If you buy that ETF, how long would you intend to hold it? Is it something you buy and hold for a couple of days? It’s nothing more than doing a bet right? Yesterday would have been a good day to buy it.
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I have been running a risk parity approach with UPRO and TMF based on the famous Hedgefundie thread on bogleheads forum. Given the market volatility, it might better to be heavy in TMF than UPRO now.
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While everybody is panicking, Berkshire Hathaway is issuing 5-years bonds paying a coupon of … 0%.
When monetary policies are such that it feels safer to give your money for 5 years to a corporate rather than keeping it on your bank account…
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…in Euro, not USD.
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Frankly speaking it wasn’t so bad. I have been preparing myself for this for last three years. I wonder though how I would feel if I got -50k (-50%). And how my wife would react… Hope she won’t kill me once this happens. :-p
BTW. Who bought yesterday dip? I bought VT at 67.70 but only 30 shares as I was scared. Should have bought more.
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I bought VTI, VEA and VWO but not at the very bottom. I’m more proud of buying GREK, ERUS and KSA at the bottom, even if small amounts.
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PS. El-Erian’s Advice to Investors: Do Not Buy This Dip https://www.bloomberg.com/news/videos/2020-03-09/el-erian-s-advice-to-investors-do-not-buy-this-dip
I have no idea who that guy is. But also do not misinterpret my purchase as a particular skill. I see my asset dip 10% below target, I buy to bring it back to balance, no second thoughts. That’s the plan and I stick to it.
Yesterday a particularly large number of assets triggered that level so there I was buying even though another -10% could be lurking down the road. Who knows, right?
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Hi guys! It looks like you are all doing smart things like buying the dip. Congrats!
What I don’t understand is this: I always thought that the best long-term strategy is to be FULLY invested, at least in theory. Therefore, I am always 100% in stocks with minimal spare cash (less than 10k). This means for example that when I got my 2019 bonus in January I immediately invested it.
Now, I know that currently it might be a good time to buy, but how? No cash left here, as theory suggests. The only possibility I have is to sell some assets that didn’t behave that bad, like a Gold Producers ETF, to rebalance and to buy assets that were hit more. The other thing would be to postpone some payments, like taxes, or to buy on margin, but I am not comfortable with any of these, as debt would ruin my sleep.
Anyone in the same situation or you were all so smart that you kept some cash to invest in the rainy days?
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Nothing smart about keeping cash for a future crash. I’m too fully invested with only my monthly savings left.
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Great question. It always seemed a bit contradictory to me that you should “invest in regular intervals“ but also “resist the urge to sell in a market downturn and, in fact, invest more.” As you alluded to, if you’re buying in regular intervals then supposedly you don’t have “spare cash” to take advantage of such a situation.
I tried to figure out this (seemingly) paradox a couple of years ago by searching around on Google, but it’s still not clear to me. Best I can tell is that the advice is really only applicable to (the large number of) people who don’t actually invest regularly. Of those who do invest regularly, some may also choose to set aside something like 5% each month in order to have “spare cash” when an opportunity arises (be it a specific stock, a friend or family member starting their own business, or a market downturn).
So my conclusion is that you’re the smart one by investing regularly. Assuming it’s something like once a month, you’ll also likely take advantage of the dip. In the end, although you’re not investing more, you’re certainly buying more.
My impression is that a portion of forum members haven’t been fully/regularly investing because they perceived stocks being largely overpriced. This of course is unknown, timing the market, etc. And I think they’d agree it’s not always a rational decision, especially since a highly-likely outcome is that years go by and you haven’t invested at all.
But I’d love to hear more opinions on this because I’ve always felt like maybe there’s something obvious that I’m missing.
Who suggested this theory? In the end, it’s up to you to decide which asset allocation you want to have.
So you’re basically living from paycheck to paycheck? 
I think it mainly comes down to two things:
- how long is your investment horizon? If you are talking about 20+ years, your gains in the stock market most probably will be the highest (compared with other assets)
- how much book value loss are you able to stomach? Can you live with your portfolio going down 50% or more in case of a stock market crash? Do you know 100% you won’t sell any stocks when everyone around you is going crazy?
Nobody has 100% stocks anyway (you need some money to live), but if you are ok with a wild ride and you don’t need that money for a long time: go for 100% stocks!
Over the past, 60% stocks and 40% bonds would have fared best (according to BigERN from EarlyRetirementNow), but that’s how it was in the past. With this AA, you could rebalance your portfolio.
Regarding 100% stocks and only a little money saved away: please don’t forget that if stock market is crashing, businesses will be affected as well. Do you have enough money on the side to be able to survive one year without income, because your job was cancelled and you don’t find a new one?
It might seem so now, but maybe at the end of this month, when you are scheduled to do your regular investment, prices will reach even lower levels. Or not, who knows? No need to change your habits around this.
You are talking about the emergency fund which shouldn’t be part of your AA anyway.
Changing the AA because of the market is not smart and is a harmful behavior longterm.
I had just sold some employee shares that became vested in late January.
I was just lucky. I sold high and now I’m buying low.
You are right. I usually include the emergency fund in my net worth, not in my AA.
Agree. You should make an investment plan and stick to it. I didn’t recommend to change your AA btw.
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Imagine how much even better the time might be, once we hit another -10 or -20 percent.
This is admittedly true for me.
And I’m still trying to make sense of it.
- So far, the stock market is approximately at the same level as it’s been a year ago.
- We‘re experiencing the early stages of a potential global health crisis, with infections growing exponentially in many territories and restrictions on mass events and travel being put in place that have been unprecedented in recent history. These just barely shaving off a year of stock market gains doesn’t add up to me.
I am still making my regular investments on a fund savings plan. Thankfully, my job should be fairly safe and provide so e sort of anticyclical protection. The greater the economic turmoil, the more I get to do (over the short to mid-term).
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Why? GDP growth isn’t affected that much. The reduced earnings are just temporary.
Stocks have already outpaced GDP growth considerably, over the last few years (I think I‘ve said it before on the forum).
That remains to be seen.
Deceased consumers are no source of growth or steady earnings. Companies defaulting and going bankrupt due to liquidity problems aren’t either (at least over the shorter to mid-term). We haven’t seen yet how well health systems in emerging economies are going to keep up with the virus.
Also, I doubt we‘ve really seen or heard the full effects on earnings yet, from companies.
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