With stock prices at all-time highs and growing unease filtering out of the nation’s capital, investors will want to have cash on hand to take advantage of any opportunities that may emerge.
https://www.fool.com/investing/2017/02/16/cash-will-be-king-in-2017.aspx====
Would you recommend raising cash now in anticipation of picking up some bargains in the future?
I think the period around the State of the Union will be a telling time. I also think that Trump's State of the Union speech will be one of the most watched in a long time ... no one can guess what he will say.
Comments
I've never raised or lowered cash levels in anticipation of these circus acts preferring Mr. Markets take/guidance instead.
Then another year passes, another prognosticator makes a fool of himself. Pun intended.
Then another.
And then another.
However, you should listen to me when I tell you, yes you should have cash on hand. I'm also telling you there will be WW III coming soon. No, really. I'm serious. I just don't know how to put the emoji for "serious".
Old_Skeet always keeps an ample amount cash for the unexpected including stock market pullbacks. It is a standard part of my asset allocation.
- First, stick to your long term plan whatever it is. Market timing is very tough to pull off.
- Second, if your plan allows for overweighting or underweighting equities, than I believe this is an appropriate time to be underweight (meaning a higher than usual cash level).
- I'd never try to base an investment decision on an anticipated speech, Federal Reserve meeting, Act of Congress, Supreme Court ruling or the like. Whenever I've anticipated one such outcome from such - the opposite usually occurred.
- Yes - I watch the political scene unfold with alarm. But this is not a political forum and there's little I can do to change the course of history anyway.
Like you, I suppose, I read a lot of financial press, consume David's monthly commentaries and listen to/watch a lot of Bloomberg. The warnings about valuations have been there for several years. But for every one like me, there's at least one other who will will tell you not to worry. That in the long run markets always go up. And the less attention you pay to the financial media the better off you are.(Ignorance is bliss.) Then there are a "select" few who acknowledge that markets can fall precipitously - but who will claim they always know exactly when to bail (at the top of course).
So - Pick your poison.
https://krugman.blogs.nytimes.com/2017/02/18/trumps-rosy-scenario
Growth more like 2. 5 %
Derf
>> His thinking has been so muddled recently because of his political positions I'm surprised he can do anything remotely related to economics.
You're going to have to do a lot better than just your sayso.
If this is the case and with the amount of money sloshing about, other market areas will likely find this "slosh" money.
These monies will not sit idle.....
This may suggest that the bond boom is not yet dead; in particular, U.S. Treasury issues, eh?
wealthtrack.com/high-risk-market-international-value-advisers-charles-de-vaulx-says-markets-expensive-opportunities/ Transcript:
wealthtrack.com/wp-content/uploads/2017/01/WEALTHTRACK_DeVaulx_1331_01.20.17.pdf
This is an artificial market, driven by QE, and rates have to rise sometime. Yellen will be replaced by a compliant individual, but there is an increase or two in interest rates in the meantime.
If anyone knows when to step out of this market, they're much smarter than I. One also has to be able to predict crowd behavior, to get to the exits before they do; and some members of this crowd use megadata and computer arrays far beyond my ability, time or resources.
I haven't put my grandchildren's money in since I have to believe there's at least a 10% decline to come, but 20% seems possible.
As others have commented, one needs to buy when there is blood in the gutters (but, frankly, I doubt the Rothchilds were ever fully invested).
Must admit that I'm a long way from dog food for lunch (and, hey, the French eat horsemeat, so I hear), but I bet some of that Fancy Feast with a bit of onion and hot sauce would be mighty tasty. Unfortunately, it's not actually that cheap.
Have you considered dollar cost averaging that money in over 1-2 years? Then if we do get that decline you can take advantage of it.
One way would be to "dip your toe" into conservative allocation funds. Funds like HBLIX, CBUZX, DIFIX, VWINX might fit this category. Try to own funds that you're comfortable holding through thick and thin (7- 10 years). To deal with the "thin", calculate (best estimate) what your (1-3 year) distribution needs will be. Keep this part of your portfolio in "near cash" or "cash" investments.
This thread is full of choices and it takes some time to digest. Do some research, select your options, and segregate this (1-3 year) amount from the rest of your portfolio. Once you can fill your 1-3 year needs move further out on the risk/reward/time line.
Time often a forgotten investment consideration. Time helps build positions (by DCA), time helps to smooth out market volatility, time provides undervalued assets to be recognized and revalued. Time also provides a framework for investors to reallocate their portfolio.
Consider these time frames for your portfolio: 1-3 years, 3-7 years, and 7-10 years. Three "time categories" that each of your investments should fit in. The percentage that is dedicated to the three categories is based on age, need, resources, goals, and any other tangible reasons to put "saved money" in that category.
Approach your "saved money" from the standpoint of goals (what did you save it for in the first place). For me, this approach is goals based, time based, and creates a set rules I can follow (a plan). It's success is not guaranteed, but it helps me stay the course.
I've borrowed the @Old_Skeet philosophy of having an investment range of 40-60% equity investment at all times (though not the folder idea or numerous funds). Selection of funds doesn't need to be perfect nor the # of funds IMO. Knowing that squelches my urge to buy the hot fund or sector that you will often see talked about here at MFO. I don't need a toe hold in this manager's new fund or that manager's new idea (or sales pitch) for alternative investing. I think @Junkster coined the phrase "group think funds" for that theme. Portfolio and fund consistency and staying invested long term in my view is much more important.
John's DCA suggestion is never a bad idea. Good luck in your decisions.
Derf
Lately I have been rebalanced out of equity into cash or short term bond as I think US market is ahead of itself. Also pick up some gold ETF, IAU just to hedge inflation (regardless what the government reported). March 15th is next Fed meeting and there is increasing probability of 25 basis point hike. Similar to 2016, there is likely two other hikes this year. As for my bond allocation, I use balanced fund, PRWCX and WNENX so that the managers can make decision on the % bond-equity.
By making up scenario I described I was trying to figure when I can expect to be whole again. If I can't be whole again in 3 years, then I don't want to invest there. I'm contemplating just raising cash instead of adding to plain jane balanced funds.
Isn't the whole point of GLRBX (among others) to be able to fear the worst, or about?
Historically none of your funds have ever experienced a negative 3 year rolling average.
GLRBX has data back to 1996:
OAKBX data goes back to 1998:
ICMBX has to shortest history going back to 2008:
A fund like VWINX has maintained stellar 3 yr rolling average results for over 30 years. I'll let the managers of this balance fund decide the blend of equities and bonds (percentages & types).