Ukraine War... How much will S&P drop this week?

[Turf Doc]

Just saying that a few have chosen to use the “current” valuation to overweight Intl or significantly underweight US due to valuation that they view . @CM I thought had this in mind. Whatever the target allocation is, the rebalancing would be the issue.

IIRC CM doesnt have any US holdings?

[Kamban]

Compared to y'all buying and selling and TLHing, I am doing nothing. No buying or selling or any tax loss harvesting. I don't have international index funds but even if I had, I usually don't sell or buy on news, unless there is steep discount. I just let it fall and rise for another year or another decade and things are back to what they were before.

[artemis]

Compared to y'all buying and selling and TLHing, I am doing nothing. No buying or selling or any tax loss harvesting. I don't have international index funds but even if I had, I usually don't sell or buy on news, unless there is steep discount. I just let it fall and rise for another year or another decade and things are back to what they were before.

Tax-loss harvesting is always optional - but when you have shares that for some reason you no longer wish to hold, it can be a handy way to get rid of them without taking a tax hit. Ditto with donating them to charity.

For personal reasons I want to get rid of my Vanguard Total International Stock Market shares and replace them with Developed Markets International shares, and my US portfolio has become lopsided over the years with too much weight in small caps, so I'd lake to do some rebalancing in favor of large cap shares. Those are the only reasons I have been looking for opportunities to do some tax loss harvesting. Normally I wouldn't bother with it.

[Tim]

IIRC CM doesnt have any US holdings?

I could be wrong. @CM would be better giving his take.
https://forum.whitecoatinvestor.com/...ing#post298356

[FIREshrink]

Would be interesting to hear comments on those that “tilt”. Specifically to Intl and EM. I don’t plan on rebalancing, I view it simply as diversification.

I am/was 60% international. No action taken, and none planned. I'm not smart enough to predict the future.

[artemis]

I am/was 60% international. No action taken, and none planned. I'm not smart enough to predict the future.

Did you intentionally pick that asset allocation, or did you drift into it over time? Just curious. I drifted away from my intended asset allocation over a period of many years because the same amount of money bought more shares of Vanguard Total International and Vanguard Small Cap than Vanguard S&P 500.

[TheDangerZone]

Market doesn't like war... never has. This might be the most predictable dip since COVID started...

I would say probably down 3-6% by week's end. The bottom will depend on the headlines.

And yeah, I did put my money where my prediction is... sold basically everything that isn't locked out on a covered call (so roughly half of my stocks/indexes sold and over 60% of my overall portfolio to cash now).

So to recap, on Friday, 2/11, the S&P closed at 4418. This thread was started on Monday, 2/14.

On Friday, 2/18, the S&P closed at 4348 (down 1.6%)

On Friday, 2/25, the S&P closed at 4373 (down 1%)

On Friday, 3/4, the S&P closed at 4328 (down 2%)

Lots of volatility in between but as they say, predictions are hard, especially about the future. Timing the market is always harder than it looks and sounds.

Furthermore, the statement that "market doesn't like war... never has." appears to be very wrong. https://awealthofcommonsense.com/202...-is-heartless/

[Dont_know_mind]

Would be interesting to hear comments on those that “tilt”. Specifically to Intl and EM. I don’t plan on rebalancing, I view it simply as diversification.

I’m 100% international with a major resources tilt. My portfolio is about 5% below post covid high. I was hoping to rebalance at lower levels but hasn’t got there yet. I think there is a 50% chance or higher Russia will invade Moldavia or another country before they finish with Ukraine, the market is pricing this in. Commodity decoupling is starting and hopefully a major move up in crb vs general equities. Commodity EM is outperforming, rest of EM is underperforming. Supply chain issues may get worse. Allocation to western world production capacity maybe a reaction to Putin. I thank my lucky stars I didn’t have any Russian exposure and mainly developed market indices tilted to resources. I feel comfortable with my exposures here. My main regret is not buying any uranium exposure last year. European and Chinese equities are beginning to look interesting from valuation POV. I am thinking allocate next dividends to Uranium, but if too expensive maybe UK or Chinese index. Brazil, Australia I am not adding further exposure as well priced now cf when I bought in 2020.

[Max Power]

... the statement that "market doesn't like war... never has." appears to be very wrong. https://awealthofcommonsense.com/202...-is-heartless/

Lol, if you believe that, I don't know what to tell you.

If you cherry-pick timelines, you can make market "stats" say anything you like. That no-name kid is picking war + recovery periods and saying war helps. Of course markets tend to recover eventually if fundamentals are strong. To say war helps or does not hurt? That's a joke. He cherry-picks timelines (war + recovery period... then stops the chart well after the war yet before the next market slump)... apparently trying to double down on some article he wrote awhile ago, but one look at the WW2 chart shows you that it crashed and he is FOS.

Back in reality, in the months (and sometimes years) that follow a significant conflict the market suffers. Those are Pearl Harbor, Saddam Sell-off, Korean War, 9/11, etc are many of your biggest and most famous crashes in market history. This is common knowledge.

...The interesting part in the rest of this month will be to see if the USA markets can continue to diverge from the rest of the world. If nothing else, we might get an "invisible crash" of sorts (NYSE/NASDAQ markets wiggle largely sideways awhile - yet inflation diminishes buy power as we print billions and billions in that timespan). That was seen mostly in circa 1980 and 2009, but it goes on constantly to various degrees.

As it sits a couple weeks after the Ukraine invasion, VWO and VEA are down 8%, world markets are down but VOO is only down less than half that. There are many days where France, China, etc are down... yet USA is up (maybe significantly). That usually doesn't continue forever, and it doesn't make sense to me. There is either pent-up energy for a USA stocks crash... or inflation is the buoy (and we'll get away with it since USD is the world reserve)? We shall see. Stay tuned.

You can usually tell this inflation (invisible/silent market crash) by gold price spikes to account for all of the new money supply. Right now here is already $1B to Ukraine, another $10B for Ukraine bill, much more billions for COVID, etc etc going to vote. Fed has no room to go lower. Buckle up.. and buy a bit of gold.

But yeah, to say war helps or does not hurt markets is not even worth any real reply. In other news, penicillins are bad for bacterium.

[CM]

Yes, my equity allocation is 100% int'l. I own gold ETFs, LT US treasurys, and cash equivalents.

[CordMcNally]

Lol, if you believe that, I don't know what to tell you.

If you cherry-pick timelines, you can make market "stats" say anything you like. That no-name kid is picking war + recovery periods and saying war helps. Of course markets tend to recover eventually if fundamentals are strong. To say war helps or does not hurt? That's a joke. He cherry-picks timelines

The fact you called Ben Carlson a no-name kid is laughable. I’d say he’s fairly well known throughout the financial industry.

As far as including post-war, I think that’s totally reasonable. You wouldn’t have a ‘post-war era’ without war. That’s kind of like saying $BABA is a great buy but then neglecting to factor in the entire China government factor.

[Zaphod]

the market doesnt mind wars between big vs small players, depending on the environment. it hasnt done well and is inflationary when large powers are at war, which makes sense.

Good luck to you international/EM investors going to take a bit of a hammering but we will too eventually, but ofc, will be worse outside. Euro obviously directly impacted by the war, energy/inflation and refugess, EM will get crushed due to dollar.

Maybe international will get so crushed it actually becomes a good buy here soon.

[FIREshrink]

Did you intentionally pick that asset allocation, or did you drift into it over time? Just curious. I drifted away from my intended asset allocation over a period of many years because the same amount of money bought more shares of Vanguard Total International and Vanguard Small Cap than Vanguard S&P 500.

That's my target, as of today it looks like I'm 41% international, 29% domestic, 30% fixed income. So I'm 58.5% international, not too far from target.

[xraygoggles]

Is 100% international really any better than being 100% US? Yes, I get valuations are much lower for the former, but sometimes it's for a reason (earnings for Faang seem to back up valuations for ex)...

Certainly in the near future, international & emerging mkts are gonna get absolutely rekt.

[Kamban]

Tax-loss harvesting is always optional - but when you have shares that for some reason you no longer wish to hold, it can be a handy way to get rid of them without taking a tax hit. Ditto with donating them to charity.

For personal reasons I want to get rid of my Vanguard Total International Stock Market shares and replace them with Developed Markets International shares, and my US portfolio has become lopsided over the years with too much weight in small caps, so I'd lake to do some rebalancing in favor of large cap shares. Those are the only reasons I have been looking for opportunities to do some tax loss harvesting. Normally I wouldn't bother with it.

If I had Russian index or stocks I might get rid of it but more from personal than long term financial reasons. I don't have International index since I believe I have enough exposure to international via large US companies like CAT and P & G.

Early on during my infividual stock buying days I decided to focus on the stock's performance and future growth and value and not on whether it was bad for health / environment etc. Only a small part of me prevented me buying Phillips Morris as an Oncologist. The major reason is that I saw no future i the company with declining smoking rates amongst US citizens and I could see litigation payouts coming in the future. But I had no qualms investing in Coca-Cola or Pepsi even though I do not drink any soft drinks.

Now I just invest in large indexes and forget about the month to month fluctuations.