Time to get out of stock market?

SC Trojan

SC Trojan

Level 2 Member
I just wanted to see others opinions on this. My thoughts is we're in a bubble right now and that there are signs it's going to pop. I look at a lot of "hot" companies like Netflix, Tesla, Facebook and say "didn't we see this movie in 2001?" Pretty much all stock indexes are at all time highs, so now is a good time to get out and wait it out. Even if this year is another up year in the market, I don't see it being more than 10%, and the downside to me is much larger (say 50%). Anyone have thoughts?
 
thepaul500

thepaul500

Level 2 Member
If you look at it from a pure valuation standpoint, stocks are not that high right now, and have plenty of room to grow adjusted for inflation. Take a look at a few different sectors other than the "hot" tech stocks. The commodities have been beaten down to what could soon be some very good deals if we see some upward momentum in raw materials/gold.

Now, if (when) Greece goes under, we could certainly see a large freefall. PIMCO's Gross is predicting the financial apocalypse, though I'd imagine he took a very large short position ;)

Or, things could turn around. The Eurozone and China could start seeing growth and we could go on a huge run. A few positive GDP surprises would do wonders.

Buying bonds now would be IMO, a terrible idea. The Fed WILL raise rates here sooner or later, in which case watch your principle go down the toilet. I'm not much a fan of all cash, as it just sits there and loses value. Edited to add, that in prior periods of raising rates, stocks have gone on very nice runs up, no guarantee obviously.

So, I'm still 100% in stocks, but I have 20 years till retirement. If it crashes in a few weeks, well, I'll take out a 2nd mortgage and buy some more.

Also, my opinion on this is worth exactly what was paid for it.
 
Matt

Matt

Administrator
Staff member
The answer is easy:

If it pops tomorrow, and it puts you in an untenable position - such as meaning you no longer can retire, or must make other changes to your lifestyle that are unacceptable you should adjust your allocation to the point where this doesn't happen any more.

Also, if you have made enough, and are happy with swapping that into a low risk investment, then do that.

But if you are just trying to guess when the next bubble will hit because you want to time the market, you are fighting a losing battle.
 
SC Trojan

SC Trojan

Level 2 Member
You're right, no one can choose the peak or the valley. After the bubble last time I can't count the number of people that said "oh, I knew there was a bubble". The problem was no one knew when it was going to burst. If you sold out in 2005, then you lost out on 2 or 3 years of growth because you mistimed it. Similarly, I had a couple people I knew that actually did time the stock market and sold pretty much at the peak. The problem is they were scared of getting back in and didn't buy in at the bottom. I actually did an analysis in like 2010 or 2011 that showed my continuous investing through the peaks and valleys was better than their cash in at a high and hold it all in cash.

I do think equities are getting over-valued. Take a look at Shiller's CAPE ratio. The last time it got this high was April 2007, and we all know how that turned out...

My real worry is I can't figure out what's driving growth. It seems like the world was pinning its hopes on China growing, and it looks like they are starting to cool. In the US, I don't see any real sustainable improvement in the economy since the last bubble outside of fracking and smartphone apps. Maybe I'm pessimistic, but to quote my favorite tv show it feels like "winter is coming"
 
PurpleSquirrel

PurpleSquirrel

MS Nuts
One of the indicators I watch is Advance Decline Line. Don't see anything to get out of stockmarket at this time. At a macro level, many stocks are advancing indicating a healthy trend.
 
ChiliPalmer

ChiliPalmer

Look at me.
SC Trojan said:
You're right, no one can choose the peak or the valley. After the bubble last time I can't count the number of people that said "oh, I knew there was a bubble". The problem was no one knew when it was going to burst. If you sold out in 2005, then you lost out on 2 or 3 years of growth because you mistimed it. Similarly, I had a couple people I knew that actually did time the stock market and sold pretty much at the peak. The problem is they were scared of getting back in and didn't buy in at the bottom. I actually did an analysis in like 2010 or 2011 that showed my continuous investing through the peaks and valleys was better than their cash in at a high and hold it all in cash.

I do think equities are getting over-valued. Take a look at Shiller's CAPE ratio. The last time it got this high was April 2007, and we all know how that turned out...

My real worry is I can't figure out what's driving growth. It seems like the world was pinning its hopes on China growing, and it looks like they are starting to cool. In the US, I don't see any real sustainable improvement in the economy since the last bubble outside of fracking and smartphone apps. Maybe I'm pessimistic, but to quote my favorite tv show it feels like "winter is coming"
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What's driving growth? Municipal debt, to some extent. While the US turned that spigot off, Europe turned it on.

As far as imminent decline, while I'd like to time, I know I can't. Get in, on a regular weekly or monthly basis, always. That's how I sleep at night.
 
SC Trojan

SC Trojan

Level 2 Member
I know that one bad week doesn't make a crash, but things are starting to look bleak. China's economy has a bunch of cracks and people are looking around realizing that was pretty much what the world economy was being bet on. Commodities have dropped precipitously, but it's not just a case of oversupply, it's also a case of anticipated demand not materializing. Sorry to be a chicken little, but I think the end is nigh...
 
thepaul500

thepaul500

Level 2 Member
I actually made way more money yesterday in my trading acct (not my 401k though, ugh!). Averaged down a fairly bad bet on BTU, originally bought a small chunk at 7.00 a few months back and watched it die (irrationally not selling), but bought a boatload at 1.05 a few days back and cashed out yesterday afternoon @1.83 (avoided that whole wash sale mess!). Moved some of the profit into a few gold miners (between their stock and bonds) who have been beat down like crazy recently, but should see a bump up in a rising gold price situation (aka, bottom falling out of market).

I'm not convinced that we are in for a long term selloff, companies are profitable right now (heck, even airlines are!!!). I actually welcome every single dip in the market, its just an opportunity to buy more. It would be crappy to be retiring in a few years due to uncertainty, sure, but with a 20+ year horizon, I get giddy just like I did an '08. (I should have bought more Ford stock instead of a house and I'd be retired now instead of 20 years.)
 
B

bgh10788

Level 2 Member
A wise person gave me two pieces of advice for the stock market.
1. Don't try to time the market. No one really knows it's a bubble until it pops.
2. Don't get scared and sell low and conversely, don't get excited and buy high.

For me, I'm not turning paper losses into real losses. The market will recover. If anything, now's a great time to increase investments. I would be if I didn't have a wedding to pay for.
 
Matt

Matt

Administrator
Staff member
If you know what you are doing, turning a paper loss into a real loss creates a gain. If you don't know what you are doing... well.
 
G

GettingReady

Level 2 Member
I'm staying the course, but I have made some changes. My dh and I will be retiring early next year. We don't have as much cash as I would like since most of it is designated for a replacement vehicle for 14 and 16 year old cars and our trip to EU next year. Our house will be going on the market and if it sells that will more than cover us the 5 years needed for max SS. Most of his 401k has been transferred to Vanguard via in service withdrawals. He only has 50k left in the account and I moved that to an interest income fund. I realize there won't be any gains but I'm okay with that. I really do not want to pull from investment funds in a down market.
 
Barefootwoman

Barefootwoman

Level 2 Member
If you're interested, GettingReady - Wade Pfau of Mclean Asset Management is offering a free webinar (I believe it's open to anyone who wants to register) on tax implications and related withdrawal strategies for retirement planning on October 7th. I am not affiliated with him - just know him as a well respected subject matter expert/retirement researcher in the finance community.
 
Barefootwoman

Barefootwoman

Level 2 Member
Advice from an experienced investor....be wary of panic or greed, educate yourself well on the topic and stay the course...adjust your glide path as necessary....it's more of an in depth topic.
 
G

GettingReady

Level 2 Member
Thanks for letting me know about the webinar. I'll do a search for it. We're planning on doing Roth conversions before SS starts. Ironically, once we starting getting the max SS benefit when he turns 70, vs me taking at 62 and him filing and restricting on my SS, it will be more than what we currently live on. It's strange to think of having more disposable income in retirement than we do now without needing to draw from our investment funds.
 
Barefootwoman

Barefootwoman

Level 2 Member
I apologize. I thought I had seen it advertised on their website, but looks like it was an email since I am on their distribution list. Anyway, here is their site, I am sure if you ask for a sign up link, they would send it - this is likely one of those sessions they do hoping to bring in clients, lol.

fixing the link to break it - sorry - its world wide web mcleanam dot com

yes, I am learning that there's as much to learn about retirement planning as there is investing...the learning never stops lol.

Wishing you a great retirement, sounds like you are all set!
 
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G

GettingReady

Level 2 Member
Barefootwoman said:
I apologize. I thought I had seen it advertised on their website, but looks like it was an email since I am on their distribution list. Anyway, here is their site, I am sure if you ask for a sign up link, they would send it - this is likely one of those sessions they do hoping to bring in clients, lol.

http://www.mcleanam.com/

yes, I am learning that there's as much to learn about retirement planning as there is investing...the learning never stops lol.

Wishing you a great retirement, sounds like you are all set!
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Thanks for the link. I've always invested, not as much as I should have, nor did I always know what I was doing, but at least I got plugged into Vanguard years ago. The past 1 1/2-2 years has been spent learning about retirement planning, drawdown, etc. Now I'm learning about MS'ing and CCs and rewards. Hope the next stage isn't learning about long term care facilities!
 
smittytabb

smittytabb

Moderator
Staff member
thehustla said:
Anyone keeping an eye out on VW stocks?
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No, but I know it went down after the scandal. As a VW fan, I was wondering if it might be a good time to buy a VW though. They have pissed a lot of people off. A friend of mine is quoted in a CBS news article and is part of a group that is suing VW for using software to cheat emissions tests.
 
G

GettingReady

Level 2 Member
I don't invest in individual stocks but index funds and never try to time the market. No doubt it will take VW time to rebuild their reputation and validitity. If they "cheat emission tests" what else have they falsified? I'm sure there will be other investigations.
 
chener

chener

New Member
sriki said:
Very much. I am trying to see how much fallout there will be and then decide if I should go in or not. It doesn't look good so far.
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We're talking about a minimum of $18 billion in liability that is likely to VW books. The damage is likely much more once you add in the hit to their brand reputation. They've already seen a noticeable drop in market share in EU only a month after the fallout.
 
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