Stocks - The Best Buys 2

[DoubleK]

Never been so happy to be in cash. It took longer to get all set up in the US than I ever imagined and as it turns out it's been a blessing in disguise.

[Shazam]

Originally Posted by DoubleK

Never been so happy to be in cash. It took longer to get all set up in the US than I ever imagined and as it turns out it's been a blessing in disguise.

Now all you have to do is find the bottom.

[DoubleK]

Originally Posted by Shazam

Now all you have to do is find the bottom.

I'm not that smart, but I do know that putting it to work at 5700 is better than 6100.

[Shazam]

Could drop another 10%. Maybe 20%.

Who knows.

Right now this drop is of the magnitude last August.

[Cappy]

I've been slowly transferring my TFSA and RRSP to cash.

my TFSA is about 75% cash. RRSP will be about 50% cash. My non-registered will be stocks etfs due to the Capital gains taxes.

Any one else moving this way?

I know "time in market" > "timing the market" but it just seems too obvious that we are in for a recession

[Leondros]

Originally Posted by Cappy

I've been slowly transferring my TFSA and RRSP to cash.

my TFSA is about 75% cash. RRSP will be about 50% cash. My non-registered will be stocks etfs due to the Capital gains taxes.

Any one else moving this way?

I know "time in market" > "timing the market" but it just seems too obvious that we are in for a recession

I mean the S&P 500 is already down almost 10% off highs. Market has priced in a recession the past 2 weeks significantly. The thing with the geopolitical situation this time around is policy is what is driving this economic headwind which can very quickly switch back the other way. Even more important to not make decisions on this. Time in the market IS greater than timing and you are gambling if you are trying to time anything right now.

Having said that, if you near term need the cash it could be a rational decision. If this is the case I question your initial investment decision of having this cash in the market in the first place.

[Cowboy89]

Originally Posted by Cappy

I've been slowly transferring my TFSA and RRSP to cash.

my TFSA is about 75% cash. RRSP will be about 50% cash. My non-registered will be stocks etfs due to the Capital gains taxes.

Any one else moving this way?

I know "time in market" > "timing the market" but it just seems too obvious that we are in for a recession

The only issue is missing the eventual rebound. Between 1995-2024 78% of the stock market’s best days have occurred during a bear market or during the first two months of a bull market. If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by 83%.

[Torture]

Originally Posted by Cowboy89

The only issue is missing the eventual rebound. Between 1995-2024 78% of the stock market’s best days have occurred during a bear market or during the first two months of a bull market. If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by 83%.

Exactly. Easy to say you should be in cash right now but when do you put it back in?

If you have a long time horizon this is just a blip. It doesn't matter what the market is today, but 20+ years from now.

[PaperBagger'14]

Originally Posted by Leondros

I mean the S&P 500 is already down almost 10% off highs. Market has priced in a recession the past 2 weeks significantly. The thing with the geopolitical situation this time around is policy is what is driving this economic headwind which can very quickly switch back the other way. Even more important to not make decisions on this. Time in the market IS greater than timing and you are gambling if you are trying to time anything right now.

Having said that, if you near term need the cash it could be a rational decision. If this is the case I question your initial investment decision of having this cash in the market in the first place.

This is my thoughts as well, I’m a year and a half from selling my investments and utilizing that cash. A nice big dip in the markets like this means buy buy buy for me. With a year and a half to go before needing it I am of the belief that things will normalize again.

[Cowboy89]

Originally Posted by PaperBagger'14

This is my thoughts as well, I’m a year and a half from selling my investments and utilizing that cash. A nice big dip in the markets like this means buy buy buy for me. With a year and a half to go before needing it I am of the belief that things will normalize again.

That's not really a long time horizon in equities. There have been 'lost decades' in markets past. For long term investors (ie it you measure your time period before needing the cash in decades), then sure buy the dips, time in market> timing the market. But if you actually need the cash in a time period measured in months (even if it's 12-18 months), you might want to revisit how much risk you're taking on in the market (especially with this macroeconomic backdrop) relative to being able to fund your goals.

[Leondros]

Originally Posted by Cowboy89

That's not really a long time horizon in equities. There have been 'lost decades' in markets past. For long term investors (ie it you measure your time period before needing the cash in decades), then sure buy the dips, time in market> timing the market. But if you actually need the cash in a time period measured in months (even if it's 12-18 months), you might want to revisit how much risk you're taking on in the market (especially with this macroeconomic backdrop) relative to being able to fund your goals.

Agreed on this - 1.5 years is very short for equities. There is a reason why planning into retirement your change to weighting to bonds starts 10 years out if not earlier.

[Slava]

Originally Posted by Cowboy89

The only issue is missing the eventual rebound. Between 1995-2024 78% of the stock market’s best days have occurred during a bear market or during the first two months of a bull market. If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by 83%.

No offence intended, but I laugh every time I hear this "best days" information. I mean sure, that is true. But because those stats take place during those terrible times, those best days are after the precipitous fall. So yeah, it would suck to miss that big day (which is like 2-3%, and a massive move upward), but not dropping that 15% first is a bigger impact.

I'm not suggesting that you can get out, buy at the bottom and everything is perfect because that is just luck if you can even do that once. But, just saying that this statistic sounds a lot better than it is in practice.

Originally Posted by Leondros

Agreed on this - 1.5 years is very short for equities. There is a reason why planning into retirement your change to weighting to bonds starts 10 years out if not earlier.

Well, if you should/intend to go to bonds. This gets into a tangential discussion about risk management and asset allocation...but it's not exactly cut and dried.

[PaperBagger'14]

Originally Posted by Cowboy89

That's not really a long time horizon in equities. There have been 'lost decades' in markets past. For long term investors (ie it you measure your time period before needing the cash in decades), then sure buy the dips, time in market> timing the market. But if you actually need the cash in a time period measured in months (even if it's 12-18 months), you might want to revisit how much risk you're taking on in the market (especially with this macroeconomic backdrop) relative to being able to fund your goals.

I don’t “need” that cash per se, I would like to make some other moves with it but if the markets are still down by that time I can easily wait it out multiple decades. In other words not selling those investments will not meaningfully change anything about mine or my family’s day to day life.

If it takes an extra 5-15 years to see the gains I want that is also fine. I’m young enough I’ve got loads of time for the market.

[Table 5]

Originally Posted by Slava

No offence intended, but I laugh every time I hear this "best days" information. I mean sure, that is true. But because those stats take place during those terrible times, those best days are after the precipitous fall. So yeah, it would suck to miss that big day (which is like 2-3%, and a massive move upward), but not dropping that 15% first is a bigger impact.

Indeed, over the long run it's better off missing the 10 worst days, then being in the market for the 10 best days. Those 10 best days almost always come right after a big drop. Financial institutions love the "10 best days" and "in the market" chestnuts, as it keeps the fees coming in. There are no fees when clients are sitting in cash.



Obviously timing either is an impossible task, but I think there's nothing wrong with reducing some risk right now (especially if it helps people sleep better at night).

[nik-]

It annoys me that they don't include the "not missing either" graph on that chart.

[Slava]

Originally Posted by Table 5

Indeed, over the long run it's better off missing the 10 worst days, then being in the market for the 10 best days. Those 10 best days almost always come right after a big drop. Financial institutions love the "10 best days" and "in the market" chestnuts, as it keeps the fees coming in. There are no fees when clients are sitting in cash.



Obviously timing either is an impossible task, but I think there's nothing wrong with reducing some risk right now (especially if it helps people sleep better at night).

From a psychological perspective, it's far better to miss the losses than the gains.

[TorqueDog]

Found on another site, kind of hoping we're following the same trend:

[Shazam]

I was thinking the same thing this morning.

Plowing $5mm into TQQQ.

YOOOLLLLOOOOO!

[V]

I'm not sure selling after a 10% drop is the smartest move. Maybe there's more to come, but if you're selling now, I'm not sure what you're going to need to see to get back in.

[Qwerty]

Originally Posted by Shazam

I was thinking the same thing this morning.

Plowing $5mm into TQQQ.

YOOOLLLLOOOOO!

Rookie numbers, this is CalgaryPuck! Gotta pump up those numbers. I expect at least $20mm