Stock market bubble, impending crash

August 14, 2021, 05:28 PM

doublesharp

If gains came in 7 1/2 months and you sold, your tax would be at ordinary income rates. After a year tax is long term gain.

Market is nuts but if you cash out where ya gonna go?

Dog's of the Dow theory will make you money in good times and keep you in the game in bad times.

August 14, 2021, 05:53 PM

RichardC

August 14, 2021, 05:55 PM

FishOn

quote:
Originally posted by doublesharp:
If gains came in 7 1/2 months and you sold, your tax would be at ordinary income rates. After a year tax is long term gain.

Market is nuts but if you cash out where ya gonna go?

Dog's of the Dow theory will make you money in good times and keep you in the game in bad times.

I remember folks in 1999 not wanting to sell their tech stocks that were up 100% in trailing 12 months, since they would have to pay STCG taxes at ordinary income rate. Would have cost them another 20% of the gains. A short time later they were down 70% from the highs.

August 14, 2021, 07:05 PM

doublesharp

^^^^ Me too

Also knew some that bailed in 2008/9, thinking dow 14000 was tip top and mkt was going to zero, and they missed a fat gain that is still going on. Many panicked in Mar 2020, too.

Market timers end up with patches on their britches is an old adage that has been proven true time and again.

August 14, 2021, 07:53 PM

quote:
Mar 2020

The market had a nice correction early in the year when the new highs/new lows give a sell signal:

https://www.investorvillage.co...&pt=msg&mid=22268403

August 14, 2021, 08:07 PM

2PAK

I remain invested with a chunk of cash in Fidelity waiting for the next correction in order to jump in with some additional money. Having said that, I also keep a healthy cash position in savings but the bulk of my savings is in equities.

August 14, 2021, 11:19 PM

BBMW

The flip side of all this is that inflation is rising. This means two things. If someone sells out of the market and into cash, and inflation runs away the value of the cash is going to get inflated away. Stocks tend to ride over inflation.

August 15, 2021, 04:24 AM

sourdough44

I don’t pretend to have a crystal ball, or ‘magic conch’ like Sponge Bob, though I have been more defensive in recent months. Like most here I don’t have good vibes with a lot that’s going on.

Then one can’t ignore inflationary pressures, prices are going up, the value of cash under the mattress is going down.

What’s a person saving for the future in an IRA, 401k, or 529 plan to do?, diversify based on time horizon & comfort level. It just seems we’re about due for a shakeout of sorts, not even saying it has to be in the form of a stock market adjustment.

Of course even within stocks, there’s the spectrum from risky to more stable choices for long-term growth.

August 15, 2021, 05:27 AM

r0gue

Couldn't it just be a simple as the market price inflating along with everything else. CPI was up 5.6%. What are you gonna do, pull it out to cash and watch it diminish in value by 5 to 6 percent a year? Gold? Bitcoin?

August 15, 2021, 08:22 AM

pedropcola

So you pull out and put a third into cash. Then what? Seriously, what are your indicators to put any of it back in? If you can’t answer that then don’t play the timing game.

At the end of the day that’s what you are actually asking. Should I Market time? Well if your gut says pull out will your gut tell you when to get back in? Or will you be the guy who buys a new car with the proceeds, probably before even paying taxes, and thinks it’s a brilliant move. Let’s see. Money making double digits in the market, bad feeling, pull it out and pay cash for a car that instantly and explosively depreciates and needs a new roof liner to boot. Not a smart financial move. Ever.

For every couple dozen market crashes that are predicted, one happens. Diversify yes. Panic sell no.

August 15, 2021, 08:53 AM

SIG4EVA

The stock market goes up and down. Always has and always will. The people that panic at the bottom lose their money and the people that invest at the bottom make a ton of money. It's pretty simple. It shit hits the proverbial fan, your money in the market wouldn't matter either way.

August 15, 2021, 08:54 AM

FishOn

quote:
Originally posted by pedropcola:
So you pull out and put a third into cash. Then what? Seriously, what are your indicators to put any of it back in? If you can’t answer that then don’t play the timing game.

At the end of the day that’s what you are actually asking. Should I Market time? Well if your gut says pull out will your gut tell you when to get back in? Or will you be the guy who buys a new car with the proceeds, probably before even paying taxes, and thinks it’s a brilliant move. Let’s see. Money making double digits in the market, bad feeling, pull it out and pay cash for a car that instantly and explosively depreciates and needs a new roof liner to boot. Not a smart financial move. Ever.

For every couple dozen market crashes that are predicted, one happens. Diversify yes. Panic sell no.

You want to trim sectors/styles that have run to very overvalued levels and exceeded the percentage/allocation you planned them to have in your portfolio, and rebalance those funds to sectors/assets that are out of favor and are inexpensive on a relative basis. You are essentially selling high and buying low throughout the cycles this way. Its basic portfolio theory, and it works. Takes out the guesswork and the emotion.

If you want to gain a better understanding of where we are in the larger cycles of liquidity and relative valuation and risk, this is a good summary:

https://www.bloomberg.com/news...d-taper-hits-markets

August 15, 2021, 10:51 AM

Flash-LB

quote:
Originally posted by 1s1k:
quote:
Originally posted by Lefty Sig:
Timing the market and picking "winner" stocks are losing propositions. If it was possible then all those guys that make their money telling you what to do would be rich and wouldn't need a day job. If you have enough capital on hand to actually move the market then the rules do change, but that still doesn't guaranty anything.

Jumping in and out of the market based on predictions about the future kills returns in most cases.

Proper asset allocation and a long term view is key.
I could not agree more. Sitting on the sidelines constantly thinking it’s going to implode will cost you a fortune.

A couple of smart guys posted this. That's the way it is. You might time the market a few times and think you can continue doing it, but you can't. Don't let me stop you though, go ahead and time and for a few years and see where it gets you.

August 15, 2021, 11:17 AM

pedropcola

That’s great fishon but has nothing to do with the gist of this thread or the dozens like it that have preceded it. Diversify yup. Rebalance yup. Pulling it out to cash because your heehaws are getting that icky feeling isn’t a strategy, it’s a guess. One that time and time again costs people money.

That article you linked, which I did not read, is probably yet another pro’s opinion of where the market is going and why. And they might be right. Or wrong. Or right but their timing is way off. Or. Or. Or.

Market timing is for stupid suckers who might get lucky on occasion which leads them to think they can successfully time the market. Which they can’t.

Notice nobody smart here said buy and hold and never look back. Nobody said don’t diversify or rebalance. Nobody even said don’t move into cash. What was said is make sure if your indicators tell you to move to cash ensure you know what indicators will tell you to move back in. Icky feelings aren’t indicators.

No one here can even remotely guess when this run will end. Getting out early could and history backs this up, would likely end more badly than riding it out. Have a plan for getting in and out. And realize fortunes have been made and lost if your plan isn’t great.

August 15, 2021, 12:01 PM

FishOn

quote:
Originally posted by pedropcola:
That’s great fishon but has nothing to do with the gist of this thread or the dozens like it that have preceded it. Diversify yup. Rebalance yup. Pulling it out to cash because your heehaws are getting that icky feeling isn’t a strategy, it’s a guess. One that time and time again costs people money.

That article you linked, which I did not read, is probably yet another pro’s opinion of where the market is going and why. And they might be right. Or wrong. Or right but their timing is way off. Or. Or. Or.

Market timing is for stupid suckers who might get lucky on occasion which leads them to think they can successfully time the market. Which they can’t.

Notice nobody smart here said buy and hold and never look back. Nobody said don’t diversify or rebalance. Nobody even said don’t move into cash. What was said is make sure if your indicators tell you to move to cash ensure you know what indicators will tell you to move back in. Icky feelings aren’t indicators.

No one here can even remotely guess when this run will end. Getting out early could and history backs this up, would likely end more badly than riding it out. Have a plan for getting in and out. And realize fortunes have been made and lost if your plan isn’t great.

Preaching to the choir, you are. I can tell you did not read the article, as it is not an opinion piece. It is historical and statistical data.

August 15, 2021, 05:06 PM

BBMW

Where's JAllen when we need him? He'd be all over this.

August 15, 2021, 05:51 PM

Sig209

quote:
Originally posted by BBMW:
Where's JAllen when we need him? He'd be all over this.

I hope he's resting in blessful peace !

he recommended Realty Income (O) years ago and I bought quite a bit and have done well with it.

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