but it is not a fee lunch, there is an opportunity loss that can be significant if the top takes a longtime in coming. Risk, as distinct from uncertainty, is something that can be calculated. There must be some formula for comparing opportunity loss caused by raising cash against real loss for staying fully invested. Some Fools have suggested 30% in cash as a guess.
The above is uncertain. A better alternative is to make sure to have a sturdy portfolio that can bounce back. Such a portfolio has less cash and therefore is more productive during the bull phase. I see three requirements, 1) no margin, no debt. 2) sell all the speculative positions. 3) hold on to and even add to high conviction stocks. These have to be real, data based high conviction. If you even remotely use words like “hope, could, wish, might” or other similar ones, the stock is not high conviction but high hope.
I can speak based on my 2000 bubble experience. I had decided to hold through the downturn. The trouble was that I held some stocks into bankruptcy because they were high hope, not high conviction. As simple as that!
There is another important consideration, the size of the portfolio in relation to your expenditure needs. If you can live comfortably on interest and dividends you have no need for high growth, high risk stocks. If your portfolio is small and you have no other source of income you have to take on more risk. This is where the stock/bond allocation plays a role. The richer you are the more important asset allocation becomes.
Results are in, 59% are long term investors, going to hold, and add monthly or as usual.
25% are similar, will hold, but are no longer investing but accumulating cash with new money.
83% are at least holding.
Only 3% have sold out.
4% will go all cash when they think economy will go into recession.
9% will sell when market turns bear.
I am with the majority here. My conviction on NVDA just increased this week as we now can foresee an entire new upgrade cycle with the new graphics standard. This will take multiple years, and new games will need to come out and move more mainstream, but it is coming.
From my perspective, with the MULE acquisition holding things up, I do believe the market has now turned more bearish. Rising interest rates, trade war, high valuation…difficult to say otherwise. But this is all part and parcel of capitalism at work. We cannot always make easy money. Just as the market does not always go straight up with no end, it won’t go straight down with no end. Investing proves that time is our most precious resource.
I do want to add an example, as there is a time to sell. I don’t want to reiterate all my reasons to sell, but just give one major example form a mistake of the Fool, long ago now…
Iomega. Back in the late 1990s the Fool made a killing on Iomega and their portable drive. This was of course long before the cloud and when dial up internet was all the scream. The share price went through the roof! I mean, it may very well have been David Gardner’s #1 pick of all time (and that is saying something). However, the Fool never sold. The share price cratered, and 4 figure gains were eventually sold at low 3 figure gains.
This is an example that one could have predicted ahead of time. A time to sell is when a disruptive innovation appears. With Iomega its breakthrough product quickly became antiquated by better and more disruptive products. It is a process we have seen happen too many times to count.
The mistake people make often is selling out way to soon for new dominant companies. Just like you want to hold companies that have great business, not that might, envision, etc. as Denny says, the same for disruption. Not just might, envision, etc. but actually you see such a product in the market and taking real marketshare.
