Fingers crossed

[spotty_dog]

I've been investing long enough to now consider a market correction to be a buy signal - since stocks are more likely to have gone back down below fair market value. I don't try to time the exact bottom, just wait a few days for intra-day volatility to subside. That, combined with strict stock/bond asset allocation, generally means buying low and selling high.

I guess my question is, how much of your portfolio is waiting on the sidelines looking for a buy signal, how long has it waited, and how much does this throw off your strict asset allocation?

I still think stocks are super overvalued, to be honest, but I can't lose out on current growth because of fears that someday -- and no one knows when -- prices will collapse back down to less-speculative levels.

[Windsurfer]

I guess my question is, how much of your portfolio is waiting on the sidelines looking for a buy signal, how long has it waited, and how much does this throw off your strict asset allocation?

I still think stocks are super overvalued, to be honest, but I can't lose out on current growth because of fears that someday -- and no one knows when -- prices will collapse back down to less-speculative levels.

As of last Friday it was 2% cash, 49% stock and 49% bond. The cash wasn't specifically waiting on the sidelines, but with a market correction out of the way I'll definitely get it re-invested - except for the part that's coming out a tax sheltered education savings plan to start paying for my son's first year at university. Given the size of the market correction, it looks like I'll be topping up the stock portion for a little while now to get back to 50%/50%. I'll be surveying the damage across several accounts this weekend.

I have done detailed (DCF) analyses on specific stocks in the past to make sure I was buying them undervalued, but that takes more time than I have available now, so I generally just buy the market using SPY or XIU.TO or VTI. If the time horizon is long enough, when you buy is less important than keeping it invested. I had an MBA prof who claimed the stock markets are so efficient now that its a waste of time trying to beat overall market performance over any multi-year span -- so you might as well just buy a low-MER market-wide ETF for the portion you don't have in bonds. Pick your risk tolerance (stock/bond split) based on time-to-retirement, keep the portfolio simple, and stay invested through highs and lows.

[spotty_dog]

If the time horizon is long enough, when you buy is less important than keeping it invested. I had an MBA prof who claimed the stock markets are so efficient now that its a waste of time trying to beat overall market performance over any multi-year span -- so you might as well just buy a low-MER market-wide ETF for the portion you don't have in bonds. Pick your risk tolerance (stock/bond split) based on time-to-retirement, keep the portfolio simple, and stay invested through highs and lows.

I couldn't agree more. Though I use a mutual fund for my domestic equity (Fidelity's total market index fund ER is .05%, same as VTI.)

The rebound has already been significant. Between my stock purchase Tuesday and the growth, my allocation is within a half percent for every asset class. We'll see how the week ends...and the decade.

[gcuthbe1]

Windsurfer and spotty_dog Yep! It's all long term.

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[tippyleigh]

Thankfully we don't have any money lose 😂😂😂

Now, if somehow our student loan debt would magically crash and go bye-bye, that would be sweet!


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[Windsurfer]

I couldn't agree more. Though I use a mutual fund for my domestic equity (Fidelity's total market index fund ER is .05%, same as VTI.)

The rebound has already been significant. Between my stock purchase Tuesday and the growth, my allocation is within a half percent for every asset class. We'll see how the week ends...and the decade.

I have to admit I've been a bit distracted by work before going on vacation, then vacation, and then getting caught up at work after vacation -- and hadn't been following the stock market that closely. My stock weighting went from 50.28% (Aug 14) to 48.75% (Aug 21) to 49.08% (Aug 28) to 49.95% (Sept 4). On Sept 2, I moved half of the 2% cash into stock to help get it back to the 50% target weighting. The rest of the cash is waiting to be withdrawn to cover some of my son's university expenses. From Aug 14 to Aug 28 the total portfolio (stock, bond, cash) has gone down by 2.5%.