Is it time to cut and run ... or, a time to do a little buying?

Old_Skeet

Hi all,

It depends.

For some ... It might be a time to cut and run if they are leveraged or at the high range for equities within their asset allocation.

However, for me as mostly a long term investor who trades a little from time-to-time ...

I got my watch list out and most likely will open a spiff position in the S&P 500 Index somewhere around the 2030 range should the Index pull back to this mark and then average in from there based upon its price movement and/or a time line up to and into fall. In addition, I got a few funds that I’d like to add to which are in the growth area of my portfolio. Since, I have ample cash currently held within my portfolio (about 20%) I am not looking to lighten up in my equities at this valuation (2050) range. I consider a five to ten percent pull back in the Index as a buying opportunity as long as I stay within the mid range (45% to 55%) exposure to equities within my asset allocation (low allocation being 40% and high allocation being 60%). Simply stated, it is not the time to go all in, for me; but, it just might be a good time to do a little nibbling to round up a few positions and to open my traditional fall spiff, a little early.

Based upon my last Instant Xray analysis (07/31/2015) my portfolio bubbled (net) at about 20% cash, 20% bonds, 50% equity and 10% other.

What's your thoughts on the current market movement? And, what might you be doing, if anything?

hank

I'll sidestep your question Skeet. But I do think it points to the wide divergence of views on investment philosophies among contributors. All of course are "correct" in their own way. Short on time. But quickly, there are the "timers", the "buy and die" types, "momentum players", "technical analysts" , "risk-takers" and we conservative "slog-it-out" types.

I'd worry if all my funds were going up at the same time. I figure upon having some dogs every year along with the gems. I don't mind losing 2 or 3 or even 5% in one year - If over 5-6 year spans our $$ is growing at an acceptable rate. I think the fact that in the early days my (commission based) advisor had me 100% in aggressive global growth funds probably helped me become immune to these types of ups and downs. One the other hand, some get very concerned if the DJ is up 3% while they're down 3% at any point in a year.

Junkster

There doesn't seem to be much panic here in light of a very ugly market. Meanwhile, junk bonds (sometimes a precursor to the equity markets) have been down, down, and down since 5/31. I can't predict any better than the man in the moon. But a real meltdown in junkland would have real negative reverberations in equityland. Energy could be the key as if energy prices keep dropping that puts even more burden on junk bonds.

msf

hank said:

I'd worry if all my funds were going up at the same time. I figure upon having some dogs every year along with the gems. I don't mind losing 2 or 3 or even 5% in one year. If over 5-6 year spans our $ is growing at an acceptable rate.

Agree completely.

There was another thread asking about when one looks to change funds. For me, if everything is moving in the same direction, I get concerned about lack of diversification and look to see whether I should be making some adjustments.

That said, I have been doing Roth conversions for some time, converting bits and pieces when the market is down during the year. At the end of the year I pick the best and undo (recharacterize) the other ones. Now looks like a good time to convert another little piece.

hank

@msf: If it's the same thread I looked at, I wondered too. My comment would have been: "The world's a very big place." Not all global bond funds are going to invest in the same countries and currencies at the same time or in similar amounts. That doesn't necessarily mean any particular manager is right or wrong. So, cut these global bond fund managers some slack. And (as you pointed out) understand the reason you own the fund.

Your approach to Roths is the correct one. I think it was Fidelity I was reading recently that recommends this approach. Example: If you convert 5 different ones in a given year and than re-characterize one or two that lagged while keeping the profitable ones, you are legal. However, if you recharacterize one (go from Roth back to Traditional) and than immediately use that same $$ to do another conversion you are NOT legal. There's a waiting period before you can do another Roth conversion using the same money. Complicated?

I haven't tried that approach. In my case, the (single) conversion of January has already "burned up" 7 months of the IRS's required 5 year waiting period. So I've gained on that score although the investment has lagged. A lot of ways to look at these.

LLJB

Hi Old_Skeet,

I think it's a good time to add a little to areas that have been hit harder and I've been adding a bit to energy stocks but the broad market isn't very far off it's peak and I'd prefer to see even more weakness than you would like before adding broadly. I'm not feeling any desire to sell. The CNN Fear and Greed indicator is showing a lot of fear and that suggests more of a buying opportunity to me than a sell indicator.

Old_Joe

LLJB pretty well sums up my feelings too.

Mark

I pretty much agree with Hank. Most likely we're a jumble of different ages each with our own unique goals and investing circumstances. I'm mostly sitting on my hands unless Mr. Price hands me a more than decent sale price on some pretty good companies who been relegated to the bottom shelf. (e.g. see Energy)

PRESSmUP

I have no desire to sell, but I haven't gotten the urge to put my 401K rollover to work in equities at this point either. Sitting on a pretty good slug of cash doing nothing in the rollover account. I did buy an additional tranche of VTR since reits are doing well, but that's about it.

We are well beyond due for a pullback of AT LEAST 10%, and there are red flags all over the place.

I have sufficient equities in a taxable account and the rollover such that I won't feel the least bit nervous about missing the next move up.

But, I'm not sure that's the direction we'll be heading over the next few months.

Old_Skeet

Well ... What say ye now?

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JohnChisum

My opinion? This is not over yet. Today could be very bad or surprising. That's the market.

A couple of months ago I started to lean bearish. This market is obviously broken. The big question , is this a correction or the start of a bear market?

We shall all know in due time.

PRESSmUP

Hey Skeet....I am going to pull the plug and take a helpful loss on PG and CVX. I have no idea at all what oil is doing, and PG is wandering in the desert as well. I have a feeling my mutual funds may see some redemptions, and thus some taxable gains this year, so some offsetting losses would be ideal.

I am eyeballing VZ and WFC as suitable replacements for the income sleeve, but may wait just a bit until the dust settles.

As for funds, FMIJX will be the first out of the gate....but not all at once, and not quite yet.

press

VintageFreak

definitely sell a little of what you are thinking and buy a little of what you are wanting. help you sleep and at worst, you didn't really do much but maybe have a tax loss to boot in the process, which never hurts.

jlev

@PRESSmUP why is FMIJX on the out list? if I may ask for your thoughts.

PRESSmUP

Sorry for the imprecise wording jlev....FMIJX being "first out of the gate" meaning it will be the initial spot where new money will be flowing. I currently do not have a position in the fund.

press

Sven

Don't think FMIJX will see sizable outflow. They are conservative investors that hedge currency exposure similar to Tweedy Browne. The leveraged ETFs will take the biggest hits. Next are the ones with sizable emerging market exposure.

If I would seek shelter in foreign exposure in turbulent time, FMIJX would be my first choice and Seafare G&I (with Andy Foster) for emerging markets.

johnN

same courses. still 80/20 in 401@work. bought couple of oil bonds recently yield ~ 7%