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I haven't been doing anything at all, beside some mechanical tax-loss harvesting. Suffered -21% YTD returns (~$800k lost on paper) on my 3-fund portfolio, which
by deanmoriarty 4y ago
I haven't been doing anything at all, beside some mechanical tax-loss harvesting. Suffered -21% YTD returns (~$800k lost on paper) on my 3-fund portfolio, which includes roughly 85/15 stocks/bonds.
Thanks to new contributions my net worth since last year is "just" down -11%. I haven't increased the rate of my new contributions because I have always dumped all my savings in the market since forever, I never kept any "dry powder" for moments like these as I always thought it was too much opportunity cost. Actually, thinking about it, the rate of new contributions significantly decreased this year because a good chunk of my pay is in FAANG RSUs :-)
It sucks, but I know I don't know anything and I can't risk timing the market and being double-slapped (first slap: taxes to liquidate the portfolio; second slap: not catching the market rebound, when/if it will happen).
Again, it sucks when you think how much stuff I could have bought with the ~$800k I lost on paper. My parents, old-school folks, think I am completely insane and irrational for letting this happen, and they also though this in March 2020 when I didn't sell. I literally have my dad texting me every other day begging me to sell. But surprisingly you get used to it, and I do not think I would panic, nor change my plans, even if we go much lower from here.
- boomchinolo78 4y agoMan, you're not one of those hopeless souls that "don't know anything and can't risk timing the market" your folks do seem to have a clue
- deleted 4y ago[deleted]
- ZoomerCretin 4y agoTiming the market is almost always a bad idea. If he had sold in March 2020, he almost certainly would not have bought back in until the market picked up again, losing out on a lot of market gains.
- brad0 4y agoI think it's somewhat possible to time the markets given monetary policy. Monetary policy and stimulus during COVID caused a currency devaluation. If nothing else changes, the value of assets should increase, relative to a currency. The same thing happened with monetary policy in March 2022. Interest rates went up, stocks went down. I'm curious what others think.
- ctchocula 4y agoIt's not possible, because monetary policy tends to be a lagging indicator of recessions [1] whereas the stock market is a leading indicator of recessions [2]. Also, there's the problem that dropping the interest rate doesn't mean the Fed will continue to drop it to zero. Similarly increasing the interest rate doesn't mean the Fed will continue to increase it until we hit a recession. The predictive power provided by such a lagging indicator combined with an imperfect correlation means that monetary policy alone isn't enough to time the market. [1] https://fred.stlouisfed.org/series/INTDSRUSM193N https://fred.stlouisfed.org/series/INTDSRUSM193N [2] https://fred.stlouisfed.org/series/NASDAQCOM https://fred.stlouisfed.org/series/NASDAQCOM
- karmakurtisaani 4y agoIt's easy to time the market when you know exactly what happened and have an explanation why it happened :P
- BurningFrog 4y agoI think it's fine to try to "time the market" and/or do many other things. But don't do it with more than 5-10% of your savings on one assumption/prediction.
- noahtallen 4y agoIs that the case? Recessions are “normal” (in that it’s not a once in a life time experience), and I thought the best practice for long-term investments was to 1. Keep them invested permanently, at least until you’re close to needing them, and 2. Buy low, sell high. Under either of those, now is not a good time to sell. The only reason it would be a good time to sell is if the economy never recovers… now that would be a once in a lifetime experience. This all operating under the assumption you don’t actually need the cash in the near future if you have enough liquid to cover a few months of no income.
- Arete314159 4y agoWhile recessions are normal, I don't think this one will be. There are some major changes happening in the world that are permanent. For instance, the Brookings Institute estimates that Long Covid has already taken up to 4 million Americans out of the workforce. If we continue at that pace (~2M a year), then by 2025 we'll have 5% of our workforce too disabled to work, and many more workers impacted by reduced functionality, or by caretaking responsibilities. In this sense it will be much different from your average recession. Add to that the other demographic changes as Baby Boomers age out of the workforce, and we're going to have a labor shortage for the next several decades at least. Some people with Long Covid can still work, but their brain fog makes them unable to work in their former capacity. So any job that involves a very high-functioning brain -- from coding to surgery to piloting an aircraft -- may become extremely hard to fill as time goes on.
- tmountain 4y agoEveryone is entitled to their own opinion, but there are a lot of assumptions baked into your analysis. Particularly, around long covid recovery times and that trend continuing. Also, what percentage of that cohort makes up “skilled labor”? I hate the term, but you get the idea…
- Arete314159 4y agoYou're right, I'm making a lot of assumptions. OP asked each person for their opinion, not a crystal ball with 100% accuracy, I gave mine. That said, I've been a reluctant member of the disability community for several decades, and I can also state that ME/CFS has a heckuva lot of overlap with Long Covid. The disabled community has called a lot of the things that have happened this entire pandemic, while 'experts' have gotten a lot of things wrong. I'm telling you what all the disabled people, who have been right this entire time, are saying: a lot of businesses are on the verge of collapse, because of long covid and other covid-related reasons (like, getting burned out from getting covid 3 times a year). Go to a subreddit for nurses and see how things really are. Go to a subreddit for teachers. Our hospitals are going to collapse, I predict in a few years, if we don't change course. Our schools are going to buckle under this strain. How functional is an economy with a 36 hour wait to get in the ER and terrible educational options? What happens when all the flight attendants, teachers, nurses, doctors, bus drivers, waiters, cooks, and so on either get too sick or too burnt out and quit en masse? That's why I'm saying it's not just "a recession," it's that plus...a whole lot of other huge economic issues. I understand if you think this makes me sound alarmist. But, FYI, when I lived in NYC and I warned that our laissez faire attitude to the air at Ground Zero was going to give thousands of people cancer, I was also called alarmist. As Sarah Kendzior says, it's a sin to be right too early.
- ZoomerCretin 4y agoAs I learned the hard way with Ethereum (bought at $87, sold at $83) and Gamestop (bought at $60 and $200, sold at $50), panicking is the easiest way to lose your money when investing. Thankfully it wasn't too expensive of a lesson, but I'm now done gambling and stick with buying ETFs that track the stock market.
- kingofpandora 4y agoIt wasn't the panicking that lost you money.
- ZoomerCretin 4y agoEthereum is now at $1,328, 15x what I paid for it four years ago. $GME went back up after I sold. Neither purchase would have been a loss if I had held through paper losses.
- iampims 4y agoHindsight. You couldn’t have known at the time.
- kingofpandora 4y agoYou weren't investing. You were gambling. Gamestop? Come on.
- llampx 4y agoThere's no difference between investing and trading for the average retail stock market dabbler. Anytime you trade money for a stock, you are speculating that the asset will go in the direction you want, mostly up. If someone is looking through financial statements and has intimate knowledge of the industry, more power to you since you are more likely to be the classical definition of an investor. I can give you loads and loads of examples where you could have held and suffered much greater losses over time. Last year I "invested" in $FSLY. Look at the stock performance. It would need to go up 900% to get back to its 2021 peak. Can it happen? Sure. Would you buy the stock thinking it could do a 900%?
- RobRivera 4y agogood for you. you're the tupe of person who would listen to my advice on wealth management. tax implications, asset diversification, ebbs and flows of markets, etc. all things that can be rationally discussed from a risk management perspective. wealth management strategies that are reactive? eep
- afryer 4y agoGreat job sticking to your investment principles. Every investor needs a 'Ulysses pact' that ties them to the ship to prevent the sirens from eating them. It sounds like your account is mostly taxable, have you ever considered getting your 3-fund exposure through a '90/60' fund like NTSX? The fund uses bond futures to get the increased exposure. It also has some tax efficiencies vs bond etfs. There is a US (NTSX) and International (NTSI) version. You could allocate 2/3 of the portfolio to NTSX/NTSI to achieve a 60/40 and then have the rest for either opportunistic market timing/security selection ("dry powder") or as an allocation to alternative beta (say something like managed futures, MLPs, private businesses, etc.) Obviously, taxes are a primary consideration, but I find these types of funds interesting in theory!
- deanmoriarty 4y agoI am generally not interested in taking more risk (I’m not saying your fund has more exposure to risk, I haven’t checked), and for the bonds part of my taxable portfolio I invest in diversified muni funds, VWIUX specifically. At the current SEC yield of 3.2% and my marginal tax rate of 40.8% this implies a tax-equivalent yield of 5.4%, which is good enough in my books.
- afryer 4y agoTotally, understand what you are saying and I think you will have success. I'm not saying to necessarily take more risk, I am saying to use 2/3 of capital to get access to tax efficient 60/40 exposure. Then I would look to further diversify. Whether it's munis to capture credit risk premiums, managed futures for commodity risk premiums, or taleb-style option trading for tail risk premiums. I think these simple liquid alternative funds could improve risk adjusted returns for boglehead style X-fund investors and not increase complexity or break the investment philosophy. Happy investing.
- xupybd 4y agoAnd this is how you get wealthy. Hold tight and play the long game.
- nly 4y agoHe's already wealthy by the sounds of it.nl Pretty easy to be chill when even if your pot gets halved you're still rich.
- ManuelKiessling 4y agoI have to say: hats off to you, Sir! The whole buy-and-hold thing, while technically simple, is really hard psychologically — and that’s when you have to deal with only your inner demons, fears, and greed. Having a close relative, and one that many people look up to, actively „sabotaging“* your resolution, is really next level! *) I know your father only wants the best for you and this is in no way meant as an attack.
- throw0101a 4y ago> The whole buy-and-hold thing, while technically simple, is really hard psychologically It's easy(er) if you never log into your account(s). I haven't gone in since January when I topped up by TFSA (~Canadian IRA), and my retirement account (RRSP ~ 401(k)) is automatically deducted from my chequeing account. I have no idea if I'm up or down and by how much.
- ericmcer 4y agoThis is smart and obvious but I need to be reminded of it. I am down barely 10% of what you are but still panic every few weeks.
- tmountain 4y agoI could have written a nearly identical comment. Stay with your plan and good luck!
- panarky 4y agoEasy come, easy go. We made great returns since 2008 for doing absolutely zero work except buying index funds and letting it ride. Nothing goes up forever, we'll probably give more back in the next 12 months, or not, nobody knows and that is beautiful.
- DangitBobby 4y agoUnfortunately for me, I got my first retirement account about a year ago. At least I managed to buy my first house before the market went totally bananas.
- downvoteme1 4y ago800k down and 11% loss. Was your portfolio 8 million at the start of the year?
- snapplebobapple 4y ago800k is 11 % of ~7.272 million, so no it wasn't 8 mill.
- deanmoriarty 4y agoHow can it be any of those? I said my net worth is down 11% from last year, and my YTD portfolio return is roughly -21% or $800k.
- snapplebobapple 4y agoMy bad. I assumed they only messed up the math, not everything. 00k is 21% of ~3.8mm, which, coincidentally, is also about the size of my portfolio in the public market prior to the big tastefest. Congrats on being financiall secure everywhere except San Francisco, Singapore, central London and maybe Hong Kong.
- daoist_shaman 4y agoDollar cost averaging is my favorite strategy. No anticipation of risk, no timing the market. Just gains all the way up.
- llampx 4y agoIf it sounds too good to be true...