6 ms·

Those of you (US) with large stock/cash positions: what are you doing to weather the (inevitable) storm? Feels like we’re in the doom and gloom media phase. I s

Those of you (US) with large stock/cash positions: what are you doing to weather the (inevitable) storm? Feels like we’re in the doom and gloom media phase. I suspect lots of people will start forgetting within the next 6 months in which the stock market will go sideways, until the next catalyst which is the US election cycle.

my_username_is_ 7y ago
>what are you doing to weather the (inevitable) storm? Stay invested in equities. Keep some cash on hand as an emergency fund in case you lose your job, but just don't sell your stocks when the market is down. Stay diversified and stay in the market.
- mooreds 7y ago
  > Stay diversified and stay in the market. Agree 100%. Always worth noting that you should have an asset allocation based on your risk profile. If you need the money to pay for your kids college and it is less than 5 years away, don't have it in stocks! Beyond that, equity allocation makes sense. You want to walk the line between not being able to sleep at night because the market is cratering and not being able to sleep at night in 30 years because you don't have enough money saved to retire the way you want to. Disclaimer: I like this stuff, but I am not a financial advisor.
rifung 7y ago
> Those of you (US) with large stock/cash positions: what are you doing to weather the (inevitable) storm I follow the traditional advice of doing nothing and not trying to time the market.
- twoheadedboy 7y ago
  Yeah I get that. What about for people like me who are trying to enter the market? I'm wondering if it's worth it to wait and see, or if I should just not worry too much and invest now anyway.
  - icelancer 7y ago
    The next $1000 I put into my retirement accounts is no different than your first $1000.
  - astura 7y ago
    No, its absolutely not "worth" it to "wait and see" unless you have proven clairvoyance. Just invest for the future when you have the money to invest - stock market should be for the long term.
  - mywittyname 7y ago
    On average, buying now is cheaper than buying later. And you can't time the market. You're going to be contributing to this for years and years, so where the market was at when you invested your first dollar will be meaningless.
  - notJim 7y ago
    Time in market beats timing the market.
    - czbond 7y ago
      True, but time in market with educated and not naive timing beats "time in market". Edit: "naive", and that I simply mean to time ETF payments with awareness and possibly technical indicators.
  - wil421 7y ago
    Minimum 3 months of savings, pay off high interest debt, and max out 401k or at very least max out your employer match. Max out employee stock purchase programs and sell quickly.
whatshisface 7y ago
If the capital flight away from the rest of the world is bad enough, US markets could even go up during a global recession. That's the thing about the stock market, it goes up and down and you can never guess which.
jumbopapa 7y ago
Stay the course. Don't try to time the market. You just need to avoid the irrational decision to pull your money out of the market because you'll most likely get it wrong and be worse off. We've had 10 years of prosperity which should have been ample time to secure an emergency fund to weather the storm.
astura 7y ago
A cash emergency fund is there to help you weather financial storms, that's its sole purpose. I have a six figure US stock position and I'm not going to change anything I do as long as I remain employed. Save for retirement/long term in the stock market, save for big ticket items in cash (I have a new car fund, for example). If I lose my job I'll have to stop contributions until I get another job. If I remain unemployed longer term I'd have to tighten my belt on frivolous purchases.
eikenberry 7y ago
The market goes up and down. You invest for the long term and ignore the volatility.
WhompingWindows 7y ago
Same as always: improve skill-set to 1) live more cost-efficiently 2) provide more value at work. 1) definitely leads to better savings rate over time, 2) probably does.
f00zz 7y ago
Not in the US nor have a large $$$ position, but as someone who dabbles a bit in options trading on the side, I've got to say: this volatility is great.
misiti3780 7y ago
continue to put x% of my salary into vanguard ETFs, and store the rest in cash. you cannot time the market.
- rchaud 7y ago
  I'm using Questrade, and because I have a self-directed account, I need to put in a buy order manually 1x/month. Is that the way it's normally done? I used to have a mutual fund through my bank, where I'd set a monthly amount and they'd automatically deposit that into the fund from my chequing account. I decided to try something different since the reporting tools available through the online banking system were very basic.
  - overcast 7y ago
    Cheap Vanguard funds like VFIAX (S&P500) or VTSAX(Total US stock market). No need for managed funds that charge over 5 basis points, you're just wasting money. Then sock away cash in a no fee online high yield banking account like Ally or Marcus.
icelancer 7y ago
>> what are you doing to weather the (inevitable) storm Investing every two weeks into my standard allocation that I've decided on, rebalancing when necessary. Anything beyond that is speculation. Especially the concept of an inevitable storm coming. When, how, and where that happens is not something too many people know.
overcast 7y ago
Continue investing passively through your 401k, Roth, and HSA. But start spending less, and sock away that extra cash into high yield bank accounts. That way you're investing for your future, while covering any emergency needs in case of job loss. I've been working my way up to a 6-9 month buffer for the last year.
- icelancer 7y ago
  >> start spending less This seems like overly simple advice but it's the best advice you can listen to if you think there is a storm coming. Cutting spending and allocating that money to cash reserves while keeping your usual investment strategy (401k / Roth IRA / etc) is the most effective thing you can do.
Ambele 7y ago
I'm reducing margin (borrowed money for investing) to zero or near-zero. I'm also building up a savings account. Some of the Democrats could very well push for a pre-election recession in order to make Trump look less re-electable.
rchaud 7y ago
Look at the S&P 500 index from early 2008 to say 2012. Governments will enact policies to prop up the stock and bond markets, as they always have. Our entire civilization is held up on the promise that financial market indices go up over time, except for temporary recessionary periods. We just accept that retirees cashing out at the wrong time will be victims of 'collateral damage' during these 'market corrections'. Everything from job growth, to the pension funds that you contribute to, to the municipal bonds governments issue to fund projects, rests on this one core assumption.
- f00zz 7y ago
  People who bought the Nikkei index in the early 1990s are still waiting for the correction to end...
  - mywittyname 7y ago
    https://dqydj.com/nikkei-return-calculator-dividend-reinvestment/ https://dqydj.com/nikkei-return-calculator-dividend-reinvest... After dividends, you broke even after inflation (-0.096% return) if you dumped your life savings into the Nikkei in Jan 1990 and never invested another dime. But if you kept investing incrementally over the years, like most people do, then annual returns went to 2.5% after inflation in 1995-2000, to 6.5% in 2005 and 9.4% in 2010.
  - rchaud 7y ago
    Good point. The Japan case is a weird one. There's a Paul Krugman essay from the '90s that argues it's partially due to a historically high savings rate among Japanese consumers[0]. A good chunk of their boom was export-driven after all. Loosening monetary policy to fight deflationary pressure in the '90s also didn't seem to work because interest rates were already near zero. I think the US is different because the benchmark Fed rate is 2.25% now after many years of near-zero rates. So there's room to cut rates if needed. [0]: http://web.mit.edu/krugman/www/nikkei.html http://web.mit.edu/krugman/www/nikkei.html
    - f00zz 7y ago
bduerst 7y ago
I've been trimming positions to increase cash on hand, as much as possible these past three months. I'll likely put it in some of the more stable industry ETFs moving forward, and won't bother with shorting index funds since we don't know exactly when/where the major hits will come. My take is that this trade war is irrationally based on animosity (even if the sentiment behind it is rational) so my hypothesis is when the tariffs are finally enacted you'll start to see a bigger shift as fund managers figure out that yes, the trade war is here.
czbond 7y ago
If you have stock gains that you need, and can't live without - consider your exit price, and perform proper portfolio maintenance. Recession indicators have been in play for about 2 years. If nothing else, be much more aware of your high downside risk - and at least scenario model if we go down to multi-decade lows. Specifically in any items with negative EPShare, or not necessities. We're in the cycle now that hits equities -> mid-consumer spending -> business spending -> consumer spending -> real estate. Don't consider the specifics of this message, but the generalities and apply to life Prepare for years of lower rates of return; If you own property, you will be able to re-fi in a few years to some very low rates. Cash is king for fire sales - lots of people will be going super broke the next 5 years. House prices will de-value enough, so don't buy property for the next 1-3 years. Stock market can revert to 50% of current values. Edit: used this technique to purchase my first house, firesale. Will do it again this round, along with other lessons learned ;) Edit 2: Listen to your own companies investor calls (if large enough) - you can predict upcoming layoffs. If you need a new job, do it now before wages stagnate or deflate some. Place yourself in a line of business that is close to a revenue stream of the business, they're rarely cut.
- lbotos 7y ago
  > House prices will de-value enough, so don't buy property for the next 1-3 years. I don't follow. Are you saying don't buy until till the drop or, don't buy when it drops?
  - czbond 7y ago
    Each house market would act differently, some with a depressed recovery, some a whipsaw recovery. Watch your own market as the rule applies "last to go up, first to go down". Coastal markets will drop enough, interior less. Here is a good Case Shiller analysis of prices over time for markets. Buy when it gets near last periods low prices (do own analysis, don't rely on my flippant date mention though...). https://wolfstreet.com/2019/08/01/housing-bubbles-chicago-dallas-atlanta-minneapolis-charlotte-still-crushed-detroit-cleveland/ https://wolfstreet.com/2019/08/01/housing-bubbles-chicago-da...
tradeWar 7y ago
Hodl!

my_username_is_ 7y ago

>what are you doing to weather the (inevitable) storm? Stay invested in equities. Keep some cash on hand as an emergency fund in case you lose your job, but just don't sell your stocks when the market is down. Stay diversified and stay in the market.

mooreds 7y ago
> Stay diversified and stay in the market. Agree 100%. Always worth noting that you should have an asset allocation based on your risk profile. If you need the money to pay for your kids college and it is less than 5 years away, don't have it in stocks! Beyond that, equity allocation makes sense. You want to walk the line between not being able to sleep at night because the market is cratering and not being able to sleep at night in 30 years because you don't have enough money saved to retire the way you want to. Disclaimer: I like this stuff, but I am not a financial advisor.

rifung 7y ago

> Those of you (US) with large stock/cash positions: what are you doing to weather the (inevitable) storm I follow the traditional advice of doing nothing and not trying to time the market.

twoheadedboy 7y ago
Yeah I get that. What about for people like me who are trying to enter the market? I'm wondering if it's worth it to wait and see, or if I should just not worry too much and invest now anyway.
- icelancer 7y ago
  The next $1000 I put into my retirement accounts is no different than your first $1000.
- astura 7y ago
  No, its absolutely not "worth" it to "wait and see" unless you have proven clairvoyance. Just invest for the future when you have the money to invest - stock market should be for the long term.
- mywittyname 7y ago
  On average, buying now is cheaper than buying later. And you can't time the market. You're going to be contributing to this for years and years, so where the market was at when you invested your first dollar will be meaningless.
- notJim 7y ago
  Time in market beats timing the market.
  - czbond 7y ago
    True, but time in market with educated and not naive timing beats "time in market". Edit: "naive", and that I simply mean to time ETF payments with awareness and possibly technical indicators.
- wil421 7y ago
  Minimum 3 months of savings, pay off high interest debt, and max out 401k or at very least max out your employer match. Max out employee stock purchase programs and sell quickly.

whatshisface 7y ago

If the capital flight away from the rest of the world is bad enough, US markets could even go up during a global recession. That's the thing about the stock market, it goes up and down and you can never guess which.

jumbopapa 7y ago

Stay the course. Don't try to time the market. You just need to avoid the irrational decision to pull your money out of the market because you'll most likely get it wrong and be worse off. We've had 10 years of prosperity which should have been ample time to secure an emergency fund to weather the storm.

astura 7y ago

A cash emergency fund is there to help you weather financial storms, that's its sole purpose. I have a six figure US stock position and I'm not going to change anything I do as long as I remain employed. Save for retirement/long term in the stock market, save for big ticket items in cash (I have a new car fund, for example). If I lose my job I'll have to stop contributions until I get another job. If I remain unemployed longer term I'd have to tighten my belt on frivolous purchases.

eikenberry 7y ago

The market goes up and down. You invest for the long term and ignore the volatility.

WhompingWindows 7y ago

Same as always: improve skill-set to 1) live more cost-efficiently 2) provide more value at work. 1) definitely leads to better savings rate over time, 2) probably does.

f00zz 7y ago

Not in the US nor have a large $$$ position, but as someone who dabbles a bit in options trading on the side, I've got to say: this volatility is great.

misiti3780 7y ago

continue to put x% of my salary into vanguard ETFs, and store the rest in cash. you cannot time the market.

rchaud 7y ago
I'm using Questrade, and because I have a self-directed account, I need to put in a buy order manually 1x/month. Is that the way it's normally done? I used to have a mutual fund through my bank, where I'd set a monthly amount and they'd automatically deposit that into the fund from my chequing account. I decided to try something different since the reporting tools available through the online banking system were very basic.
- overcast 7y ago
  Cheap Vanguard funds like VFIAX (S&P500) or VTSAX(Total US stock market). No need for managed funds that charge over 5 basis points, you're just wasting money. Then sock away cash in a no fee online high yield banking account like Ally or Marcus.

icelancer 7y ago

>> what are you doing to weather the (inevitable) storm Investing every two weeks into my standard allocation that I've decided on, rebalancing when necessary. Anything beyond that is speculation. Especially the concept of an inevitable storm coming. When, how, and where that happens is not something too many people know.

overcast 7y ago

Continue investing passively through your 401k, Roth, and HSA. But start spending less, and sock away that extra cash into high yield bank accounts. That way you're investing for your future, while covering any emergency needs in case of job loss. I've been working my way up to a 6-9 month buffer for the last year.

icelancer 7y ago
>> start spending less This seems like overly simple advice but it's the best advice you can listen to if you think there is a storm coming. Cutting spending and allocating that money to cash reserves while keeping your usual investment strategy (401k / Roth IRA / etc) is the most effective thing you can do.

Ambele 7y ago

I'm reducing margin (borrowed money for investing) to zero or near-zero. I'm also building up a savings account. Some of the Democrats could very well push for a pre-election recession in order to make Trump look less re-electable.

rchaud 7y ago

Look at the S&P 500 index from early 2008 to say 2012. Governments will enact policies to prop up the stock and bond markets, as they always have. Our entire civilization is held up on the promise that financial market indices go up over time, except for temporary recessionary periods. We just accept that retirees cashing out at the wrong time will be victims of 'collateral damage' during these 'market corrections'. Everything from job growth, to the pension funds that you contribute to, to the municipal bonds governments issue to fund projects, rests on this one core assumption.

f00zz 7y ago
People who bought the Nikkei index in the early 1990s are still waiting for the correction to end...
- mywittyname 7y ago
  https://dqydj.com/nikkei-return-calculator-dividend-reinvestment/ https://dqydj.com/nikkei-return-calculator-dividend-reinvest... After dividends, you broke even after inflation (-0.096% return) if you dumped your life savings into the Nikkei in Jan 1990 and never invested another dime. But if you kept investing incrementally over the years, like most people do, then annual returns went to 2.5% after inflation in 1995-2000, to 6.5% in 2005 and 9.4% in 2010.
- rchaud 7y ago
  Good point. The Japan case is a weird one. There's a Paul Krugman essay from the '90s that argues it's partially due to a historically high savings rate among Japanese consumers[0]. A good chunk of their boom was export-driven after all. Loosening monetary policy to fight deflationary pressure in the '90s also didn't seem to work because interest rates were already near zero. I think the US is different because the benchmark Fed rate is 2.25% now after many years of near-zero rates. So there's room to cut rates if needed. [0]: http://web.mit.edu/krugman/www/nikkei.html http://web.mit.edu/krugman/www/nikkei.html
  - f00zz 7y ago

bduerst 7y ago

I've been trimming positions to increase cash on hand, as much as possible these past three months. I'll likely put it in some of the more stable industry ETFs moving forward, and won't bother with shorting index funds since we don't know exactly when/where the major hits will come. My take is that this trade war is irrationally based on animosity (even if the sentiment behind it is rational) so my hypothesis is when the tariffs are finally enacted you'll start to see a bigger shift as fund managers figure out that yes, the trade war is here.

czbond 7y ago

If you have stock gains that you need, and can't live without - consider your exit price, and perform proper portfolio maintenance. Recession indicators have been in play for about 2 years. If nothing else, be much more aware of your high downside risk - and at least scenario model if we go down to multi-decade lows. Specifically in any items with negative EPShare, or not necessities. We're in the cycle now that hits equities -> mid-consumer spending -> business spending -> consumer spending -> real estate. Don't consider the specifics of this message, but the generalities and apply to life Prepare for years of lower rates of return; If you own property, you will be able to re-fi in a few years to some very low rates. Cash is king for fire sales - lots of people will be going super broke the next 5 years. House prices will de-value enough, so don't buy property for the next 1-3 years. Stock market can revert to 50% of current values. Edit: used this technique to purchase my first house, firesale. Will do it again this round, along with other lessons learned ;) Edit 2: Listen to your own companies investor calls (if large enough) - you can predict upcoming layoffs. If you need a new job, do it now before wages stagnate or deflate some. Place yourself in a line of business that is close to a revenue stream of the business, they're rarely cut.

lbotos 7y ago
> House prices will de-value enough, so don't buy property for the next 1-3 years. I don't follow. Are you saying don't buy until till the drop or, don't buy when it drops?
- czbond 7y ago
  Each house market would act differently, some with a depressed recovery, some a whipsaw recovery. Watch your own market as the rule applies "last to go up, first to go down". Coastal markets will drop enough, interior less. Here is a good Case Shiller analysis of prices over time for markets. Buy when it gets near last periods low prices (do own analysis, don't rely on my flippant date mention though...). https://wolfstreet.com/2019/08/01/housing-bubbles-chicago-dallas-atlanta-minneapolis-charlotte-still-crushed-detroit-cleveland/ https://wolfstreet.com/2019/08/01/housing-bubbles-chicago-da...

tradeWar 7y ago

Hodl!