My 401k is almost all cash now. 1/2 Mil

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
King0fspades
Posts: 6
Joined: Sat Oct 28, 2017 8:15 pm

My 401k is almost all cash now. 1/2 Mil

Post by King0fspades » Mon Oct 30, 2017 6:09 pm

First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?

chevca
Posts: 426
Joined: Wed Jul 26, 2017 11:22 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by chevca » Mon Oct 30, 2017 6:15 pm

Well, you're asking folks who are against market timing what they would do, when you're attempting to time the market. I think most would say pick an asset allocation you can stick with and go with that.

The market has been on quite a run since you have been going to cash. How does that sit with you?

How will you know when exactly to buy back in next time?

User avatar
Kalo
Posts: 425
Joined: Sat May 25, 2013 1:01 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by Kalo » Mon Oct 30, 2017 6:18 pm

You might be right, you might be wrong. We won't know until it is too late to go back for a do-over. My preference is to stay balanced. I am 60/40 stock bond at age 57. I might gradually sell down to 50/50 but can't envision going lower than that. Being all cash or all stocks is not hedging your bets. It is making a bet. I prefer to hedge since I don't know what the future holds.

Kalo
"When people say they have a high risk tolerance, what they really mean is that they are willing to make a lot of money." -- Ben Stein/Phil DeMuth - The Little Book of Bullet Proof Investing.

User avatar
TomatoTomahto
Posts: 6788
Joined: Mon Apr 11, 2011 1:48 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by TomatoTomahto » Mon Oct 30, 2017 6:19 pm

Welcome to the forum, but I wish you would have dropped by in, oh, say, 2011?

You have missed a lot of growth, and that will be difficult to recoup.

You should pose the question in the approved format. It’s difficult to answer without knowing more about you.

mervinj7
Posts: 370
Joined: Thu Mar 27, 2014 3:10 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by mervinj7 » Mon Oct 30, 2017 6:25 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Most folks here are anti-market timing. They would tell you to pick an asset allocation you are comfortable with and rebalance occasionally. As an extreme example, if you had $100k invested in an S&P 500 fund in Sept 2011, you would have $240k right now using a total return of 139% (dividends reinvested). You would need a MAJOR crash of over 60% to get back to 2011 levels.

https://dqydj.com/sp-500-return-calculator/

John Z
Posts: 253
Joined: Sun Nov 14, 2010 5:42 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by John Z » Mon Oct 30, 2017 6:39 pm

Welcome to the forum!

Being 48 years old and going to all cash is going to dead money. Inflation will cause you to lose the time power of compounding especially if this market continues upward for months or longer. At least consider a bond index fund where you can earn 2-4% per year.

mortfree
Posts: 574
Joined: Mon Sep 12, 2016 7:06 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by mortfree » Mon Oct 30, 2017 6:39 pm

Stay in cash.

Your strategy has helped us all thus far :D

But really should be invested. Even if you go 40:60 for stocks:bonds

User avatar
celia
Posts: 7090
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: My 401k is almost all cash now. 1/2 Mil

Post by celia » Mon Oct 30, 2017 6:48 pm

How have you been sleeping all this time? Have you worried about being out of the market while doing this?

There is such a thing as worry when you are taking too much risk. That's not good. But there's also worry when you are not taking enough risk (because you aren't keeping up with inflation).

The Wizard
Posts: 11000
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: My 401k is almost all cash now. 1/2 Mil

Post by The Wizard » Mon Oct 30, 2017 6:48 pm

That stable value fund isn't "cash". It has an APR I assume.
I have some $$$ in TIAA Traditional, for instance, paying either 3.25% or 4.0% for new money.

Nonetheless, the bulk of my assets are in stock funds, not cash nor Trad...
Attempted new signature...

King0fspades
Posts: 6
Joined: Sat Oct 28, 2017 8:15 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by King0fspades » Mon Oct 30, 2017 6:50 pm

Didn't sell everything in 2011. Started selling. Since Feb 2016 in am all cash. I missed at least 33%.
I don't mind waiting 2-3 years. I really don't have the heart to go stocks with the current market levels. I have seen 2000,2001, 2008.

King0fspades
Posts: 6
Joined: Sat Oct 28, 2017 8:15 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by King0fspades » Mon Oct 30, 2017 6:53 pm

The Wizard wrote:
Mon Oct 30, 2017 6:48 pm
That stable value fund isn't "cash". It has an APR I assume.
I have some $$$ in TIAA Traditional, for instance, paying either 3.25% or 4.0% for new money.

Nonetheless, the bulk of my assets are in stock funds, not cash nor Trad...
Stable fund is 1-2% offered through my company's 401k.

King0fspades
Posts: 6
Joined: Sat Oct 28, 2017 8:15 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by King0fspades » Mon Oct 30, 2017 6:54 pm

TomatoTomahto wrote:
Mon Oct 30, 2017 6:19 pm
Welcome to the forum, but I wish you would have dropped by in, oh, say, 2011?

You have missed a lot of growth, and that will be difficult to recoup.

You should pose the question in the approved format. It’s difficult to answer without knowing more about you.
What is the approved format?

staythecourse
Posts: 4964
Joined: Mon Jan 03, 2011 9:40 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by staythecourse » Mon Oct 30, 2017 6:55 pm

My honest advice is to do some reading. Then after doing the basic reading of investing then come on here and ask questions. Without a foundation to ANYTHING it is impossible to be successful. Here are some recs.

Easy books: Jack Bogle's edition to the Little Book series (I believe new edition is out or soon to be out) and Allen Roth's "How a second grader beat wall street". Both are easy to read. Both can be done and digested in one weekend.

Good luck.

p.s. After doing some reading you will have answered many of the questions you want the answer for in the first place.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

student
Posts: 1329
Joined: Fri Apr 03, 2015 6:58 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by student » Mon Oct 30, 2017 6:56 pm

King0fspades wrote:
Mon Oct 30, 2017 6:54 pm
TomatoTomahto wrote:
Mon Oct 30, 2017 6:19 pm
Welcome to the forum, but I wish you would have dropped by in, oh, say, 2011?

You have missed a lot of growth, and that will be difficult to recoup.

You should pose the question in the approved format. It’s difficult to answer without knowing more about you.
What is the approved format?
I think he is referring to this. viewtopic.php?t=6212

jginseattle
Posts: 686
Joined: Fri Jul 01, 2011 7:33 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by jginseattle » Mon Oct 30, 2017 7:00 pm

I would definitely not attempt to make two all-or-nothing one-way bets. This is market timing on steroids.

Assets allocated to stocks should be determined by your need for liquidity, risk tolerance, and the ability to stick with your plan.

User avatar
blueblock
Posts: 829
Joined: Sun Oct 19, 2014 6:06 pm
Location: Wisconsin

Re: My 401k is almost all cash now. 1/2 Mil

Post by blueblock » Mon Oct 30, 2017 7:00 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
What would you do?
First, I would adjust my views as to when I might be able to retire. Second, I'd explore the wiki here, along with the forum discussions, to understand that my views and current position are inconducive to investing success. Finally, I wouldn't beat myself up about past mistakes, being happy to have discovered them at a relatively young age.

smitcat
Posts: 649
Joined: Mon Nov 07, 2016 10:51 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by smitcat » Mon Oct 30, 2017 7:23 pm

King0fspades wrote:
Mon Oct 30, 2017 6:50 pm
Didn't sell everything in 2011. Started selling. Since Feb 2016 in am all cash. I missed at least 33%.
I don't mind waiting 2-3 years. I really don't have the heart to go stocks with the current market levels. I have seen 2000,2001, 2008.
At what level will you buy back in?
Otherwise said how much of a from here before your back in?

User avatar
TomatoTomahto
Posts: 6788
Joined: Mon Apr 11, 2011 1:48 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by TomatoTomahto » Mon Oct 30, 2017 7:31 pm

student wrote:
Mon Oct 30, 2017 6:56 pm
King0fspades wrote:
Mon Oct 30, 2017 6:54 pm
TomatoTomahto wrote:
Mon Oct 30, 2017 6:19 pm
Welcome to the forum, but I wish you would have dropped by in, oh, say, 2011?

You have missed a lot of growth, and that will be difficult to recoup.

You should pose the question in the approved format. It’s difficult to answer without knowing more about you.
What is the approved format?
I think he is referring to this. viewtopic.php?t=6212
Yes, sorry, lazy and dinner was ready and I was hungry. OP, the format gives posters here a frame of reference for offering advice.

User avatar
Cycle
Posts: 72
Joined: Sun May 28, 2017 7:57 pm
Location: Minneapolis, USA

Re: My 401k is almost all cash now. 1/2 Mil

Post by Cycle » Mon Oct 30, 2017 7:34 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Specifically how are you defining next cycle? 50% drop? What if it is only 49% drop, wait for the next cycle in 10 years? The crash may only last a few days, before jumping 25%, heck it may even be just a few hours. Someone posted recently an article about how a crash recovery is usually too quick for most people to act on.

Perhaps your 401k is a tiny portion of your assets, but if that's the case you should have bonds in the 401k for tax efficiency.

I'd suggest dollar cost averaging your cash position to a 3-fund portfolio allocation recommended in the Boglehead wiki over the next couple months. Perhaps there will be a crash during that transition and the risk you took will pay off.

User avatar
whodidntante
Posts: 2196
Joined: Thu Jan 21, 2016 11:11 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by whodidntante » Mon Oct 30, 2017 7:41 pm

It's possible you are extremely risk averse and that you will never overcome that. You'll have to save more than someone who took a rational stance on risk and asset allocation, but you don't "have" to own more stocks than you are comfortable with, or even any stocks at all. My father sold all his stocks a few years before retirement and never looked back, and my grandmother never owned a share of stock in her life. She wasn't wealthy, but she was fine.

Some people perceive rental real estate as less risky than stocks. It probably is as long as you diversify across a few properties. That's more of a side business than a passive investment, but it can help you build wealth.

AlphaLess
Posts: 46
Joined: Fri Sep 29, 2017 11:38 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by AlphaLess » Mon Oct 30, 2017 8:19 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Random questions with the caveat that it is none of our business, but you might still consider answering:
- when did you start saving (considering you saw the crash of 1999),
- how did your timing strategy fared then,
- how much would you have been up if you did not start divesting since 2001?

JW-Retired
Posts: 6468
Joined: Sun Dec 16, 2007 12:25 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by JW-Retired » Mon Oct 30, 2017 8:27 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
All cash now? Even if what you have done is not the worst it could have been, it's not very good. The US stock market is up more than 2X since Jan 2011. IMO, you should admit your crystal ball skills are not to be trusted (like those of most everybody).

I would go 50/50 stocks/bonds and think about something else.
JW
Retired at Last

sambb
Posts: 1753
Joined: Sun Mar 10, 2013 3:31 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by sambb » Mon Oct 30, 2017 8:29 pm

sounds like your risk tolerance changed, so you rebalanced out. Nothing wrong with that, if your risk tolerance changes.
People's risk tolerance can cause rebalancing. Not a big deal of thats what you want to do.

keith6014
Posts: 164
Joined: Thu Jan 02, 2014 11:58 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by keith6014 » Mon Oct 30, 2017 8:33 pm

not the end of the world. dont be so hard on yourself.
dca every month to s&p until you are 70stock:30 bond

sadie wess
Posts: 250
Joined: Wed Jan 19, 2011 9:42 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by sadie wess » Mon Oct 30, 2017 8:37 pm

staythecourse wrote:
Mon Oct 30, 2017 6:55 pm
My honest advice is to do some reading. Then after doing the basic reading of investing then come on here and ask questions. Without a foundation to ANYTHING it is impossible to be successful. Here are some recs.

Easy books: Jack Bogle's edition to the Little Book series (I believe new edition is out or soon to be out) and Allen Roth's "How a second grader beat wall street". Both are easy to read. Both can be done and digested in one weekend.

Good luck.

p.s. After doing some reading you will have answered many of the questions you want the answer for in the first place.
Exactly!

ThePrince
Posts: 65
Joined: Sun Aug 20, 2017 9:15 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by ThePrince » Mon Oct 30, 2017 9:09 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Hope your not planning on retiring soon. Your opportunity cost has been significant.

King0fspades
Posts: 6
Joined: Sat Oct 28, 2017 8:15 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by King0fspades » Mon Oct 30, 2017 9:22 pm

Cycle wrote:
Mon Oct 30, 2017 7:34 pm
King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Specifically how are you defining next cycle? 50% drop? What if it is only 49% drop, wait for the next cycle in 10 years? The crash may only last a few days, before jumping 25%, heck it may even be just a few hours. Someone posted recently an article about how a crash recovery is usually too quick for most people to act on.

Perhaps your 401k is a tiny portion of your assets, but if that's the case you should have bonds in the 401k for tax efficiency.

I'd suggest dollar cost averaging your cash position to a 3-fund portfolio allocation recommended in the Boglehead wiki over the next couple months. Perhaps there will be a crash during that transition and the risk you took will pay off.
My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.

User avatar
badbreath
Posts: 586
Joined: Mon Jul 18, 2016 7:50 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by badbreath » Mon Oct 30, 2017 9:24 pm

Stay in the market even if you are low like 40/60, I too went thru all the crashes you talk about and was 100% stocks but have made money back and then some.

I still remain with a 60/40 portfolio and will stay there for a long time (into retirement)

Dont play with ETF GLD, SLV that will also make all look very volatile .
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

delamer
Posts: 3097
Joined: Tue Feb 08, 2011 6:13 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by delamer » Mon Oct 30, 2017 9:29 pm

King0fspades wrote:
Mon Oct 30, 2017 9:22 pm
Cycle wrote:
Mon Oct 30, 2017 7:34 pm
King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Specifically how are you defining next cycle? 50% drop? What if it is only 49% drop, wait for the next cycle in 10 years? The crash may only last a few days, before jumping 25%, heck it may even be just a few hours. Someone posted recently an article about how a crash recovery is usually too quick for most people to act on.

Perhaps your 401k is a tiny portion of your assets, but if that's the case you should have bonds in the 401k for tax efficiency.

I'd suggest dollar cost averaging your cash position to a 3-fund portfolio allocation recommended in the Boglehead wiki over the next couple months. Perhaps there will be a crash during that transition and the risk you took will pay off.
My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.

How much in assets do you need to retire? How will you invest once you are retired?

User avatar
Sandtrap
Posts: 2364
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳

Re: My 401k is almost all cash now. 1/2 Mil

Post by Sandtrap » Mon Oct 30, 2017 9:37 pm

Some helpful links:
Bogle Philosophy
/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
/wiki/Getting_started
/wiki/Bogleh ... rt-up_kit
Define General Investment Goals and Objectives
/wiki/Invest ... statement
Outline of Investing
/wiki/Outline_of_investing
Suggested Reading List
/RecommendedReading.php
What the experts say about investing
/wiki/What_ ... investing

This :D
Asking Portfolio Questions
/forum/viewt ... =1&t=6212

finite_difference
Posts: 712
Joined: Thu Jul 09, 2015 7:00 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by finite_difference » Mon Oct 30, 2017 9:40 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
If I were you, I would quit market timing and adopt the boglehead philosophy.

If I were very conservative like you, I would adopt a 30/70 AA and set it and forget it. 30% Total market, 70% Total Bond. I would not waste my time practicing losing money by speculating on gold, or by guessing when the market is going to do whatever it is going to do. Which is basically impossible. If Bogle can’t do it, do you really think you can? I would instead encourage you to practice Tai Chi, guitar, French, or something that would actually add value to your life.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

aqan
Posts: 256
Joined: Fri Nov 06, 2015 7:07 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by aqan » Mon Oct 30, 2017 9:47 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
What would you do?
I'd stay in cash and visit this forum everyday. There are a ton of threads with similar questions and personally it took me a while (~6 months) to absorb the wealth of knowledge available here. you need to complete internalize the fact that market timing is fool's chase. You could be lucky and get it right once or twice but in the long run it does more harm than good.
Once you digest the fundamentals of investing and come up with your Investment Policy Statement. You will be ready to invest.
I'd determine my AA (a target date fund is probably a good start - simple and effective) according to my risk appetite and setup my new contributions to go that AA. regarding your cash - when you feel confident start moving your old money into your pre-determined AA.

JBTX
Posts: 1522
Joined: Wed Jul 26, 2017 12:46 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by JBTX » Mon Oct 30, 2017 10:01 pm

King0fspades wrote:
Mon Oct 30, 2017 9:22 pm
Cycle wrote:
Mon Oct 30, 2017 7:34 pm
King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Specifically how are you defining next cycle? 50% drop? What if it is only 49% drop, wait for the next cycle in 10 years? The crash may only last a few days, before jumping 25%, heck it may even be just a few hours. Someone posted recently an article about how a crash recovery is usually too quick for most people to act on.

Perhaps your 401k is a tiny portion of your assets, but if that's the case you should have bonds in the 401k for tax efficiency.

I'd suggest dollar cost averaging your cash position to a 3-fund portfolio allocation recommended in the Boglehead wiki over the next couple months. Perhaps there will be a crash during that transition and the risk you took will pay off.
My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.
So say potential fully invested amount in market topped investment at about $10,000 in late 2007. It later bottomed at about $5000 in early 2009.

So you went all in at $8000 (20% less than $10,000 top). Market went down to $5000, then back up. You started to sell in 2011 when investment value was about $8000-$9000 and were completely out when amount was $18,000. Potential fully invested amount is now $20,000

So you made about $1000 from 2008 to 2011, then approx 1/2 * (18,000-9000)=4500. 4500+1000=5500 total gains. I suspect the number is less because not sure where you were between the top and the 20% dip.

Total gains if you were buy and hold last 10 years is roughly $10,000.

https://morningstar.com/funds/XNAS/VFINX/quote.html

In my case, i was about 70% stocks in mid 2007, and now am about 60% 10 years later. After the crash, I consciously made an effort to lower my exposure as the market went up, but even then, most of it was really just rebalancing. The net result was my asset allocation changed roughly in accordance with typical aged based asset allocation rules of thumb.

Eric76
Posts: 119
Joined: Fri Nov 07, 2014 4:02 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by Eric76 » Mon Oct 30, 2017 10:03 pm

OP is absolutely right.

The market is inevitably going to crash eventually!

2pedals
Posts: 256
Joined: Wed Dec 31, 2014 12:31 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by 2pedals » Tue Oct 31, 2017 8:05 am

I would spend a lot of time defining an investment policy statement. Take a good look at what you expect to see in the future. When do you want to retire, what are your expenses, do you have any debts, do you have a pension plan in addition to your 401K, other sources of income, etc,,, etc. ?

You are market timing, most SatuMedia do not believe in market timing. I don't because it has not worked out well for me in the past and have learned the hard way. Sometimes I was right but when I was wrong I was wrong big time. I don't think you can count on beating the market consistently by market timing. The problem you have now is how do time the market correctly and get back in at a "relative" market low? You have to be right twice. Some people are wrong twice and it becomes a lose-lose rather than a win-win, huge risk when you play the timing game. So if you are market timing, in your IPS conservatively consider what bad market timing will do to your plans, not what good market timing will do.
Last edited by 2pedals on Tue Oct 31, 2017 8:07 am, edited 1 time in total.

CnC
Posts: 208
Joined: Thu May 11, 2017 12:41 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by CnC » Tue Oct 31, 2017 8:06 am

King0fspades wrote:
Mon Oct 30, 2017 6:50 pm
Didn't sell everything in 2011. Started selling. Since Feb 2016 in am all cash. I missed at least 33%.
I don't mind waiting 2-3 years. I really don't have the heart to go stocks with the current market levels. I have seen 2000,2001, 2008.
To be honest you have lost more since you started selling than you did in 2000 or 2001 you probably lost more than you did in 2008.

Do you realize that the market went up by 100% since 2012? Selling all your stock in 2011-2016 probably was the most expensive loss you have taken in the market?

That is why we are against market timing. There is absolutly nothing saying that you will ever be able to buy the stocks you sold for less than you sold them for let alone 2-3 years.

Best of luck to you with your risk tolerance I am not sure what I would suggest you do at this point.

lostdog
Posts: 626
Joined: Thu Feb 04, 2016 2:15 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by lostdog » Tue Oct 31, 2017 8:08 am

Time in the market is better than timing the market. What if this bull lasts another ten years?
"Our life is frittered away by detail. Simplify, simplify." -Thoreau

Jack FFR1846
Posts: 5742
Joined: Tue Dec 31, 2013 7:05 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by Jack FFR1846 » Tue Oct 31, 2017 8:14 am

Well, if you look at gold and silver, they've pretty well crashed compared to 5 years ago. If I were a market timer, I'd call the bottom and buy, buy, buy. But I'm not, so I'll stick with my 50/50 stock/bond and someday bring myself to sell my $153 face value of junk silver US coins and take my loss.
Bogle: Smart Beta is stupid

CnC
Posts: 208
Joined: Thu May 11, 2017 12:41 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by CnC » Tue Oct 31, 2017 8:20 am

King0fspades wrote:
Mon Oct 30, 2017 9:22 pm
Cycle wrote:
Mon Oct 30, 2017 7:34 pm
King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Specifically how are you defining next cycle? 50% drop? What if it is only 49% drop, wait for the next cycle in 10 years? The crash may only last a few days, before jumping 25%, heck it may even be just a few hours. Someone posted recently an article about how a crash recovery is usually too quick for most people to act on.

Perhaps your 401k is a tiny portion of your assets, but if that's the case you should have bonds in the 401k for tax efficiency.

I'd suggest dollar cost averaging your cash position to a 3-fund portfolio allocation recommended in the Boglehead wiki over the next couple months. Perhaps there will be a crash during that transition and the risk you took will pay off.
My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.
You realize that a 20% drop will still put the assets you purchase from this point forward higher than what you sold yours for.

Well best of luck I sincerely hope that 750k will be enough for you to retire on.

User avatar
Pajamas
Posts: 2780
Joined: Sun Jun 03, 2012 6:32 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by Pajamas » Tue Oct 31, 2017 8:20 am

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Ouch. There have been significant gains in the markets since 2011. The S&P 500 doubled over that time period and is up almost 15% just so far this year.

Have you really, truly looked at the effectiveness of your current investing methods vs. indexing by crunching numbers as well as examining the underlying emotional and intellectual reasons for your investment approach? Seems like you are so adverse to losses that you avoid the market exposure needed to make gains. Adopting a new investing strategy isn't going to change that and is putting the cart before the horse.

Look at a long-term chart of the S&P 500. It has almost tripled from the 2009 low, so you would need a significant loss to get back to that baseline in order to get back in. When you started getting out in 2011, the markets had not recovered to their 2007 highs.

goblue100
Posts: 340
Joined: Sun Dec 01, 2013 10:31 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by goblue100 » Tue Oct 31, 2017 8:29 am

CnC wrote:
Tue Oct 31, 2017 8:06 am
King0fspades wrote:
Mon Oct 30, 2017 6:50 pm
Didn't sell everything in 2011. Started selling. Since Feb 2016 in am all cash. I missed at least 33%.
I don't mind waiting 2-3 years. I really don't have the heart to go stocks with the current market levels. I have seen 2000,2001, 2008.
To be honest you have lost more since you started selling than you did in 2000 or 2001 you probably lost more than you did in 2008.

Do you realize that the market went up by 100% since 2012? Selling all your stock in 2011-2016 probably was the most expensive loss you have taken in the market?

That is why we are against market timing. There is absolutly nothing saying that you will ever be able to buy the stocks you sold for less than you sold them for let alone 2-3 years.

Best of luck to you with your risk tolerance I am not sure what I would suggest you do at this point.
This is exactly what I would have posted. Normally that would keep me from posting, but I think the point is so important I wanted to add my +1. This is exactly why market timing is so harmful to the portfolio. If you started with a 70/30 portfolio and simply rebalanced we would be talking about your ~$750,000 portfolio. According to the Vanguard portfolio models
https://personal.vanguard.com/us/insigh ... llocations
the worst year for a 70/30 portfolio is a 30% loss*. 30% loss from 750,000 would leave you $525,000.
That is if the "crash" happens immediately and is among the worst on record, neither of which is a given. If we get 2 more years of even sub par returns you fall further and further behind.

* Crashes can be multiple years. But given you stated you would start buying back in at %25 down, you're not really shielded from a multi year crash anyway.
Some people are immune to good advice. - Saul Goodman

User avatar
Cycle
Posts: 72
Joined: Sun May 28, 2017 7:57 pm
Location: Minneapolis, USA

Re: My 401k is almost all cash now. 1/2 Mil

Post by Cycle » Tue Oct 31, 2017 8:29 am

King0fspades wrote:
Mon Oct 30, 2017 9:22 pm
I may start DCA into SPY a little bit and hope for a crash in next few years.
Are you being affected by the sunk cost effect? Nows as good a time as any to get into the 3 fund portfolio. The sooner the better.

Are you in the 2/3rds that underperforms the index or in the 1/3 that beats it? If you're in the 1/3 that beats it odds are good you won't be in this cycle, just like every fund manager that has a bit of good fortune every few years.

Just because previous cycles have been about 10years does not mean anything about the next ten years. Next ten years the index may chug along at 3% real return, or it may crash 19% a few times.

deltaneutral83
Posts: 417
Joined: Tue Mar 07, 2017 4:25 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by deltaneutral83 » Tue Oct 31, 2017 8:37 am

There is no point of going any further in investing until a complete grip around emotions is managed. Has the OP looked at what his account would be had he left everything since 1999 with just a yearly re balance? Something tells me it would be significantly more than he has now.

tampaite
Posts: 386
Joined: Wed Feb 18, 2015 9:29 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by tampaite » Tue Oct 31, 2017 8:41 am

King0fspades wrote:
Mon Oct 30, 2017 9:22 pm

My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.
Drop 20% below to what? yesterday's closing ? This may backfire if market goes up 40% from today's high and then drops 20% - you will still be buying 20% higher than today's price in future.

An alternative is to tie it to an Index like Dow Jones - "I will buy when DJ is below 20k" and start planning for it. Again, this may or may not work.

Arthur Digby Sellers
Posts: 24
Joined: Wed Sep 14, 2016 2:51 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by Arthur Digby Sellers » Tue Oct 31, 2017 8:56 am

If you have seen the crashes of 1999 and 2008, then you know that both times the market recovered and eventually moved significantly higher than those peaks. So investors who stayed in the market significantly outperformed even those investors who got lucky and sold at the "peak."

Two fundamental principles of the stock market are: 1) it tends to go up over the long term, and 2) it is next to impossible to predict short term movements (especially for individual investors). If you accept those principles, the rational response is to pick an asset allocation you can live with and stick with it through thick and thin. If you don't accept those principles, then you probably should not invest in the stock market, but good luck to you.

Jags4186
Posts: 1373
Joined: Wed Jun 18, 2014 7:12 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by Jags4186 » Tue Oct 31, 2017 9:25 am

By going to cash in 2011 and continuing to wait for a crash, you have watched the S&P500 give over 100% in returns to investors who did nothing. The market would have to fall around 60% from today's level for you to have "made the right call". I would suggest you get back in now at an appropriate asset allocation for someone with you risk tolerance. You've essentially made a >$500,000 mistake.

David Scubadiver
Posts: 522
Joined: Thu Mar 24, 2016 8:40 am

Re: My 401k is almost all cash now. 1/2 Mil

Post by David Scubadiver » Tue Oct 31, 2017 9:58 am

Do what works for you.
If you can never forgive yourself for losing money during a market crash, then don't be invested in the market.

But, it would seem that being 50/50 split between stocks and bonds would be a good idea for you. You've been in the markets long enough to know that if that allocation gets out of whack due to a crash, you can rebalance and buy things cheaply to profit on the recovery. There is not a generally good reason to give up the upside of equities completely while waiting for a correction or a crash. Unless you have all the money you will ever need, in which case, there is no reason to be in the market at all.

tampaite
Posts: 386
Joined: Wed Feb 18, 2015 9:29 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by tampaite » Tue Oct 31, 2017 10:32 am

Arthur Digby Sellers wrote:
Tue Oct 31, 2017 8:56 am

Two fundamental principles of the stock market are: 1) it tends to go up over the long term, .
Long term, we all will be dead.

You'll only need to look at Japan's Nikkei 225 Index - it reached peak of 39K in 1989 and today, it's at 22K.

If you were fully invested in 1989 and say, you were a 60-70 year old, odds are, you would be dead by now before you recovered your investment.

itstoomuch
Posts: 4704
Joined: Mon Dec 15, 2014 12:17 pm
Location: midValley OR

Re: My 401k is almost all cash now. 1/2 Mil

Post by itstoomuch » Tue Oct 31, 2017 10:46 am

OP. Have you ever thought about getting a financial advisor?
Your 401k people ought to have one available.
Robo and FAQ work fine but you will be talking to a computer that give you an and/or/xor gate answer.
YMMV
Rev90517; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax 25%. Early SS. FundRatio (FR) >1.1 67/70yo

WhiteMaxima
Posts: 504
Joined: Thu May 19, 2016 5:04 pm

Re: My 401k is almost all cash now. 1/2 Mil

Post by WhiteMaxima » Tue Oct 31, 2017 11:01 am

If I were you, I won't stay all in cash. I been through 1999 and 2008. Even if you stay 100% in stock, it will still managed come back. However, history won't repeat the same way. I would say 50/50 at this time and you will win-win. If market crash tomorrow, You have 50% cash to DCA throught it. If market up year over year by 10%, You will still get >5%. Our life span is limited, what if a bear market stay 10 to 20 years and you need fund to cover your needs.
Last edited by WhiteMaxima on Tue Oct 31, 2017 11:05 am, edited 1 time in total.

Post Reply