Too much binary thinking going on here. This isn't an all-or-nothing, permanent decision. Heck, you could have been out the market for one month from Feb 23 - March 23 in 2020 and been rewarded quite well. I understand what qlai is doing. I don't feel the need to keep my money in just to have it invested when I don't have a clear edge. I may be back in something next week -- or not -- who knows. Nothing wrong with protecting capital.
I'm going to mostly cash in Long-Term portfolio
- Thread starter qlai
- Start date
Sure, it's fine to preserve capital. I do wonder if they have a real plan on when to re-enter markets. And if said plan is realistic. I've said it numerous times this year, 2021 feels a lot like 2019. Ignoring the 2020 black swan effect, it would not surprise me to see a moderate late rally into end of year possibly spilling over into 2022. Then a corrective phase on news.
A lot can happen this Monday a ton of stuff is at kind of a pivot point can move in both directions. So I'll be quick on the trigger if things look off.
Since I also cashed out my 401k recently, I'll give my logic.
When I cashed out in october, my all stocks plan had returned a pretty good 27%, although until end of September it was stuck around 12%, proof that 2021 was not an easy year (returned a blowout 98% in 2020).
My concern is that within 6 months we will have a crash and my 401k would drop 30%. Of course the hope is for a V shaped crash like in Q1 2020, but it could also be a months/year long recovery crash... Either way, I will go back all in when I believe market has bottomed.
The next challenge is when to re-enter if there's been no crash.... toughest decision, particularly is the signals are as mixed as they are today.
When I cashed out in october, my all stocks plan had returned a pretty good 27%, although until end of September it was stuck around 12%, proof that 2021 was not an easy year (returned a blowout 98% in 2020).
My concern is that within 6 months we will have a crash and my 401k would drop 30%. Of course the hope is for a V shaped crash like in Q1 2020, but it could also be a months/year long recovery crash... Either way, I will go back all in when I believe market has bottomed.
The next challenge is when to re-enter if there's been no crash.... toughest decision, particularly is the signals are as mixed as they are today.
One of the reasons for me was crypto “bubble.” Everywhere I look, cryptos are pumped as though it’s guaranteed money. I am not very knowledgeable in cryptos, but it seems a lot of dumb money is pouring into unregulated space. If cryptos crash, it will spill over to equities.
Another interesting case would be if we have equities “crash” (10-15% pull back lol) and cryptos don’t go up - meaning they may not be “new gold” hedge as promised.
One thing to note is that Bulls don’t usually roll over and die, so it’s most likely going to be a fight that may drag for a year or more.
Another interesting case would be if we have equities “crash” (10-15% pull back lol) and cryptos don’t go up - meaning they may not be “new gold” hedge as promised.
One thing to note is that Bulls don’t usually roll over and die, so it’s most likely going to be a fight that may drag for a year or more.
Great minds think alike
I am contemplating moving more into cash also.
One reason, we are getting ready to close on a new house and just don't need any drama with the market until we close in Jan.
A few other things giving me pause.
1. EVERYBODY is a bull. I've seen numerous posts from the Z's and the M's "why should I get a job when I can make all this money trading?" And everybody thinks they are going to be able to time the exit from the party. They're smarter than everyone else.
2. Never underestimate the ability of partisan politics to fuck things up. Look at what they HAVE to get done by the end of 2021/very beginning of 2022.
3. China. I don't think the property crisis is anywhere near to being over. Not to mention the saber rattling with Taiwan.
4. COVID. It ain't going away. IMO this has to slow EM and EU growth.
5. The Fed. IMO they will pull forward both easing and rate hikes. The longer term danger is they wait too long to TRY to curb inflation. On top of that you get a Dovish president and is loathe to do what is needed for fear of a WaPo-ish headline "Women and Minorities most Impacted by Rate Hikes"
The other thing I see is I think passive investing is going to underperform. It's just not natural to have these kinds of gains in the indexes for such a long period. That could have a big imnapct on the overall psychology.
You are sitting on a pile of cash and will be able to take advantage of any opportunity the market presents.
If you are going to make a move like this, best to back it up by some research. Investment decisions based on feelings will yield random results.
Lol. I remember Livermore story where he would go to the bank to look at pile of cash in order to have appreciation of money. Harder and harder to do these daysYou are sitting on a pile of cash and will be able to take advantage of any opportunity the market presents.