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My 403B has done very well since the market hit 7000 a few years back. I'm a little worried that we're close to peaking. I think smoke and mirrors are propping it up at this point (Berneke flooding the market with cash).

I have a little money in a fixed rate fund. It guarantees 3% and is currently yielding around 6.5%. I'm think about throwing everything into it, and preserving what I have until some buying opportunities begin.

My brother says I should leave it alone as long as I don't need to touch it in the next 5 years (shouldn't need to). I have a friend in Detroit who has a couple hundred grand in stocks and he got out all together.

I'm torn. My gut is to go to the fixed rate fund and get back in after the inevitable crash. Anyone else playing it safe these days?

Academics will tell you market timing is difficult. Mostly they will recommend thinking long and hard about portfolio allocation as the most important thing. In that view, younger folks will do best historically around 70% diversified equities/30% bonds and cash equivalents. At age 70 more like 40/60.
Then you just stick with it.
Low management costs probably the second most important thing, which for the most part you are talking index funds to get that.
I'm most familiar with Vanguard. Management cost for their Target Retirement funds are in the .014 - .016 range.

My direct answer to your question would be No, I am not "worried" to the extent I'd pull money out of the market and go to cash at this point. I'm just sticking with my asset allocation and will continue to do that.

If it makes you more comfortable, you could have your plan ready to execute immediately should you get uncomfortable.

Being able to sleep at night is important!

I'm playing it semi safe for now, if it keeps going up, I won't feel bad about the opporutnity cost as I would if I kept playing and it corrects.

I'm going to lay low and go quasi-cash until I see real numbers in GDP, profit reports, and employment numbers after the second quarter, this is all speculative on the 2nd quarter being great right now, IMHO.

Well, depends on your time horizon, obviously.

As someone in my 20s, I'm firmly in "buy buy buy" mode - regardless of what the market does. I'm firmly an asset allocation kind of guy. Stay the course for the long term. Pour it all into index funds.

Of course, I do have that feeling that we're in for a bit of a dip again. For whatever that's worth.

Dollar cost averaging is the way to go, I try to get in front of that, often wish I just would be patient, but it's not my style.

Crushed Apple on their recent swoon though, I'm feeling good.

If you think the market is going to go down 20%, set aside 20% in the stable value 3% fund and buy back into stocks if this happens. Always good to have a little cash around for when things can be bought for a bargain.

I like that advice.

I've been wanting to get my allocation a little more aggressive, but at the same time I don't want to buy high.

So if we get a pullback here, maybe it would be a good time to do dollar averaging and buy a higher percentage of stock gradually as the market settles.

But, I don't really think it is going to fall much, to be honest. Historically, April is usually a good month. The old money typically sells in late spring and heads for the beach until fall.

(04-03-2013 04:06 PM)72Tiger Wrote:  If you think the market is going to go down 20%, set aside 20% in the stable value 3% fund and buy back into stocks if this happens. Always good to have a little cash around for when things can be bought for a bargain.

I dabble in the market, but most of my money is in my 403B. I trust my own judgement more than I trust those managing my fund. I agree that it's tough to market time, but this one seems to be staring us in the face. Can't see it hitting 15000 and I don't see many indicators as to why it's doing well now other than a flood of cash. I agree on the 20% correction.

As for my stocks I'll leave them alone. Likely will just pass them on to my children. I keep sufficient cash in my Scottrade account to buy start buying if the market tumbles.

Im gonna be in the market for life. Bachelor for life. Don't hate the playa, hate the game.

2007 scarred me for life.

IMHO....the Bernanke bubble is off and running. It will burst. No idea when.

Consider learning how to (very) selectively use options.

If you stay in the market, sell covered calls in your qualified plans, and sell naked puts in your "regular" accounts.

It's a nice way to mitigate risk.

And it can allow you to remain liquid and safely make money in your nonqualified accounts.

If you can make 5% return on a safe investment, take it. The stock market fluctuation over the years averages to about 5%. With the peaks and valleys of the stock market come pressures, frustration, and anxiety. The stock market has come back greatly. Seems to be a good time to take your profits and transfer into a safe account free of the angst. Just my thoughts.

What's your definition of a "safe" investment? I'd love to get 5% for one of those.

(04-03-2013 11:57 PM)ESSSS Wrote:  2007 scarred me for life.

IMHO....the Bernanke bubble is off and running. It will burst. No idea when.

Consider learning how to (very) selectively use options.

If you stay in the market, sell covered calls in your qualified plans, and sell naked puts in your "regular" accounts.

It's a nice way to mitigate risk.

And it can allow you to remain liquid and safely make money in your nonqualified accounts.

I know two people who do well with trading commodities futures and they're both geniuses. Make that three now.

I'm not smart enough to do commodities. Wish I could take a class in investing in them or something.

I basically follow the lazy portfolio method:

http://www.bogleheads.org/wiki/Lazy_Portfolios

Pick your allocation (mine's sort of based on the Swensen, but is really a combination of a few that fits our timeline/risk tolerance) and then periodically re-balance everything. I built a snazzy spreadsheet that combines balances from all our accounts (401k, Roths, etc.) and plots the proper allocation, then allows me to set future contributions and re-balance amounts to show how that'll affect the allocation going forward.

Even that's more complicated than it has to be, but it's still pretty easy. I just check into things every few months. Usually I can adjust just by varying contributions across various mutual funds - maybe once or twice a year I'll actually move money from one fund to another if the balance is far enough away from the target.

(04-04-2013 08:38 AM)thegeneral Wrote:  What's your definition of a "safe" investment? I'd love to get 5% for one of those.

This recommendation is based on Chip's information:


I have a little money in a fixed rate fund. It guarantees 3% and is currently yielding around 6.5%. I'm think about throwing everything into it, and preserving what I have until some buying opportunities begin.

I'm a dividend investor. Also keep a lot of cash set aside for buying bargains. Market pullbacks are seen as opportunities instead of bad things if I were a growth guy.

If you plan on hanging onto the principal and only using the dividends, price fluctuations just aren't that stressful.

(04-04-2013 07:14 PM)72Tiger Wrote:  I'm a dividend investor. Also keep a lot of cash set aside for buying bargains. Market pullbacks are seen as opportunities instead of bad things if I were a growth guy.

If you plan on hanging onto the principal and only using the dividends, price fluctuations just aren't that stressful.

Awesome.

Quote:I know two people who do well with trading commodities futures and they're both geniuses. Make that three now.

That's not what I do.

Selling puts is akin to having someone pay you to buy their stock you a price that you want/agree to pay.

Selling covered calls is akin to having someone pay you to buy your stock at a price where you'd agree to sell it.

When done correctly, these can be VERY conservative and effective strategies.

IMHO...doing this is safer than buying stocks outright. And it allows one to remian liquid in case the market tanks.

Who allows nakeds these days?