4 ms·

So what should Joe Investor who is not a sophisticated investor, but likely has a ton tied up in say, an Index Fund, be doing right now?

godzillabrennus 11y ago
Cash out. Wait for the bust. Buy back in.
- sxcurry 11y ago
  One thing I've learned from HN over the years - be sure to ignore all financial and medical advice!
- shostack 11y ago
  And what about if the majority of that is in a 401k?
  - hueving 11y ago
    Same applies. Change allocation to cash. Then change back after crash.
    - WalterBright 11y ago
      The trouble with switching to cash is then you've got to pay income tax on the capital gains. You'll be buying back in with less (proceeds - taxes).
      - nextweek2 11y ago
        Investment funds will offer a cash investment option. This invests in currencies. Along with government bonds it's considered low growth low risk investment. Nobody would advocate actually withdrawing from an investment account. Just move it to safer investment options.
        WalterBright 11y ago
        Moving it incurs capital gains taxes. Even if you passively invest in a mutual fund, the funds internal transactions show up as capital gains that get reported to the IRS, and you have to pay the tax.
        spinchange 11y ago
        Not if it is in a tax deferred retirement account: there are no cap gains incurred by reallocating or NAV distributions unless there's an actual cash withdrawal. This is specific to 401ks & traditional IRAs only.
        hueving 11y ago
        You are woefully misinformed. I hope you have not been keeping money in a particular 401k fund because you thought you couldn't change the allocation without paying taxes...
      - spacehome 11y ago
        Not if it's in a 401k.
      - deleted 11y ago
        [deleted]
  - kanwisher 11y ago
    I don't necessarily agree with the market falling, but there is no reason you can't move your 401k indexes into a cash position at the brokerage and rebuy later. Not that I think thats a good idea
Teodolfo 11y ago
Stay the course if the investment time horizon is 20+ years. Make sure you have an asset allocation you are comfortable with and aren't taking on too much or too little risk. Do nothing and ignore the noise.
- imrehg 11y ago
  Taking too much risk I understand, but what does it mean taking too little risk in this context?
  - shlomo_goystein 11y ago
    Smart goy!
  - dmm 11y ago
    If you're 30 you probably shouldn't have a bunch of money in govt bonds. If you're 65 it may be a really good idea.
lujim 11y ago
I didn't sell everything, but I did sell a few things to take some profits and dumped a few losers to help offset those capital gains with some losses on things I really wanted to get out of. I'm going to over 75% cash right now. If the market drops 20% then I'm going to slowly start dollar cash averaging in to see if it trends back up. If it doesn't I'm just going to stay cash heavy. If I had been smart enough to buy Google, Facebook, or Amazon a few years ago I would be taking some or maybe all profits there. If Apple goes below 100 I will start buying again and possibly selling covered calls on it. My IRA's have a really long time horizon so although I'm still putting cash in them every month I'm not buying anything. I'm not selling anything in there either because I just buy SPY (S&P ETF) and occasionally some down and out sector ETFs every month.

godzillabrennus 11y ago

Cash out. Wait for the bust. Buy back in.

sxcurry 11y ago
One thing I've learned from HN over the years - be sure to ignore all financial and medical advice!
shostack 11y ago
And what about if the majority of that is in a 401k?
- hueving 11y ago
  Same applies. Change allocation to cash. Then change back after crash.
  - WalterBright 11y ago
    The trouble with switching to cash is then you've got to pay income tax on the capital gains. You'll be buying back in with less (proceeds - taxes).
    - nextweek2 11y ago
      Investment funds will offer a cash investment option. This invests in currencies. Along with government bonds it's considered low growth low risk investment. Nobody would advocate actually withdrawing from an investment account. Just move it to safer investment options.
      - WalterBright 11y ago
        Moving it incurs capital gains taxes. Even if you passively invest in a mutual fund, the funds internal transactions show up as capital gains that get reported to the IRS, and you have to pay the tax.
        spinchange 11y ago
        Not if it is in a tax deferred retirement account: there are no cap gains incurred by reallocating or NAV distributions unless there's an actual cash withdrawal. This is specific to 401ks & traditional IRAs only.
        hueving 11y ago
        You are woefully misinformed. I hope you have not been keeping money in a particular 401k fund because you thought you couldn't change the allocation without paying taxes...
    - spacehome 11y ago
      Not if it's in a 401k.
    - deleted 11y ago
      [deleted]
- kanwisher 11y ago
  I don't necessarily agree with the market falling, but there is no reason you can't move your 401k indexes into a cash position at the brokerage and rebuy later. Not that I think thats a good idea

Teodolfo 11y ago

Stay the course if the investment time horizon is 20+ years. Make sure you have an asset allocation you are comfortable with and aren't taking on too much or too little risk. Do nothing and ignore the noise.

imrehg 11y ago
Taking too much risk I understand, but what does it mean taking too little risk in this context?
- shlomo_goystein 11y ago
  Smart goy!
- dmm 11y ago
  If you're 30 you probably shouldn't have a bunch of money in govt bonds. If you're 65 it may be a really good idea.

lujim 11y ago

I didn't sell everything, but I did sell a few things to take some profits and dumped a few losers to help offset those capital gains with some losses on things I really wanted to get out of. I'm going to over 75% cash right now. If the market drops 20% then I'm going to slowly start dollar cash averaging in to see if it trends back up. If it doesn't I'm just going to stay cash heavy. If I had been smart enough to buy Google, Facebook, or Amazon a few years ago I would be taking some or maybe all profits there. If Apple goes below 100 I will start buying again and possibly selling covered calls on it. My IRA's have a really long time horizon so although I'm still putting cash in them every month I'm not buying anything. I'm not selling anything in there either because I just buy SPY (S&P ETF) and occasionally some down and out sector ETFs every month.