Zukodany YES....I do trust my money market accounts at a MAJOR brokerage......Schwab. As I said I am doing the above moves to preserve cash in the event that the PANIC on the part of government....especially local government....crashes the economy into a severe recession. I am trying to strike a balance by leaving the other accounts above fully invested. I DO NOT want to panic anyone. I DO NOT think there is a "PROBABILITY" of an "extremely severe economic event". But as I said I do think there is a "possibility".......of about 15-30%. So, I will play it both ways. Right or wrong......if I am lucky...I will be able to get this money back into the markets some time over the next 3-7 months with little impact. I would expect that things will get much more clear within a few months maximum. AGAIN.....if I am LUCKY.....I will get this money reinvested at a time when markets are down 10% or 20% or 30% from where we are now. If.....I am NOT LUCKY....it will still be reinvested when I think it is reasonable to do so from a risk standpoint......without regard to trying to time the markets. My main concern with the general economy is small business. If more states start to close restaurants, bars, clubs, bowling alleys, movies, and other businesses there are going to be a lot of business failures as well as people losing their jobs. I did start to run into people this weekend that are in financial danger. One sound man where I played said he had lost 30% of his business and could not pay his rent next month if it kept up. With larger businesses and corporations my main concern is liquidity, credit, and business funding as sources of income drop and expenses continue including debt servicing. At the least it looks like a lot of belt tightening over the short term for business. The next two quarterly numbers are looking like they will be pretty DISMAL and I am guessing....WORSE than expected. BUT...it will vary from business to business and depend on the particular industry. I have ZERO trust in the politicians of any sort and the FED to know what to do or how to do it. Every time any of them put some program into place or open their mouth they panic everyone. This ENTIRE MESS is a messaging problem....a psychological panic problem....a MEDIA problem........and....a human behavior problem.
IMO, it's both (apply only if you do other investment beside stock). My take on the 2nd question is, if you've already put your money in a brokerage and have previously bought stock with it. I don't see anything wrong with leaving it at the money market. WXYZ said it best too, MAJOR brokerage. You know the saying...nothing is guaranteed lol. I personally use Vanguard myself.
WOW WXYZ! That is a bold move and I wish you all the best luck, out and back into the market. As for me at my age I'm going to hold and do nothing. Crazy Times!!
Yes, just to clarify, I have my stock account with fidelity and my savings/money market with capital one. So whenevr I sense an opportunity I wire money to my fidelity account and buy my positions. But overall I am reading many many posts about people recommending to stick with cash right now, and not to sound too pessimistic, I think this looks like were going to a depression, and it makes me all wonder if the money in my capital one saving account is secured. Overall Im keeping all my positions as is and not touching it, this is, as I said earlier, my first test with an economic crisis so Im gonna stick to my guns and sit it out. I may buy a little more as time goes by and we get a clearer understanding of what the government wants to do with our economy. But one thing that is pretty clear to me is this: in no time in history did a perfectly sound economy fell into a recession BEFORE a crisis has occurred. In other words, the way things play out is an economy hits a ditch in which with time it then decides if its falling further into it or climbing up. With the Corona virus we havent hit a ditch, we simply volunteered to create one. And while that may be perfectly normal to some, it also means that from now on were only gonna go down. And while that even may sound normal to some - then how the hell do you explain that we are already at 20% down in such a short time? Nothing makes sense with how the market is reacting
I made a deposit to the money market last week for this sale shopping. I'm just sitting to here to time, hopefully a "perfect" timing to strike. After the heavy blow last Thursday market. I almost pull a trigger to buy on Friday, FOMO. Luckily I didn't, since the market got back to the green. Seeing today all red, it makes me happy in a way (even though I'm losing money) lol. I see you're not waiting any longer and making a move already. "I will go to all cash in ONE of my TWO personal brokerage accounts. The funds will sweep into the money market portion of the account. I will put in the trades for the open tomorrow and hope to hit a wave of buyers looking for bargains." How come you don't buy today, as of right now? Buying tomorrow and "hit a wave of buyers looking for bargains", isn't that mean you will not getting the best price? I might misunderstand that part or something... I've a feeling the spreading will get worst in couple weeks, and the media will be out for blood (TomB16) . Will the market go lower because of that? Oh I wish I've a crystal ball
corona I am not buying....I am going to cash in two accounts. I am not doing this as a trade, although at some point over the next 2-7 months it will become a trade when I go back into the same stocks and funds. I am doing it for...preservation of capital. With what I am seeing right now.....the various factors that I described over the last few posts on this page and the prior page....I want to preserve that capital from what I believe might be significant short to medium term (2-7 months) losses (another 15-30%). As I said, I did the same thing in the 2008/2009 crisis by selling in May 2008 and reinvesting some time between January and March of 2009. How.....or if....this will work out is unknown since I have only done this one other time in my 45+ year investing history in 2008/2009.
We both made the same move lol, wire the money into the market. I really enjoy the way you're analyzing and thinking of how things are going right now. "how the hell do you explain that we are already at 20% down in such a short time?". IMO, it's a simple FUD. "it also means that from now on were only gonna go down" If the local businesses keep having no customer. I don't see how we can dodge the slide as well. I think history can give us a little insight on this, hopefully history will repeat itself. @WXYZ "Having lived through MERS, SARS, ZEKA, EBOLA, AIDS, etc, etc over many years......those similar or worse events did NOT involve people and governments acting like they are now. Not even close." I'm still relatively young so hopefully you can chime in this for me please. During those years, how long did the market crash and recover?(just need like an approximating). Hopefully you can recall those time and maybe we can have a slightly clearer picture how this market will be? IDK, hopefully I'm not sounding too crazy here lol
Last time I did this......in 2008/2009.......I bought back into the markets some time between January and March of 2009. I cant remember the exact date. At the time I bought back in I thought that the MAXIMUM risk on the down side was no more than another 10%. I think if my memory is right, at the time I bought back, in the markets were down a total of about 50-55%. I was willing to take a 10% potential drop in order to be back fully invested. It is impossible to predict or catch the exact bottom. In May of 2008 the Dow was down somewhere between 15-20%. Over the time I was out of the market, it went down a total of about 50-55%. I avoided about 30% of the drop in the markets and I caught the ENTIRE historic BULL MARKET that followed. This time.....who knows. I will do my usual posting on here and will post when I decide to reinvest this capital. The remaining accounts will continue to be fully invested for the long term as usual.
Ah I see now, got it. You're a long term investor at heart. May I ask what's the reason behind this decision? I just re-read your post ".I want to preserve that capital from what I believe might be significant short to medium term (2-7 months) losses (another 15-30%)". If that the only reason, just ignore. Thanks. "The first restaurant we went to was closed for TWO DAYS due to the scare. WTF? Two days? The second one where we ate had about 30% of normal business. We had to go to the store for dog food. Most basics were there but shelves were very empty. Dog food was fine. We tried to get Q-tips, they were sold out. WHY? I dont know. Tooth paste aisle was also devastated. WHY? Who knows. I did see my first people wearing masks....three of them.....the first I have seen in Texas." The fear is real man! Everything at the grocery are like completely wipe out. I mention it in earlier post when I went to grocery lol.
You know Corona. I dont even remember the markets dropping due to Aids, Ebola, Sers, Zeka, or Sars. I am sure the markets did drop some, but it made no impression on me to have any memory of it at this point. I dont remember any BIG PANIC like we are seeing now with any of those events. AIDS was a different era. There were not a lot of investors back than compared to now and we did not have the 24/7 media like we do now. I think I WILL remember this little event years from now. I know I stayed fully invested through those other events because the only time I have sold out ALL accounts and gone to cash was 2008/2009. My kids are continuing to do their regular monthly investment in the SP500 in their accounts. My sister has about $7000 a month that she does not need and those funds will continue to sweep into her Schwab account and automatically invest in the SP500 every month.
corona My primary reasoning is that up till now I have NEVER seen wholesale panic in the markets and in society as we are seeing now. This is a once in a lifetime crisis.....and I DONT mean the virus. You know my thoughts about the virus and death rates........HYPE. I mean how people are reacting.....and.....ESPECIALLY how the various governments from local on up are closing businesses, ordering this and that, massively exaggerating and exacerbating the situation. The current situation is a TOTAL UNKNOWN with no similar event in my 45+ years of investing. That is the same way I felt in 2008/2009. Before 2008, I would have NEVER said there was ANY chance of a world wide banking collapse. By May of 2008, I had gotten heavily......I mean HEAVILY.....into reading about all the collateralized mortgage obligations and the risk and danger from those products. At the time I went to ALL cash in May 2008, I was thinking that there was ACTUALLY.....for the first time in my life.....the "possibility" of a world wide banking collapse. In hindsight we came a lot closer than most people realize. At that time it was......like now....a total unknown situation for me with no similar event in my investing history. The current situation is different.....obviously......but is striking me the same way. So, I am taking those two accounts to cash till I believe we are done with this HIGHLY ABNORMAL situation that is influencing the markets.
HERE is what I just looked up on those events: I dont remember them, I just sat through them as normal little market blips or corrections. I would not call any of the above a market crash or anywhere close. I dont know what it is that is making people so crazy this time around. I dont remember any quarantines, restaurant closings, runs on grocery stores, etc, etc, during those events. They may have happened, but I dont remember any.
I share your perspective on this. For me, it comes down to this: Can a company survive in the absence of all retail activity for a few months if they are unable to obtain financing due to retail collapse? Yes - Hold it and stop quoting it until the crisis is over No - Sell it and use the cash to insulate your fall-out shelter
Got to go, take care everyone. Feel free to continue the discussion. One last comment to my friend TomB16. I agree. The closure orders that are being issued and MOST of the things that are happening are going to have a HUGE oversize impact on small businesses. The backbone of our economy. Here in Austin, today, one restaurant company closed down 10 restaurants. Yesterday in Oregon one of the largest restaurant companies in Portland closed all 20 restaurants. They are in preservation of capital mode. They were not willing to just lose money. They took decisive action as business owners and cut their losses quickly and early. Many small to medium businesses can not go a month or two or three with little to no income and their overhead. If this environment continues there are going to be lots of people out of work when small businesses fail or close. The major corporations will survive and live and thrive again. The small businesses, which probably employ the majority of Americans, will fail and close.......if the public reaction to this event continues and people stay home or continue to panic.
Got $JPM at 88 this am. Very tempting to get into BA but I think it will drop to the 80s in the coming weeks
I got my trades done this morning, funds in the accounts will happen at the close. Zukodany.....I would not personally be a buyer of Boeing right now. Even if they have resolved all their management and production issues.......the airline industry is in for a world of hurt for a while. Come companies could have trouble surviving. There could be some industry consolidation. What is going on will have a potential BIG impact of new plane delivery......and.....Boeing does not get paid till delivery is made. There could also be order cancellations, obviously. I think you are wise to wait. Busy today with a couple of workers....take care all.
File this one under........DUH. With the tab on the file reading........"EXACTLY WHAT YOU WOULD EXPECT". It always amazes me that the so called "PROFESSIONALS" are so dumb. They are the TOTAL definition of herd mentality: Wall Street Pros Panic Over Coronavirus While Mom and Pop Buy https://finance.yahoo.com/news/wall-street-pros-panic-over-113009432.html (BOLD is my opinion OR what I consider important content) If you’re one of those people — a pundit, investor or active manager — who’s been bracing for passive investing and exchange-traded funds to blow up the stock market, well, there’s some bad news for you. But first, let’s recall some warnings about passive investing: Index funds are Marxist or communist Or socialist Passive investing is “devouring capitalism” It has reached a “mania” The passive boom is creating “frightening” risk for markets Passive investing is “lobotomized investing” Indexing represents a danger to the economy Your love of index funds is terrible for our economy They are a bubble waiting to burst Passive investing poses a systemic risk But a funny thing happened on the way to this dangerous, systemic, Marxist bubble: Nothing. If ever there was a situation where the critics have told us passive was destined to fail, this should be it: the fastest bear market on record. A market externality caused by the coronavirus pandemic has sent volatility to swing wildly as markets have fallen the most since the financial crisis of 2008-’09. For investors younger than 40, this month probably saw the worst day of their investing lives. The Dow Jones Industrial Average now is about 30% lower than its record high set a little more than four weeks ago. If ever there was an opportunity for active investing to shine, this is it. But that’s not what we have seen. The panic is emanating from the great minds on Wall Street, not the plodders on Main Street. Perhaps the most intriguing indicator of this is found in the vehicles that professionals use versus those preferred by individual investors. Consider the three largest S&P 500 Index funds in the world: State Street’s SPDR S&P 500 ETF Trust or Spyder (SPY), Blackrock’s iShares Core S&P 500 ETF (IVV) and Vanguard’s S&P 500 ETF (VOO). State Street’s Spyder is arguably the choice of professionals; it was the first major index ETF and the most liquid. BlackRock and Vanguard’s offerings are preferred by registered investment advisers and individual investors. Note these all hold the exact same thing; they are simply in different ETF wrappers. As of last week, when the sell-off began to accelerate, BlackRock and Vanguard customers were net buyers every single day. By the end of the week, State Street’s customers turned into sellers. (We should get updated data on last week from all three fund managers later this week.) In other words, as the sell-off progressed, Wall Street pros panicked and sold while moms and pops stayed calm and bought. Some of this is attributable to different timelines between investors and traders, or between short-term and long-term. But one can’t help but think that some of this is explained by psychology: The professionals are the ones whose bonuses and perhaps even their jobs are on the line. Retail investors looked to take advantage of a price drop. But we can guess how this will develop, based on the latest data from Vanguard Group. According to the firm’s most recent measures of money flows, every single day of February and the first week of March(1) all saw a net gain for equities. This is very similar to what former Vanguard chairman and chief executive officer William McNabb observed during the financial crisis in 2008-’09: The pros sold and the amateurs bought. Retail investors are the dumb money? I don’t think so. Most investment assets today are still managed actively. However, as we noted in 2017, the active part of the money-management industry is still being downsized — or more correctly, right-sized. The active management world still has not yet come to grips with the sea change that followed the financial crisis. Passive indexing and ETFs have provided a counterweight to the active traders who seem to be panic selling. Remember that the next time someone warns you of the dangers of passive investing. MY COMMENT FOR any that are NOT professionals. Congratulations.........you tend to invest in a superior fashion to the so called professionals. I suspect that even the newer investors on here are holding up better than the professionals in this current atmosphere. How EMBARRASSING.
"I got my trades done this morning, funds in the accounts will happen at the close." Awesome. It would be cool you can provide the # later today, gain and such not your personal amount. It looks pretty green today lol. "For investors younger than 40, this month probably saw the worst day of their investing lives." Yup. It's a little depressing, I'm not going to lie lol. Especially, I just committed to the Roth IRA for 2019 & 2020 like 2 months ago. Also open a personal brokerage account right after and invested in the VOO. So sad. "Passive indexing and ETFs have provided a counterweight to the active traders who seem to be panic selling. Remember that the next time someone warns you of the dangers of passive investing." Would you please explain passive indexing and passive investing. Is it like day trading? Thanks. Any new thoughts on this Coronavirus crisis (market wise)? We might hit a recession? I'm still sitting and waiting. I want to get another buy in and will be fully committed (already is) for a long time investing. IMO, 2-3 weeks from now, more cases will rise because of the test kit available. Hopefully that will cause more craziness, leading to more sell.
Passive investing is NOT like day trading at all. In fact it is the OPPOSITE. Here is one comment: "Passive managers generally believe it is difficult to out-think the market, so they try to match market or sector performance. Passive investing attempts to replicate market performance by constructing well-diversified portfolios of single stocks, which if done individually, would require extensive research. The introduction of index funds in the 1970s made achieving returns in line with the market much easier. In the 1990s, exchange-traded funds, or ETFs, that track major indices, such as the SPDR S&P 500 ETF (SPY), simplified the process even further by allowing investors to trade index funds as though they were stocks." A typical passive investor today probably has their money in a SP500 Index fund of a Total Stock Market Fund. The do nothing. The let the Market Index determine the investments. They put their money in some Index for the long term. Just like many people do in their 401K. Or their IRA. All the times on here that I have talked about just putting all your investment money in a SP500 Index fund and adding to it for the long term. That is passive investing. The money is not being actively managed by a fund manager who is selecting the stocks or investments. Here is a whole article on passive investing: https://www.investopedia.com/terms/p/passiveinvesting.asp
