First warning shot fired by DOW today

[BillsCarnage]

All of 2014's gains erased in one day and global sell-offs gaining ground.

This is going to be a fragile market for the next six months or so, but this could be the warning shot that starts the market pull back.

 

[Brian]

I've been keeping a very close watch on world events lately and we are facing some stressful times. I don't pay any attention to Israel/Gaza or any of the other "headline" news because frankly, I don't care.

What I find important is this chess game we are playing with Putin that has nothing to do with Ukraine and has everything to do with the petrodollar. The BRICS nations are openly discussing finding another denomination to trade in, France and Kuwait publicly announced their desire to come off the petrodollar, Argentina just defaulted again, The BIS sent out a global warning shot not too long ago that they were concerned there was too much being circulated (thanks alot Fed).

Meanwhile we are backing Putin into a corner and starting a colder war with the U.S./EU on one side (an unwilling EU btw) and the Russians and China on the other.

It's hard to find this info because none of the corporate-controlled media will report on it. It's out there, just need to dig and ignore the b.s. the MSM is putting out.

I really wish we would leave Putin alone. I don't dig the idea of backing that man into a corner, then again this is exactly how Brzezinski would play the game.

 

[Russ Smith]

I'm 80% cash now. I had one stock go really bad this week and I'm essentially down 20K in my IRA this week. I still own 3 stocks, the rest is cash.

The market has been so up it's got to correct and I don't want to be in anything but a few stocks that aren't particularly connected to the overall market.

 

[Superbone]

I'm 80% cash now. I had one stock go really bad this week and I'm essentially down 20K in my IRA this week. I still own 3 stocks, the rest is cash.

The market has been so up it's got to correct and I don't want to be in anything but a few stocks that aren't particularly connected to the overall market.

Index funds is where it's at. What you're trying to do is time the market. A very risky proposition. Just continue to invest in the market. Continue to buy when the market is down, that's when you get deals. You've got to think long term in the stock market. Over time, it always goes up.

 

[Russ Smith]

Index funds is where it's at. What you're trying to do is time the market. A very risky proposition. Just continue to invest in the market. Continue to buy when the market is down, that's when you get deals. You've got to think long term in the stock market. Over time, it always goes up.

Sure but everyone says that you can't time the market. The reality is it's better to be cash when the market goes down than in a fund that goes down, because guess what the person running the fund is trying to time the market too but they're normally doing it with stocks.

Not claiming to be a genius but if I'd listened to all the experts that said stay in the market during the last big downturn I'd have far less in my IRA than I do.

I am fully aware I'm not going to time it right, I will get back in before it stops going down or after it starts going back up, but I know too many people in the last 3 downturns (99, post 9/11, subprime) that just stayed in the market and watched their retirement savings dwindle.

 

[Superbone]

I'm not sure what you're saying here. Nobody lost anything that stayed in the market. It fully recovered and then some. If you had continued to invest in the down market, you'd be doing fantastically today.

 

[Russ Smith]

I'm not sure what you're saying here. Nobody lost anything that stayed in the market. It fully recovered and then some. If you had continued to invest in the down market, you'd be doing fantastically today.

We're talking about different things I assume. My IRA(actually 2) is from old 401K's and I'm not currently contributing anything to either. So it goes up or down based on the performance of the investments. So when I decide the market is probably peaked and go cash, I'm trying to time the market. I fully realize I won't, it's impossible. But I'm also guessing that I will probably be able to decide when to get back in well enough to offset missing the turn.



With my Simple IRA at work, I'm still contributing so I don't move in and out.
For ages stay put was in fact the best advice but IMO that's no longer true. Since 99 we have had essentially 3 crashes, 99, the post 9/11 one, and then the Sub prime one.

During the sub prime one I went cash, many people I know didn't, most of them are ahead of what they were now but we're talking 250K, slide back to 170, now have 275K. They're ahead but would be much further ahead if they had gone cash at some point during the crash and then got back in later.

That's precisely what people who run funds do they get in and out of the market. as long as you realize you will never time the top or the bottom but you pay attention it's actually been fairly doable the last several years.

In a fairly stable market that is extremely hard to do, in a volatile market like we've been in the last decade or so, it's a lot easier to do.

 

[Superbone]

Yeah, I see your point, Russ. You could try to time the market with those static accounts and maybe improve your returns some. I just prefer to ride the market ups and downs and not worry about it. Just knowing that eventually it'll be higher than it's ever been.

 

[Folster]

Hey Russ,

I'm just curious how many times you moved to cash during this current bull market?

 

[Russ Smith]

Hey Russ,

I'm just curious how many times you moved to cash during this current bull market?

I've been in and out of cash over the last 18 months or so. In fact just last week I put about 10% more back in so I'm probably more like 60% cash now with my 3 stocks I still own. I've never been 100% cash or 100% stocks I just change the balance. I've been as high as 80% cash, maybe even 85, as low as I think 30% cash in the last 18-24 months.

I was actually ahead of the market(the funds I was in) for 2014 until a few weeks ago when one of my stocks tanked and I took a big hit, now I'm behind it this year. That is if I'd just left my money in those same funds I was in and bought no stock I'd be about 5K ahead of where I am now. I was about 11K ahead until that one stock tanked.

That was not a poor choice on when to go cash it was a poor choice on an individual stock.

Basically all the experts disagree with me on this I just think the last few years the market has been so abnormally volatile it's actually easier to do. There was a guy on CNBC last week who agreed with me he said people leaving their money all in index funds could be in for a rude awakening when the market corrects because even the best index funds go down during a correction unless they're shorting the market. Which is actually another idea I've been considering but am too afraid to probably do. There are several etf's that short the market, some 2 or 3x times the dow for example. To me that goes beyond investing into gambling.

But I'll admit I've been expecting a correction for about 3 months now. The recent pullback I was mostly cash but I expected it to last quite a bit longer than it has so far.

I bought into VTI last week(a Vanguard fund) just because it has done quite well for me in the past.

 

[Dan H]

I've been in and out of cash over the last 18 months or so. In fact just last week I put about 10% more back in so I'm probably more like 60% cash now with my 3 stocks I still own. I've never been 100% cash or 100% stocks I just change the balance. I've been as high as 80% cash, maybe even 85, as low as I think 30% cash in the last 18-24 months.

I was actually ahead of the market(the funds I was in) for 2014 until a few weeks ago when one of my stocks tanked and I took a big hit, now I'm behind it this year. That is if I'd just left my money in those same funds I was in and bought no stock I'd be about 5K ahead of where I am now. I was about 11K ahead until that one stock tanked.

That was not a poor choice on when to go cash it was a poor choice on an individual stock.

Basically all the experts disagree with me on this I just think the last few years the market has been so abnormally volatile it's actually easier to do. There was a guy on CNBC last week who agreed with me he said people leaving their money all in index funds could be in for a rude awakening when the market corrects because even the best index funds go down during a correction unless they're shorting the market. Which is actually another idea I've been considering but am too afraid to probably do. There are several etf's that short the market, some 2 or 3x times the dow for example. To me that goes beyond investing into gambling.

But I'll admit I've been expecting a correction for about 3 months now. The recent pullback I was mostly cash but I expected it to last quite a bit longer than it has so far.

I bought into VTI last week(a Vanguard fund) just because it has done quite well for me in the past.

It's like watching a blindfolded guy drive an ATV through a china shop. You know at some he's going to crash, and when he does it's going to be horrific, but who knows when . . . ugh.

 

[Russ Smith]

It's like watching a blindfolded guy drive an ATV through a china shop. You know at some he's going to crash, and when he does it's going to be horrific, but who knows when . . . ugh.

Yeah predictions are all over the place from Dow 20K to Dow 8K.

I wouldn't be surprised at all if we saw a 20% correction down under 14K but who knows.

There hasn't been an obvious reason for awhile why the DOW is up so there doesn't seem to be any logic why it would drop either.

 

[Folster]

Yeah predictions are all over the place from Dow 20K to Dow 8K.

I wouldn't be surprised at all if we saw a 20% correction down under 14K but who knows.

There hasn't been an obvious reason for awhile why the DOW is up so there doesn't seem to be any logic why it would drop either.

The other morning on CNBC a big analyst from Morgan Stanley was predicting the S&P could hit 3K before the a major correction.

I'm in the process of changing strategies and moving from a largely ETF portfolio to an actively managed mutual fund portfolio. I sold when the S&P hit 1950, and then it promptly shot up to 2000 where it has been hovering for a few days. I'm not really trying to time things, I just want to find a nice entry point.

 

[Russ Smith]

The other morning on CNBC a big analyst from Morgan Stanley was predicting the S&P could hit 3K before the a major correction.

I'm in the process of changing strategies and moving from a largely ETF portfolio to an actively managed mutual fund portfolio. I sold when the S&P hit 1950, and then it promptly shot up to 2000 where it has been hovering for a few days. I'm not really trying to time things, I just want to find a nice entry point.

I actually own VTI now which is basically tracking the markets(Vanguard fund). I did a bit of reading and basically there's almost no managed funds that outperform VTI consistently over more than a year or two.

I'm kicking myself on Go Pro though, after the IPO it came down in the low 40's and I thought I'll buy it under 40, now it's almost at 70 I think the analysts figured out people just love Go Pro, yes there are other companies who can make a similar camera and probably will under sell them but people love that product and that's why they're doing so well. Just furious I didn't buy it. Now I have to wait for a pull back before I feel good about buying it.

 

[Folster]

I actually own VTI now which is basically tracking the markets(Vanguard fund). I did a bit of reading and basically there's almost no managed funds that outperform VTI consistently over more than a year or two.

I'm kicking myself on Go Pro though, after the IPO it came down in the low 40's and I thought I'll buy it under 40, now it's almost at 70 I think the analysts figured out people just love Go Pro, yes there are other companies who can make a similar camera and probably will under sell them but people love that product and that's why they're doing so well. Just furious I didn't buy it. Now I have to wait for a pull back before I feel good about buying it.

VTI is a nice ETF. I'm holding SCHB which is Schwab's total market index that has an internal expense of .04%. If you are looking for actively managed funds that have outperformed VTI, you should look at T. Rowe Price, one of my favorite fund families. TRVLX (Large Cap Value), PRGFX (Growth) and TRBCX (Blue Chip Growth). All 3 have have outperformed VTI by a percent or more over the last 10 years after expenses. They are no load and have reasonable expenses of .69-.84%

 

[Superbone]

There was a guy on CNBC last week who agreed with me he said people leaving their money all in index funds could be in for a rude awakening when the market corrects because even the best index funds go down during a correction unless they're shorting the market.

Of course index funds go down during a market correction. The only people in for a "rude awakening" don't understand how index funds work. The idea is to have long-term funds that can ride the volatility of the market because it's always gone up over time throughout the history of the stock market to the tune of 10% per year.

 

[Russ Smith]

Of course index funds go down during a market correction. The only people in for a "rude awakening" don't understand how index funds work. The idea is to have long-term funds that can ride the volatility of the market because it's always gone up over time throughout the history of the stock market to the tune of 10% per year.

Sure but the point I was making is your money doesn't "have" to go down during those times. if you stay in the index fund it will go down, if you move out of it into cash it won't, if you move into individual stocks you better pick the right ones.

The reason people don't do this is they're constantly told "don't try to time the market you can't." That's true, not even Warren Buffet can do that, but there are times where it's actually not all that hard to save money by moving into cash and then back into the market later.

The last few volatile years it has been much easier to do.