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Debating on when to sell. Seems like the market is over valued. Could the bubble burst soon?
 

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The bubble could ALWAYS burst soon :) If you're well diversified (meaning you have other, non-equity investments) don't sweat it.

I'm 58, so I try to keep stocks at no more than 50% of my total holdings.
 

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Debating on when to sell. Seems like the market is over valued. Could the bubble burst soon?
If you don't have a good emergency cash balance, I'd sell some now. A lot depends on your age and when you plan to retire. I'm 70 so I sell a bit of my winners so that I can buy more dividend payers that are solid companies. None of us (at least not me!) are smart enough to sell at the very top of the market nor buy at the very bottom!
 

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I would sit out and watch for awhile. Democrats have promised to raise the corporate tax rate from 21% to 35%.

They also might extend lockdowns on the economy. If they do, Biden will announce this shortly after Jan 20th. This would be terrible.

I expect a 10-20% selloff if they follow through with this.
 

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None of us (at least not me!) are smart enough to sell at the very top of the market nor buy at the very bottom!
That is the most important thing to bear in mind, and it's amazing how many people either don't know it or refuse to believe it.
 
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I would sit out and watch for awhile. Democrats have promised to raise the corporate tax rate from 21% to 35%.

They also might extend lockdowns on the economy. If they do, Biden will announce this shortly after Jan 20th. This would be terrible.

I expect a 10-20% selloff if they follow through with this.
A few thoughts on this...

1) Yes, Democrats might raise the corporate tax rate. But they might also accelerate the practice of using our tax money to funnel to favored corporations in the form of subsidies and incentives.

2) If the "experts" expected a selloff, they would have already sold. Think about it....

3) Even if there is a "selloff" the market has ALWAYS historically come back

4) There is no such thing as a "selloff." The number of shares sold on any given day is exactly equal to the number of shares PURCHASED on any given day. So if there is a "selloff", who are the people on the other side of these transactions, the people who are buying these massive quantities of stocks on a day when everyone is supposedly selling, where do they get the money for these massive stock buys, and what is their motivation for buying on a day when everyone is supposedly "selling off"? My guess is that they are very wealthy and savvy investors who know that the stock market is a very long term investment tool, and they are looking for bargains to put massive amounts of money into stocks. So when everyone is "selling off", these wealthy and savvy folks say "yes I'll buy the stocks you're dumping, and buy them at a discount, so thank you very much."

As always, JMHO
 

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The bubble could begin to implode today, next month, etc. There are enough situations in this country and around the world that could trigger it. Too many to mention; from a political assassination in this country, to an invasion of Taiwan, to the Iranians finally extracting vengeance for the death of their nuke program hero, and the shootdown of their Airbus during the gulf war, etc. etc. Taking some profits now might be a good idea. You'd only know in retrospect; and what to do with the cash now? You will be paying the taxes on it with real money which, if then invested in "safe" places , will yield a substantial steady loss to inflation...decisions, decisions... Maybe this time is really different?
 

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^^^^^^^ AGREE

And there is no right or wrong answer. Everyone's situation is different. If you have money in the market that you will likely need to spend in the near term, then selling some or all MIGHT be the right call. Only the individual can decide.
 
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They also might extend lockdowns on the economy. If they do, Biden will announce this shortly after Jan 20th. This would be terrible.
I would also note that the lockdowns have devastated small business/mom & pop operations, but the big box stores and Amazon's of the world (i.e. corporations) have been allowed to remain open and have been making record profits.
 
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Noone knows when the market will selloff. I have done dollar cost averaging in balanced Vanguard funds (Fidelity and others have them too, but look for low expense rations), Dollar cost averaging works and when the market gets killed I add more money. I am 63 now, so my exposure to the market is about 50%.

I do believe that given the crappy economy everywhere, and fiat money being pumped into the market, when the market sells off , the velocity and intensity will be significant
 

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I think as long as they keep dangling promises of more stimulus payments, the stock market will continue to hold or go up. I read an article on the comparison of Trump's and Biden's economic plans back before the election. The author said that stocks would do better under a Biden administration. For the simple fact that his plan included much more borrowing. Not sure at which point the stock market begins to care about debt.
 
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AS A PROFESSIONAL..... I'm all about JJ'65's comments.

Von, we did a position-by-position analysis recently to check/reduce the market "beta" of portfolios. For folks like you, and I am guessing at your risk profile/age/etc, we recently moved to 20% cash. fwiw. Part of that is portfolios clients are drawing on, have well more than one years worth of income now in cash.

PS: here the biggest unpriced risk I saw across all portfolios , was in "safe" municipal bonds, btw.

AS a pro, I never give stupid advice like " sit it out and buy when it drops" as I know our limitations in forecasting and the market crazy dynamics. Yet, in my backwards world where the "queen" is our nuturing safety blanket, and the "king" is our risk- taking hunter, were e starting to feature more of the "queen" in our portfolios this year, and reigning back our "kings".

As I just posted elsewhere here, the old Wall Street adage is " tress don't grow to the sky". One year after you should NOT have been too prudent, now you likely ought be more so. And yes, it appears to be a contrary opinion. But they pay me not to blow their retirements up, so my perspective is somewhat conservative by contract.

Most of clients don't get my "dice-rolls" like EXROF or DQ. Yet, still a market you can cherry pick some "techie" picks in. And we're STUPIDLY ( top some) long oil and gas as I;ve mentioned here ( PBT), and ammo ( actually its the caustic soda) in Olin. More conservative accounts still own those, albeit a bit less OLN than a few weeks ago.

So, overall view, and then position by position is the method. If you care for a professional-level risk analysis von, i owe you for my Qjet and JD Hydro tractor help you given me over the years. [email protected]

Only take me 1-2 hours and its on me if you care to. From risk profile to risk analysis of portfolio, and changes that may need done. Then its up to you! :)

PS please hit me up before 2/1 as my professor duties start up again, and I get time constrained.
 

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If your monthly income is enough to sustain your family comfortably just sit tight. This "over valued" talk has been going on for years. The market has been a great investment over the long run, and will continue to be so. My Dad always told me that if you continually worry about the markets, and can't afford to take a hit now and then, then you shouldn't be in it. Keep your money in the bank, or invest in CD's.
 

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Going by past observation and my own experience, investment advise is one of the few areas in life where you usually do not get what you pay for.

Facts:

80% of actively managed funds do not/can not beat the S&P 500 over time.

Expense ratios, 12b1 and other expenses on an annual basis eat into your return. As time goes on, they eat more and more

Add to it loads (front, back) and it gets worse.

We all saw what happened to the cream of the crop investment houses with their PhD's, physicists and complicated algorithms. They went bust, were incorporated into bigger banks etc. Even Goldman took a convertible Pfd loan from Mr. Buffet at a 10% rate. So smart money is not so smart in the long run

Having said this, I think it makes sense for someone like Mr. Gene to take a look at the overall balance of the portfolio vs ones age, income requirements, risk tolerance etc.

Alex
 

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Some backup info

VTI is a broad based ETF that covers a large basket of US stocks.

Expense ratio = .03

Over a trillion dollars in assets ( people are getting savvier with low cost index investing).

Plot it against actively managed funds and you will see how most do not beat it. Also remember that these charts plot the fund price. To see the real picture, you will need "total return" return including expense ratio, loads etc. The picture becomes clear.

Alex

PS: Good reading re this topic.

 

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Yeah, and the free advice offer was for Von only please. Its strategic, not tactical in that case. Dont confuse that with a discussion of active v passive management please. Or with management fees or ANY fees as its FREE>

And the other free advice we give out in droves is exactly as Alex points out, to all our 401k participants ( well over 30K of them btw). There I am all textbook and " Bogle-ite" religiously. Cuts costs to the bone to generate sustainable "alpha" to be technical about it. And budget to plow as much as you can in. More when "the spring gets compressed".

PS, an analogy I've used oft in machine shops and such where folks can understand potential energy is the compressed spring analogy.

the market is like a spring. It doesn't usually stay "at rest in equilibrium" though, sometimes it compresses, and sometimes it releases so much of its potential energy, it has little to give forward for a while. That seems to fit the dynamics well enough to let folks know when they ought plow even more in when it compresses.

In 401(k) seminars we stress the compression end of it, as those clients are raw accumulators and don't need the lean on those assets for a while. You want to be risk exposed. Prudently. Many of those folks are distrustful of the capital markets and aren't as sophisticated as many of y'all are.

Yet, as with many viewers here, mainly like Von, who maybe on the distributive end of it, the setup is a bit backwards however. So how much energy is left in the spring vs lower returns on more stable assets is the question to be asked.
 

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Discussion Starter #20
AS A PROFESSIONAL..... I'm all about JJ'65's comments.

Von, we did a position-by-position analysis recently to check/reduce the market "beta" of portfolios. For folks like you, and I am guessing at your risk profile/age/etc, we recently moved to 20% cash. fwiw. Part of that is portfolios clients are drawing on, have well more than one years worth of income now in cash.

PS: here the biggest unpriced risk I saw across all portfolios , was in "safe" municipal bonds, btw.

AS a pro, I never give stupid advice like " sit it out and buy when it drops" as I know our limitations in forecasting and the market crazy dynamics. Yet, in my backwards world where the "queen" is our nuturing safety blanket, and the "king" is our risk- taking hunter, were e starting to feature more of the "queen" in our portfolios this year, and reigning back our "kings".

As I just posted elsewhere here, the old Wall Street adage is " tress don't grow to the sky". One year after you should NOT have been too prudent, now you likely ought be more so. And yes, it appears to be a contrary opinion. But they pay me not to blow their retirements up, so my perspective is somewhat conservative by contract.

Most of clients don't get my "dice-rolls" like EXROF or DQ. Yet, still a market you can cherry pick some "techie" picks in. And we're STUPIDLY ( top some) long oil and gas as I;ve mentioned here ( PBT), and ammo ( actually its the caustic soda) in Olin. More conservative accounts still own those, albeit a bit less OLN than a few weeks ago.

So, overall view, and then position by position is the method. If you care for a professional-level risk analysis von, i owe you for my Qjet and JD Hydro tractor help you given me over the years. [email protected]

Only take me 1-2 hours and its on me if you care to. From risk profile to risk analysis of portfolio, and changes that may need done. Then its up to you! :)

PS please hit me up before 2/1 as my professor duties start up again, and I get time constrained.
Gene, I sincerely appreciate your generous offer but I've already decided to sit tight. I don't need to sell anything and have about 30% in cash now. I'm retired and not taking any draws and I do have a broker that's of the buy and hold mindset. I just wondered if there was an overwhelming sentiment of the masses that the market was going to blow up any day now. BTW you don't owe me anything. I don't remember giving you any Q jet or JD advice of any significance but if I did I was just glad to help.
 
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