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Portfolio down 38% since the beginning of Oct, should I sell everything?

343 56 December 24, 2018 at 11:53 AM
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Since Oct 1, my tech heavy portfolio is down 38% with today's drop. It's generally accepted not to sell when things are this much down since people generally miss the recovery. But that's what I thought when I was 10% down, then 15% down, then 20% down. You get the point. I've seen this movie before 10 years ago. I don't want to be 50% down. Which at the current rate is about a week away. Should I sell everything?

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Joined Jan 2004
Here's to the future
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#2
Yes, sell it all and bury the cash in mason jars in the back yard. You may not ever earn anything with your money that way but the amount of stress eliminated is priceless.
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I like what she said, not what it means.
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#3
If you don't sell you will not lose anything.

I'm not the one to talk since I've already sold 80% of my investment back in June so my net worth is only 8% down from my earlier projection for this year. My current plan is to wait it out and pick up a couple of houses for cheap, or whatever people do to take advantage of this upcoming recession. Cash is the king but don't sell your investment if it's already too late.
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#4
Quote from shinyraindrops
:
Since Oct 1, my tech heavy portfolio is down 38% with today's drop. It's generally accepted not to sell when things are this much down since people generally miss the recovery. But that's what I thought when I was 10% down, then 15% down, then 20% down. You get the point. I've seen this movie before 10 years ago. I don't want to be 50% down. Which at the current rate is about a week away. Should I sell everything?
Do you need the money right now? Or are you just trying to time the market? If you don't need the money, you haven't lost anything until you sell. If you need some losses for tax purposes, sell. If you're ok financially, what's the point? To sell now and then reinvest again in 3 weeks when things are down another 5%?

Have you done research on your stocks? Are they getting crushed because of the market panic selloff? Or are they getting crushed because the companies have gone bad? If it's the former, hold, or even buy more if you've got the funds. If it's the latter, always sell. No point holding onto a bad company.
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#5
Really bad investor if you let your portfolio took a hit like this. I think most savvy investors have left the market 6 or 8 months ago into high interest savings account or the more sophisticated piled into fixed income assets such as real estate, govt bonds, annuities or even CDs for passive income.

Too late now though as no one knows where the bottom is and everyone is just keep on guessing.
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disgruntled caveman
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#6
Quote from johndoe35
:
Really bad investor if you let your portfolio took a hit like this. I think most savvy investors have left the market 6 or 8 months ago into high interest savings account or the more sophisticated piled into fixed income assets such as real estate, govt bonds, annuities or even CDs for passive income.

Too late now though as no one knows where the bottom is and everyone is just keep on guessing.
If you left the market 6 or 8 months ago, you missed out on some great gains.
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#7
My background:
Long time lurker, and very seldom a poster. The Finance forum just caught my eye.
Investment experience: ~18 years. First 6 of those years I was basically gambling. A rational and disciplined investor since about 2006.
----------------------------------

Here's my 2 cents...

Very few things are ever absolute truths. But some things come close. One of them is that nobody can time the markets! So, you'd be better off not to try. Trying to predict when to get in and out of markets is a fool's errand. Don't do it!! You are almost sure to fail!!

I know from experience :-(. I'm not proud of my "investments" between 2001-2006.

Now, my portfolio is up about 400+ % since 2006, simply from index investing and holding on to some big (but low P/E) names - like AAPL/INTC. I plan to continue doing that for the next 30 years.

While market timing is no good, there are some things you can do to take advantage of the ebbs and flows of the market - rebalancing.
Let's say you decide you would keep 75% invested and 25% cash - or whatever reasonable split you decide. You then rebalance every year. i.e. if the stocks run up in a year - you take enough money out to make cash portion equal to 25%. If the stocks crash - you put money into it to make sure it is still 75% of your portfolio.

If you think about it - rebalancing is the best way to systematically time the markets. You will buy stocks when they go down, and sell when they go up!!


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#8
Quote from baburai
:
Let's say you decide you would keep 75% invested and 25% cash - or whatever reasonable split you decide. You then rebalance every year. i.e. if the stocks run up in a year - you take enough money out to make cash portion equal to 25%. If the stocks crash - you put money into it to make sure it is still 75% of your portfolio.
Nice advice. Do you also prefer just index funds or are you thinking about increase the portion of individual stocks in your portfolio based on your past experience? I ask because I am terrible at choosing stocks even for buy and hold purpose. It's just so risky with large companies and penny stocks worth pennies for a reason.
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#9
Quote from teetee1
:
Nice advice. Do you also prefer just index funds or are you thinking about increase the portion of individual stocks in your portfolio based on your past experience? I ask because I am terrible at choosing stocks even for buy and hold purpose. It's just so risky with large companies and penny stocks worth pennies for a reason.
For my portfolio, and our risk tolerance - it depends!
For you - it seems the right answer probably is "index fund all the way"! I say that because you mention you are apprehensive of the risk.

My stock portfolio is still ~60% in individual stocks. Most of that position is from before 2012, plus a little bit of AAPL from 2013 and 2014.
From 2015 onwards - all new money has gone to index funds for me. The simple reason is that the market has been so overvalued since then - I could not find any bargains.

In 2012 - I bought a very large position of AAPL. It was simply too cheap to ignore! I did some spreadsheet calculation at that point to calculate the intrinsic value based on discounted future cash flow - and found that I would get my investment back if AAPL barely managed to survive without any growth for just 7 more years since 2012!! That was simply too cheap to ignore!!

I always have a few individual names in my radar. I usually keep following them for 6 months to a year and then discard most of them.
e.g. right now - the most promising individual stock I am following is MU. I will take a large investment in it if sentiment goes even more negative - taking the stock price down with it, AND the fundamentals strengthen on both risk (memory chip demand) and opportunity (3D XPoint) side.

Since 2007, I usually never buy individual stocks without at least 6 months of research.
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#10
hahaha weak hands

sell everything, like in 2009 so people like me buy it up.
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#11
Just one more piece relevant to this topic heading before I stop blabbering.

The OP seems a little concerned that his portfolio is 38% down. I'm not sure I understand the logic behind that thinking.

I buy a stock for the perpetual cash flow it generates - in the form of either dividends or other forms of retained earnings that promises to goose up future dividends (e.g. reinvestments in the business, capital expenditure, stock repurchase etc).

If you are like me - you would be reinvesting the dividends (it is free to do so in most brokerage houses). A full 20+% of my INTC position is reinvested dividends! Every quarter, I get a few more shares! This increases my expected future cash flow!!

Now, I don't see too many issues apparent with INTC (as an example) that were not evident a year ago. i.e. the fundamental expectation of the future cash flows have not changed. Given this - my dividend can purchase 12 shares instead of 10 (both made up numbers) if the stock price goes down 20%! i.e. I get the more of the future cash flow for the same price!!

Why would I (or any other investor) dislike that??

Point is - it seems extremely illogical to me to dislike market crash!! I like market crash :-D as a net buyer in the form of dividend reinvestments.

Of course, if a major fundamental shift were to happen - e.g. blackberry being replaced by AAPL in the 2006/2007 timeframe, or an Enron/WorldCom type of Black Swan event - then the market crash would indeed correlate with a bad fundamental event. But a "not fundamental driven" market crash is a good thing :-).. The more the better.

And the way you protect yourself against such bad fundamental events is by diversification and index investing. :-).
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#12
Dow up 760 points so far today, BUY ALL THE THINGS!!!!
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#13
The biggest rallies happen in bear markets. You don't get 700 point rallies during a secular uptrend.

Please don't try to time the market!!

Irrespective of what your background is and how intelligent you are - people more capable than you have tried and failed!!

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#14
Your azz got whooped with apple recently


Quote from baburai
:
My background:
Long time lurker, and very seldom a poster. The Finance forum just caught my eye.
Investment experience: ~18 years. First 6 of those years I was basically gambling. A rational and disciplined investor since about 2006.
----------------------------------

Here's my 2 cents...

Very few things are ever absolute truths. But some things come close. One of them is that nobody can time the markets! So, you'd be better off not to try. Trying to predict when to get in and out of markets is a fool's errand. Don't do it!! You are almost sure to fail!!

I know from experience :-(. I'm not proud of my "investments" between 2001-2006.

Now, my portfolio is up about 400+ % since 2006, simply from index investing and holding on to some big (but low P/E) names - like AAPL/INTC. I plan to continue doing that for the next 30 years.

While market timing is no good, there are some things you can do to take advantage of the ebbs and flows of the market - rebalancing.
Let's say you decide you would keep 75% invested and 25% cash - or whatever reasonable split you decide. You then rebalance every year. i.e. if the stocks run up in a year - you take enough money out to make cash portion equal to 25%. If the stocks crash - you put money into it to make sure it is still 75% of your portfolio.

If you think about it - rebalancing is the best way to systematically time the markets. You will buy stocks when they go down, and sell when they go up!!
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#15
Quote from bimmerboy
:
Your azz got whooped with apple recently
How??

My cost basis is <$50, split adjusted.

What difference does it make if I only have paper gains of 300% (lowest point over last week) as against 450+% (52-week high), when I don't plan to sell for another 20 years.

I like lower prices. My dividends buy more of the future cash flow that way.

Do you like it when milk and eggs become more expensive? It's the same thing. Why would I like my 'future cash flow generator' to become more expensive when I buy more of it every quarter?
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