Stay diverse in your stock purchases, stay diverse in your portfolio.
Keep a strong cash position if you fear a correction...buy more stocks if/when values drop!

 

Correlation is causation?

Lehmann Monday happened because of mark-to-market rules changing (namely, changing to mark-to-market, instead of mark-to-book-value).
I'm not saying a correction can't happen, I'm just being reminded we don't know who, where, or when, and it usually happens in the place we're not looking when it does.

 

I think in order for a correction to take place (without something like a major terrorist attack) we require either a) another half point of cumulative interest rate hikes by the fed, b) the shrinking of the fed balance sheet effectively beginning to "buy back" all of the stimulus of the past decade, or c) a little of each.

I think a little of each are on the near term horizon (next six months).

I have to say that my move out of the US stock market was about 4% on the DOW premature, but where I moved my money (international funds) did about the same so it so far has been a wash.

I set a goal each year to hit for my accounts which is about an 8.5% return, and then I set an ambitious goal which is about double that and hit that a week ago. If I just hold steady for the year I will be thrilled.

My overall goals are to try to ride the bull markets and earn average market returns with all the rest of the folks, and when corrections or bear markets hit, my hope is to outmaneuver it slightly and be immune to a few percentage points in the total drop. Not sure I can manage that over the next decade before retirement, but I like to fool myself into thinking I can if I pay attention.

The really difficult part of that is that if interest rates remain at practically nothing, it takes away safe places to put money that will earn any return at all.

 

Wow! 8.5% is my ambitious goal! Pulling consistent 6's has been my reality in this bull market.
So good for you and your strategy. Hats off to you for doubling your ambitious goal.

your last sentence is very true, safe places don't exist. I've gone with a stronger cash position waiting on a correction, but making peanuts on that plan.
Probably missed some opportunities for higher returns with this strategy. Could pay off in the long run...guess we'll see.

 

Well, I don't make my goal every year. This just turns out to be one of those lucky years. And I work for a major employer who gets funds for us to choose from with a bulk discount of no more than 1/4% annual fee, so I get to lose a lot less to the fund manager than most people.

I also don't believe in bonds. Not like they are bigfoot or anything, but at the rates they are paying, I just have had next to nothing in them for the last decade.

But as far as investing genius, I got killed during the mortgage meltdown like everybody else and lost over 30%. I was not paying any attention then and had the "long term investing let-it-ride" mentality. I still have that for the most part but I think if you can feel a crash or correction coming, moving money to protect it is probably worth the risk.

 

so very true. They have the inside information and act on it immediately. The best we outsiders can do is buy index funds and not try to time the markets. You will always guess wrong.

 

To the original question... Yep, I'm waiting. Besides shifting some money between funds to take out and protect some profits from the most risky funds, I'm all in funds that are just about exclusively stocks and no bonds or cash.

I think even a 30% dip would only put me back about 2 years. I'm looking at a retirement window of about 10-11 years. All indications are good at this point.

 

Every analyst (that I trust) says we're on the backside of a bull. Bears aren't around yet. . . but it's going to get bearish. . . aaaat. . . some point.

 

Still can't believe it. I am back to 50% US stocks, 50% international and just watching it all go up. I think the tax cut will make things run a little longer and make corporate earnings reports beat expectations a little while longer driving up the market further. I am back to thinking it will be a positive year overall. (but I admit, I know nothing more than your average homeless guy giving investing advice)

I am going to hold my stocks as they are and for about every 1% the market goes up from here, move about 1-2% to money market. If we get 10% this year I will end up with about a 20% overall cash position to buy on the dip. And if it crashes before I get anything into cash, well, I get killed like everyone else.

I pulled a 22% overall return last year, my wife did 26%. I see a Fidelity fund I wanted to get into on the side outside of my work retirement accounts did 40%. If I can just avoid getting killed on the next dip, it will do wonders for my retirement prospects. 2008 set me back 2 years, I think last year earned me one of them back.

 

I'll have to go back and look. I'm pretty sure that from the start of 2009 to now, I'm up well over 100%. It's like 2008 never happened. Last year, as like you, near 22%, and the two before that were almost 10% and about 31%.