We’ve all heard the line — statistically you are better off buying and holding through a bubble than trying to time it. I just don’t believe it. But, maybe I need to revisit this with you all to see if I’m missing something important. I’ve seen all the charts lately, PE, YOY SP, spreads, etc, etc. It all points to the markets being fundamentally overvalued. This makes it very difficult to overcome the feeling that one is buying into a bubble by investing for the long term by buying and holding. Part of what we learned in the .com fall out was that one couldn’t carry all high risk, high reward holdings and that the market, as a whole, even conservative investments would lose considerable value when the bubble eventually popped. And so, I’m in a head space where I would like to be fully invested — as I see the long term (10-20 years) outlook of the markets being very positive at least from a dollar perspective (although the falling value of the dollar may eat into the real return of equities). But, there are so few companies that have a SP that matches up with their valuation. The FED has flooded the market with so much liquidity that continues to end up in the market that either we must accept a truly new normal - a deviation from traditional measures, or conclude that we are in a truly overbought situation and that new investments carry much higher risk and lower likelihood for a fair return. So, which is it Stockaholics? How are you approaching this peak? Personally, I keep bouncing around without a proper strategy. In March my balance was about 40% in cash at the crash, then pushed in 20% on the backside of the dip. I rode that out until the SP matched the pre-crash level in Sept — back to 40% cash. Then in October I FOMO’d on Tesla to get back to 30% cash. This last week where I sold all holdings that had appreciated considerably since Sept — not named Tesla and was holding 70% cash last week. Now, I’ve gone lightly back into some index funds and a few sectors holdings that even being overvalued I’m content to hold through a downturn. Obviously holding TSLA. But the only thing I’m actively managing is a 5% chunk of speculative investments that I’m trading, but wouldn’t mind keeping if we hit the dip. Thanks for your thoughts and investing philosophies.
Your thread has "Investing" in the title but you are trading. As an investor, I want to hold well run companies long term. I would never sell a good company to fuel trading on macro factors. These holdings are partnerships, from my perspective. That is how an investor thinks. As it happens, two of our core holdings were bought out in the last 12 months. That caused me to consider Tesla as one of our core holdings. It's gotten big enough to be in that league, anyway. Plus, I trust it enough with a substantial portion of our nest egg. I've also scaled up two other holdings a bit. At this point, we have just under 30% cash. This cash will be used to either buy back into the market if there is a significant pull-back in the next 6 months or it will fund the first decade of our retirement at an elevated level of spend. I will say this: A 5% market decline is meaningless to me. To jump back in aggressively, I will need to see a 35% hit or more.
