If the market did crash...

[thryoid_storm]

I know that Bogle disciples should not try to time the market.

I just started to save for retirement and have about 60k saved after I have payed back all my loans. Just finished fellowship.

Because the market is at an all time high with the negative interest rates around the world etc.

I did feel that it is on a bubble, I sold everything and am holding in cash.

I would hate to get in at the very worst time.

If the market does crash, is there a good way to buy back stocks. Should one buy all at once when stocks thud or buy in incremental fashion.

Once I buy then I promise I will hold until I retire.

 

 

 

 

 

[jfoxcpacfp]

With all due respect, please tell me that you are not serious. If you will pm me your email address, I will email you a Nick Murray article, Fear of Heights, that will be very helpful in getting your thought processes back to where they should be.

[Noah]

I feel this way all the time. With the market at all time highs it's hard to imagine it going any higher, and there is tremendous incentive to pull out for safety with the perfect plan to buy back in at the bottom. It's a great idea if you can predict when things crash, but obviously there is no well established trend of markets crashing every time they hit a high. Often they go up even further leaving you with missing gains. In general I just enjoy tinkering with my portfolio based on data driven trends so I've implemented a blend of Dual Momentum theory for some assets and the more traditional Boggle Buy and Hold for the majority.

 

The last time I had your thought the DJIA was about 16000. I held on and am glad I did as it's over 18k. Market high to another high. Before responding to this post I looked up the historical trends and while I cognitively remember the market hanging at 16,000 for such a long time, just waiting to drop. But for the life of me I can't find that plateau. Zooming back a few years and it just keeps on going up and its just another point on a trend line. My current early career thinking is that far more important than overall returns is savings rate. It really drives the speed of asset accumulation at the beginning. If you are afraid of a big market crash right now I think that continuing to save aggressively with a 60% stock to 40% bond vs 70/30 and sticking with it for the next 10 years would be a very reasonable approach. At that point with a larger portfolio your asset allocation and market trends will have a larger impact on your overall gains.

[jfoxcpacfp]

Also recommend you read this excellent article. Although it hasn't been updated since 2013, the message is timeless.

[Zaphod]

The market has been within a couple percent of all time highs a lot the last couple years. Todays all time highs are tomorrows generational bottoms. People have been saying the same thing for decades and it continues to matter very little. Unless there were some large catalyst, that was binary and you knew 100% not only what it was but how it would play out (spoilers, we dont have that ability) then maybe, but what you're saying is you've succumbed to recency bias and general sentiment.

I dont see how negative bonds do anything other than drive up equity prices, the lower they go the worse their risk/reward and the better stocks become.

[PhysicianOnFIRE]

thryoid_storm wrote:

I know that Bogle disciples should not try to time the market.

I just started to save for retirement and have about 60k saved after I have payed back all my loans. Just finished fellowship.

Because the market is at an all time high with the negative interest rates around the world etc.

I did feel that it is on a bubble, I sold everything and am holding in cash.

I would hate to get in at the very worst time.

If the market does crash, is there a good way to buy back stocks. Should one buy all at once when stocks thud or buy in incremental fashion.

Once I buy then I promise I will hold until I retire.

 

 

 

 

 

Click to expand...

It's not just "Bogle disciples" that say not to market time. It's history, research, and evidence that identify it as a losing strategy. You have to be right twice for it to work out in your favor (sell at the high, buy at the low).

If you're not comfortable jumping back in, wade in slowly by dollar cost averaging $10,000 a month over the next six months. If the market happens to be down over that timeframe, you'll come out ahead. If it's up, you'll come out behind, but might sleep better at night.

Best,

-Physician on FIRE

 

 

[Craigy]

At least it's just $60k.  I remember people pulling out their entire retirement savings after 2008-2009 into cash, gold, whatnot (after taking the market loss).

If OP is that fearful of the stock market, he should put his money into something more tangible like real estate, etc.

[WealthyDoc]

Yikes. You likely will be poorer off because you withdrew money from equities.  You no longer own companies that generate profits for you.  On the other hand I fully understand your fear.  The solution is to find an asset allocation that won't cause you to freak out if there is a climb or a dive in the market.  Maybe that is a blended fund (e.g. 50-60% equities and the rest in bonds).  You can dollar cost average in or you could just buy a balanced fund now.  Create a IPS and follow it.  It is your only hope.

[thryoid_storm]

I am not adverse to the risk of stocks.

As WCI once said in his book, paraphrase: if you are young then you should be on your knees begging for the market to crash. I am in this boat, and I think that it will have a major correction (only time will tell of course).

If the market were to crash in the next 6 months, would you be surprised???

I want to own stocks and hold them for a long time. I am only 31 years old, spouse is a doctor as well and we have no student debt. I want to invest aggressively for the future so that if I want to work part time or quit medicine early, I will have the option.

I just feel that the market is going to have a major correction and would feel bad if my first real lesson in investing is taking a good sucker punch with a fall.

I like POF method of just buying back in slowly, this will give the benefits of both. I think I will start to do this, just buy slowly and if it crashes then buy aggressively.

I think there is something to be said for doing something opposite of what everybody else does. As Jack Bogle says, investing runs counter-intuitive to human psychology.

 

 

 

 

[Kamban]

thryoid_storm wrote:

I am not adverse to the risk of stocks.

As WCI once said in his book, paraphrase: if you are young then you should be on your knees begging for the market to crash. I am in this boat, and I think that it will have a major correction (only time will tell of course).

If the market were to crash in the next 6 months, would you be surprised???

I want to own stocks and hold them for a long time. I am only 31 years old, spouse is a doctor as well and we have no student debt. I want to invest aggressively for the future so that if I want to work part time or quit medicine early, I will have the option.

I just feel that the market is going to have a major correction and would feel bad if my first real lesson in investing is taking a good sucker punch with a fall.

I like POF method of just buying back in slowly, this will give the benefits of both. I think I will start to do this, just buy slowly and if it crashes then buy aggressively.

I think there is something to be said for doing something opposite of what everybody else does. As Jack Bogle says, investing runs counter-intuitive to human psychology.

 

 

 

 

Click to expand...

So you are going to pay all those capital gains tax on your sale and if the market goes up or remains high and goes sideways what are you going to do ?

 

Just invest in an no load index fund. If it goes down invest more. You are 31. At 61 the market would have gained a lot. Or maybe humanity may be nore more.

[lucas]

Kamban wrote:

thryoid_storm wrote:

I am not adverse to the risk of stocks.

As WCI once said in his book, paraphrase: if you are young then you should be on your knees begging for the market to crash. I am in this boat, and I think that it will have a major correction (only time will tell of course).

If the market were to crash in the next 6 months, would you be surprised???

I want to own stocks and hold them for a long time. I am only 31 years old, spouse is a doctor as well and we have no student debt. I want to invest aggressively for the future so that if I want to work part time or quit medicine early, I will have the option.

I just feel that the market is going to have a major correction and would feel bad if my first real lesson in investing is taking a good sucker punch with a fall.

I like POF method of just buying back in slowly, this will give the benefits of both. I think I will start to do this, just buy slowly and if it crashes then buy aggressively.

I think there is something to be said for doing something opposite of what everybody else does. As Jack Bogle says, investing runs counter-intuitive to human psychology.

 

 

 

 

Click to expand…

So you are going to pay all those capital gains tax on your sale and if the market goes up or remains high and goes sideways what are you going to do ?

 

Just invest in an no load index fund. If it goes down invest more. You are 31. At 61 the market would have gained a lot. Or maybe humanity may be nore more.

Click to expand...

Agree with this; whether to invest your 60k now or after the market hypothetically drops 50% next month at your ripe age of 31 will be a distant almost inconsequential memory by the time you retire.  You have plenty of potential years of continued investing and holding to dilute this decision into near irrelevance.

[Zaphod]

lucas wrote:

Kamban wrote:

thryoid_storm wrote:

I am not adverse to the risk of stocks.

As WCI once said in his book, paraphrase: if you are young then you should be on your knees begging for the market to crash. I am in this boat, and I think that it will have a major correction (only time will tell of course).

If the market were to crash in the next 6 months, would you be surprised???

I want to own stocks and hold them for a long time. I am only 31 years old, spouse is a doctor as well and we have no student debt. I want to invest aggressively for the future so that if I want to work part time or quit medicine early, I will have the option.

I just feel that the market is going to have a major correction and would feel bad if my first real lesson in investing is taking a good sucker punch with a fall.

I like POF method of just buying back in slowly, this will give the benefits of both. I think I will start to do this, just buy slowly and if it crashes then buy aggressively.

I think there is something to be said for doing something opposite of what everybody else does. As Jack Bogle says, investing runs counter-intuitive to human psychology.

 

 

 

 

Click to expand…

So you are going to pay all those capital gains tax on your sale and if the market goes up or remains high and goes sideways what are you going to do ?

 

Just invest in an no load index fund. If it goes down invest more. You are 31. At 61 the market would have gained a lot. Or maybe humanity may be nore more.

Click to expand…

Agree with this; whether to invest your 60k now or after the market hypothetically drops 50% next month at your ripe age of 31 will be a distant almost inconsequential memory by the time you retire.  You have plenty of potential years of continued investing and holding to dilute this decision into near irrelevance.

Click to expand...

Cannot agree more. Even if you get a good correction or massive drop, in 20 years its unlikely to be much more than a blip on the graph. Besides, you're a dual doctor couple with no student debt! The hard part is over, stop messing with stuff, just dump a load of cash in monthly, and give it the time thats necessary, like 20-30 years and it wont matter. It should be nearly impossible to mess this up, unless you conspire against yourself. Dont get me wrong, we all have these moments.

I wouldnt be displeased if there was a significant drop, with the caveat that it didnt affect the economy and peoples spending habits (super unlikely obviously), but you simply cannot within any degree of precision pick the extent, bottom, or start of the recovery. Just keep putting in the money consistently.

[Craigy]

Your question still boils down to timing the market.

When will you know that it's fully crashed and time to buy?  20%?  30%?  50%?

If it tumbled 50%, and you bought in, and then it crashed another 50%, what would you do?

If the market took an 80% tumble, you'd be asking yourself: perhaps this is the end of the market?  should i invest in gold bullion and canned goods?

Keep and hold your cash until you're comfortable.  But let your spouse invest his/her money as he/she sees fit.

[Dicast]

I had this thought process recently. I was completely cash Sept 8th while i was moving from Vanguard to Fidelity for my solo 401k. Sept 9th the s&p dropped 2.5%. My cash didnt show up at Fidelity until Sept 20th (it got there in a few days but rolling from the SEP IRA to a rollover IRA at Fidelity to a solo 401k at Fidelity took some time). I had high hopes the market would crash during those days...thought about holding out to see if it went further down. My plan though is to keep myself invested, diversify to control risk to a level I am comfortable. I put my money back in on the 20th and I wont look back. Keep your money in the market, dont let it have a day off.

[DMFA]

Today might be better than yesterday, but I don't know if tomorrow will be better than today.  I'm not sure anything is certain except for hindsight.

You might have a chance occurrence that could pay off brilliantly (although a 60K principal, in the face of all your future contributions and earnings and after STCG taxes, won't be that big in the end as the others above me have said), or you could blow it, or the most likely thing can occur and it won't make that much of a difference in the end.  You'll never *really* know until you look back.