Ever sold your stocks and waited?

[AustrianAngler]

Back in march I had 411K in the stock market. It has gone an incredible run and now I have 930K. This is great, but I feel things have gone up too fast. For years I have adhered to buy and hold strategy. I want to protect what I have, I am debating about different options.
1) stay the course. Do nothing.
2) Sell 1/2 of stocks and reallocate 460K into low index funds + real estate.
3) Sell everything and wait and jump back into the stock market during the next big correction. This sounds drastic, but this stock market run can't continue forever.

[Peds]

youre doing something wrong: https://www.bogleheads.org/wiki/Asset_allocation

[Gamma Knives]

Depends on your priorities and time frame. These posts have been popping up for sometime and the market has gone up since then. It is certainly possible that the market will go down. If you are not comfortable with that, with your current allocation you need to make a change. A change with less risk will likely have lower returns over time. However, you don't want to be selling after the market drops because you are panicking.

For #2 is it supposed to read low risk index funds? Such as bonds? I'm not sure I would consider real estate less volatile than stocks

If you are going with #3 you should decide when or if you will return to stocks. What will be your criteria for buying back in? What will you do if a year from now the market is up another 15%? Will you continue to stay out?

[pierre]

First of all, congratulations.
Second, recognize how lucky you were.
Third, come up with an actual plan

[CordMcNally]

You need a plan. If you’re not planning on retiring in the next 10 years then nothing is probably the correct answer as long as you have a reasonable asset allocation.

[BruinBones]

As you ponder on your recent good fortune, now is a good time to write a personal Investment Policy Statement.

<https://www.whitecoatinvestor.com/how-to-write-an-investing-personal-statement/>

This exercise will help you answer your current question, and provide you a reference to scenarios that may/will occur in your future investing career.

Good luck!

[Zaphod]

Sell long term calls (3mo, 6mo, 1y) on your positions, buy similar or shorter term puts, a collar. Imagine a price you'd be fine being wrong and letting them get called, then imagine how angry you'd be if it goes 50% above that.

Have a trigger to get back in if you get out, ie, sell puts at some level, atm, etc...but you should have a plan or enjoy watching the market rocket without you in it, or if exceedingly lucky it crashes. If it does, dont try for best price, count wins and get back in.

[Tangler]

Back in march I had 411K in the stock market. It has gone an incredible run and now I have 930K. This is great, but I feel things have gone up too fast. For years I have adhered to buy and hold strategy. I want to protect what I have, I am debating about different options.
1) stay the course. Do nothing.
2) Sell 1/2 of stocks and reallocate 460K into low index funds + real estate.
3) Sell everything and wait and jump back into the stock market during the next big correction. This sounds drastic, but this stock market run can't continue forever.

"1) stay the course. Do nothing."

Well, this is not a bad idea, but it sounds like you are concerned that you have a situation with too much risk. As others have said: you need an AA that you can live with and you need an IPS (plan) for dealing with whatever happens. The Link from Peds is solid. The IPS link above is also nice.

"2) Sell 1/2 of stocks and reallocate 460K into low index funds + real estate. "

Do you mean go from single stocks to low COST index funds + RE? I would say absolutely. Personally I don't do single stocks because of uncompensated risk. I would pick a 3 fund portfolio and pick an AA and make an IPS that describes how my AA will change as I age and how I will respond to downturns which will happen and how I will react/respond to bull markets. RE is a whole different discussion requires a decent amount of work, unless you are just talking about REITs.


"3) Sell everything and wait and jump back into the stock market during the next big correction. This sounds drastic, but this stock market run can't continue forever."

Obviously this is not a great idea. You have to be correct twice. You have to pick the top (when to get out) and the bottom (when to get back in) and this is difficult if not impossible to do it perfectly and plenty of folks regret screwing it up. Why not just do the following: 1. decrease risk by using a 3 fund portfolio (or similar) with index funds 2. decrease risk by picking an AA you can live with 3. Make an IPS with has a plan for what do to regardless of what the market throws at you. Yes, it is intelligent to "rebalance" and decrease your risk if your AA gets out of wack following stock increases. No you should try to time things pefectly.

[DynamicHipScrew]

We had a similar turnaround. Seeing as I have 25+ years before I retire, we're changing nothing.

[abds]

3) Sell everything and wait and jump back into the stock market during the next big correction. This sounds drastic, but this stock market run can't continue forever.

One of my older partners is very vocal with his opinions, thinks he's really smart, has a lot of money, and talks about money constantly. He was happy to tell everyone how he took multiple $millions out of index funds in early 2018 on the assumption that the bull market would come crashing down eventually. At the end of 2018 and the beginning of 2020 he told us again how smart he is. And now he can't figure out when to get back in and he's still sitting on millions in cash while the S&P is up 45% from when he got out.

[Tim]

You are definitely right. This stock market run can’t continue forever. If you have already “won the game” with $930k, congratulations. If not, what was your plan? Run a poll with 3 choices?
If you don’t trust your portfolio at the top, will you trust it at the bottom?
By the way, it’s easier to do nothing at the top emotionally. Get your act together. Come up with an AA, portfolio and a plan.
I would have more patience if you said you were tempted to tweak your AA.
In that case, I would say the run is too short, only 9 months.Hold on for 10 years at least.
Good luck with your plan.

[jfoxcpacfp]

The strategy you have adhered to for years is the right strategy presuming you have an appropriately diversified, simple portfolio. If not, this is a good time to rebalance, which I should have mentioned s/b a step in everyone’s long term strategy. How often is a personal preference. For us and our clients, it’s annually but it can be different for you. The non-breakable rule is to do so when the time comes around no matter what your brain (or CNBC, etc) is screaming at you.

NOTE: I am NOT your FA and this is general advice.

[Dont_know_mind]

Yes, I once went to cash and eventually regretted it.

The average period between US recessions is 5 years and the longest period between recessions in the US is 10 years. The longest period between recessions amongst developed nations in the postwar period is 27 years.

There can be bear markets in the absence of recessions.

What are you going to do if the next recession is not for another 1, 5, 10 or 30 years ?

The last recession was just this year.

I have no idea when the next recession will be.

On individual stocks, I have no idea either, I don’t do that one.

[EntrepreneurMD]

We call it dry powder. Ask anyone on Wall Street and they'll tell you you need some.

[Nysoz]

To echo others, you need to have a plan with your assets. Were they all stocks? 50% stocks and 50% index funds/bonds? Once you think you have a plan that you're willing to adhere to through ups and downs, stick with your plan.

If your stocks have run up 100% so now your portfolio is 75% stocks and 25% index funds/bonds, sell some of them (preferably for ltcg) then rebalance into index funds/bonds so you're back to your 50/50 (or whatever original) plan you had in place.