4 ms·

This is the critical questions. I'm betting on an implosion and saving a ton of cash + a little extra bonds for the fire-sale.

by iaw 10y ago

refurb 10y ago
This is agree with. I'm not pulling money out, but I'm keeping some cash in reserves when the correction does come.
paulpauper 10y ago
consider selling put options ...get paid to wait
WalterBright 10y ago
The people I know who are waiting for the big correction to invest, lose their nerve when the corrections happen, and don't invest then, either.
shostack 10y ago
So your investment strategy is trying to time the market?
- virmundi 10y ago
  Timing the market doesn't mean pin point, cracker jack timing. Just not bay of pigs timing. I pulled 25% my 401k out in 2008 into bonds and a money market. Saved a good 15%. Then re-invested towards the bottom. Not perfect bottom to get back in. Not perfect top to get out. But 15%.
  - shostack 10y ago
    False. Timing the market means trying to make investment decisions because you think the market is "high" or "low" or that it will move up or down in a certain time-frame. The only remedy for that is dollar-cost averaging over a long period of time.
- iaw 10y ago
  See virmundi's comment. I've been able to make sizable returns by not buying when things were overpriced and then buying when they are under priced. This doesn't mean all of my money, but enough that it's worth the time. The Brexit was a fantastic opportunity, I got in way late and still bought in at a 10% discount. Historically when the market looks like this there's going to be a correction in the near term. With the pace of this bubble I'll be able to buy good companies at a massive discount.
  - shostack 10y ago
    The whole point of "timing the market" being bad is that you can't know what the future holds, so while you can try to model things to determine whether they are under or overpriced, unless you pick stocks like Warren Buffet, you are best off dollar cost averaging into index funds because you will net net come out ahead when you factor in fees. >"Historically when the market looks like this there's going to be a correction in the near term. With the pace of this bubble I'll be able to buy good companies at a massive discount." Past performance is not an indicator of future results.
    - iaw 10y ago
      My tolerance for volatility and loss is higher than the traditional investor. Beyond Burton Malkiel's random walk there's Modern Portfolio Theory. There are three pools of asset-classes that I consider: Bonds - Historic low rates, soon to increase and drive down the price of existing bonds on the market. Bonds should cheapen 3-4 times this year thanks to Yellen. Equity Market - Market PE and PEG values are above the level that historically precedes a correction. Two dynamics may be contributing: The first, domestic corporate equity investment is up due to the low T-Bill rates (a risky return in equity looks a lot better when government bond rates are effectively nothing). The second, foreign investors (specifically Chinese/Russian) trying to diversify away from government corruption. This phenomenon is well-documented in desirable housing markets (Toronto, SF Bay Area, NY, London, etc.) but harder/impossible to identify in the stock markets. The second phenomenon does make the argument for a regime change, but only so long as the US Dollar remains strong relative to the rest to their home countries. Guess what the White House policy is going to do? Cash/Cash Equivalents - A near zero interest rate with low volatility. Cash, from what I can tell, is the only thing priced normally from a discount perspective. I can afford to accumulate more cash at a -3% effective rate while letting the rest of my holdings appreciate. When everyone else is bleeding I'll be there with my liquidity.

This is the critical questions. I'm betting on an implosion and saving a ton of cash + a little extra bonds for the fire-sale.

by iaw 10y ago

This is the critical questions. I'm betting on an implosion and saving a ton of cash + a little extra bonds for the fire-sale.

refurb 10y ago

This is agree with. I'm not pulling money out, but I'm keeping some cash in reserves when the correction does come.

paulpauper 10y ago

consider selling put options ...get paid to wait

WalterBright 10y ago

The people I know who are waiting for the big correction to invest, lose their nerve when the corrections happen, and don't invest then, either.

shostack 10y ago

So your investment strategy is trying to time the market?

virmundi 10y ago
Timing the market doesn't mean pin point, cracker jack timing. Just not bay of pigs timing. I pulled 25% my 401k out in 2008 into bonds and a money market. Saved a good 15%. Then re-invested towards the bottom. Not perfect bottom to get back in. Not perfect top to get out. But 15%.
- shostack 10y ago
  False. Timing the market means trying to make investment decisions because you think the market is "high" or "low" or that it will move up or down in a certain time-frame. The only remedy for that is dollar-cost averaging over a long period of time.
iaw 10y ago
See virmundi's comment. I've been able to make sizable returns by not buying when things were overpriced and then buying when they are under priced. This doesn't mean all of my money, but enough that it's worth the time. The Brexit was a fantastic opportunity, I got in way late and still bought in at a 10% discount. Historically when the market looks like this there's going to be a correction in the near term. With the pace of this bubble I'll be able to buy good companies at a massive discount.
- shostack 10y ago
  The whole point of "timing the market" being bad is that you can't know what the future holds, so while you can try to model things to determine whether they are under or overpriced, unless you pick stocks like Warren Buffet, you are best off dollar cost averaging into index funds because you will net net come out ahead when you factor in fees. >"Historically when the market looks like this there's going to be a correction in the near term. With the pace of this bubble I'll be able to buy good companies at a massive discount." Past performance is not an indicator of future results.
  - iaw 10y ago
    My tolerance for volatility and loss is higher than the traditional investor. Beyond Burton Malkiel's random walk there's Modern Portfolio Theory. There are three pools of asset-classes that I consider: Bonds - Historic low rates, soon to increase and drive down the price of existing bonds on the market. Bonds should cheapen 3-4 times this year thanks to Yellen. Equity Market - Market PE and PEG values are above the level that historically precedes a correction. Two dynamics may be contributing: The first, domestic corporate equity investment is up due to the low T-Bill rates (a risky return in equity looks a lot better when government bond rates are effectively nothing). The second, foreign investors (specifically Chinese/Russian) trying to diversify away from government corruption. This phenomenon is well-documented in desirable housing markets (Toronto, SF Bay Area, NY, London, etc.) but harder/impossible to identify in the stock markets. The second phenomenon does make the argument for a regime change, but only so long as the US Dollar remains strong relative to the rest to their home countries. Guess what the White House policy is going to do? Cash/Cash Equivalents - A near zero interest rate with low volatility. Cash, from what I can tell, is the only thing priced normally from a discount perspective. I can afford to accumulate more cash at a -3% effective rate while letting the rest of my holdings appreciate. When everyone else is bleeding I'll be there with my liquidity.