Are you preparing for doomsday? aka the next great bear?

[jfoxcpacfp]

If so, please consider that you may be handicapping your chances of retiring when you hope. I hope this article, Equities: How Accurate Were the Experts in 2017? will be as inspirational to you as it is to me. The author even calls out his own firm, Lord Abbett - gotta love him. Even if you don't listen to those who are preaching "low rate, low growth, low return" for the foreseeable future, I think you will enjoy reading it.

I just noted that registration is required, so I am uploading it for anyone who cares to download.

[Donnie]

I think if you polled the forum, you’d find that the majority are praying for doomsday so they can “buy cheap.”

[StarTrekDoc]

Never hoping for doomsday- too much money in the market --- but always poised ready to an opportunity.

[Complete_newbie]

Where has crixus gone ?

But a pretty crazy run in 2017 and still going on. Like has anyone thought about these ridiculous gains ? Gravy to last forever ? That'd be awesome

[hnnguyen3]

Thanks for sharing with us.

[jfoxcpacfp]

Donnie wrote:

I think if you polled the forum, you’d find that the majority are praying for doomsday so they can “buy cheap.”

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I would agree with you if we polled only the minority who post here. I think you might be very surprised if we included the lurkers. That is the target audience I hope to educate.

I hope you are right. Those who are praying who have never had real money in the market at such a time (also many in this audience) should do so judiciously. It is far easier to make a plan than it is to carry it out when you are watching your value shrink and the media is working overtime on gloomsday. I will be here to offer encouragement when that happens, Lord willing and the creeks don't rise.

[Hatton]

I also wonder about Crixus.  If I was still using a broker at Merrill-Lynch I guarantee he would be saying 2018 is going to be a stock pickers market.

[jhwkr542]

I never keep cash on hand to invest in a market downturn. If there is money I have earmarked to invest, it's invested. Timing the market is a losers game.

[ReFinDoc]

As a high earner, taxes will always be my biggest expense. I do not wish to take a 15-20% cap gain hit when I tax gain harvest. A 15% tax hit is similar to a correction, no?  This alone has kept me in the Market.

I always buy on big down days. Tax loss harvesting lets me stick it to the IRS and prevents loss aversion...the largest behavioral trap.  Having a balanced combination of taxable and tax deferred accounts helps with re-balancing.

Holding equities is like trying to de-fuse a bomb;you never know went it is going to blow up in your face.

If equities were predictable, then there would be no risk premium and  thus no return.

Cash has no value, it only drags down your portfolio return.

'We've long felt that the only value of stock forecasters is to make fortune tellers look good. Even now, Charlie [Munger] and I continue to believe that short-term market forecasts are poison and should be kept locked up  in a safe place, away from children and also from grown-ups who behave in the market like children.'   Buffett

[Kamban]

Donnie wrote:

I think if you polled the forum, you’d find that the majority are praying for doomsday so they can “buy cheap.”

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Cheap and Sale are two of the greatest American words. What is there to not like about cheap stock market prices.

[VagabondMD]

I would argue that if your asset allocation is set properly, the timing of bull/bear markets is not of great importance. If you are over or underweighted in stocks, compared to your risk tolerance and time horizon, it can be of great significance. Sometimes we learn quite a bit more about our risk tolerance during a bear market.

[The White Coat Investor]

Vagabond MD wrote:

I would argue that if your asset allocation is set properly, the timing of bull/bear markets is not of great importance. If you are over or underweighted in stocks, compared to your risk tolerance and time horizon, it can be of great significance. Sometimes we learn quite a bit more about our risk tolerance during a bear market.

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I've been amazed to see how many people, particularly those I call "intermediate investors" who have trouble staying the course in a bull market. It's just as important in a bull as in a bear.

[VagabondMD]

The White Coat Investor wrote:

Vagabond MD wrote:

I would argue that if your asset allocation is set properly, the timing of bull/bear markets is not of great importance. If you are over or underweighted in stocks, compared to your risk tolerance and time horizon, it can be of great significance. Sometimes we learn quite a bit more about our risk tolerance during a bear market.

Click to expand…

I’ve been amazed to see how many people, particularly those I call “intermediate investors” who have trouble staying the course in a bull market. It’s just as important in a bull as in a bear.

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The tension between fear and greed is hardwired into us. It should come as no surprise.

[StarTrekDoc]

Exactly; retirement funds should be set+forget mode INVESTING.  Two caveats - 1. Rebalancing to maintain goals; 2. TLH - to optimize during sharp downturns.

I don't equate TLH to a buying opportunity, but moreso an efficiency opportunity to minimize losses.

Like WCI and Vagabond said -- a lot harder to stare at a shrinking portfolio for 3m-3yr without hitting the eject button then watching a 8 yr bull market.

-The question beyond TLH, how does one be ready for the next bear market with ADDITIONAL funds?  Aside EF and cash sitting in bank (if so, how much do you have waiting for that bear) -- Do folk use margin or borrow from family or take a payday loan check?

[Hank]

You get margin calls when the market turns down. Exactly when you don’t want them.

(Likewise, unused HELOCs get pulled back when the market tanks. This, plus the new tax treatment, makes them unsuitable as an emergency fund.)