Trump Bubble

[rennigade]

I think I'm with 97guns on this one if I'm reading his comments correctly.

What does he mean when he says "the wise investor will realize the mania and react to it?" I agree with you that people who never talk about market are now suddenly talking about it...and its not all of the sudden hip to invest.

My questions is what does "react" mean? Jump up and down and start screaming, start buying all bonds and ditch stocks and forget AA, or pray to the powers that be that the market wont tank too much?

I took it as trying to predict the future when its not possible...whether warning signs are in front of you or not. This goes back to timing the market imo.

[MakeAStash]

Huh? My wife and I do a year end net worth calculation every year. I also add up all my accounts at the end of every month.

So you're telling me you havent checked your accounts in 2 decades? Thats really irresponsible advice if you ask me. How could you possibly keep your AA in check? Are you telling me you have no idea what your AA is?

It can be a sort of "a watched pot never boils" thing. If you keep looking it seems to take longer to reach your goal. I've held some assets for decades and never done an AA or rebalancing, and it's worked out fine.

[97guns]

I see over exuberance and I don't get in, pretty easy to understand

[97guns]

When I see the sad faces and heads rolling, that's when I get in, like I saw and did in '09 after the housing bubble popped

[disneysteve]

Profit Taking: By this time, the smart money – heeding the warning signs – is generally selling out positions and taking profits.

What does he mean when he says "the wise investor will realize the mania and react to it?"

I see over exuberance and I don't get in, pretty easy to understand

I suppose that fundamentally, almost anytime you are selling an investment, you are doing a bit of market timing. Unless you are desperate for the money, you probably wouldn't sell if you thought the value was going to continue to climb.

So is it market timing if I close out a position that I've made a nice profit on and park that money in cash temporarily while I search for another opportunity? I guess it is in a way even though I don't think that's what most of us think of as market timing.

[~bs]

if you don't already have something else lined up, it is IMO. You're sidelining funds in the hopes of finding something better.

[TexasHusker]

Owning a stock, you are owning a part of a company. A company's value - whether it be McDonald's, JC Penney, or Joes Hot Dog Hut, is driven by EARNINGS: The more $$ a company earns, the more it is worth.

That is a concept that doesn't necessarily correlate with Trump, Obama, bubbles, recessions, or depressions.

That's why when people are talking about "investing in the market" and so on, it makes no sense to me whatsoever.

If there is a company that has a fair price-to-earnings ratio, has shown consistent growth, and that you believe in, you should invest in it. It doesn't matter whether it is a lemonade stand or shares in GM. Whether the Dow Jones Industrial Average is at a record high is immaterial.

[disneysteve]

if you don't already have something else lined up, it is IMO. You're sidelining funds in the hopes of finding something better.

But if you are talking about an individual stock, you might have reason to believe that the company's future prospects are limited and the growth you've seen won't continue. Maybe the demand for their product has waned. Maybe newer competitors are cutting into their market share. Maybe new government regulations are eroding their profit margin. I think those can all be legitimate reasons to sell a stock that have nothing to do with market timing.

Now if you're talking about cashing out your Total Stock Market Index fund because you think we're "due" for a correction, that's entirely different.

[disneysteve]

Owning a stock, you are owning a part of a company. A company's value - whether it be McDonald's, JC Penney, or Joes Hot Dog Hut, is driven by EARNINGS: The more $$ a company earns, the more it is worth.

That is a concept that doesn't necessarily correlate with Trump, Obama, bubbles, recessions, or depressions.

That's why when people are talking about "investing in the market" and so on, it makes no sense to me whatsoever.

Most of us around here invest in mutual funds, not individual stocks. If I say "invest in the market", I mean putting money into a fund that owns hundreds or thousands of different companies.

[TexasHusker]

Most of us around here invest in mutual funds, not individual stocks. If I say "invest in the market", I mean putting money into a fund that owns hundreds or thousands of different companies.

That is true. If you are investing purely in the concept of "all things go up over time" then you are certainly concerned about the averages.

It seems such a stressful thing to do with one's money however - the averages move on emotion, world events, elections, riots, terrorist events.

I see great danger in investing in averages. What if you had $1 million invested in the NASDAQ average in December 1999? It fell like a stone and it took 17 years to regain that which was lost. And you had absolutely zero management control over it. It just "happened". Ouch.

I just can't get my head around that approach, but I fully realize most people are good with it.

[rennigade]

I just can't get my head around that approach, but I fully realize most people are good with it.

Different strokes for different folks. I cant wrap my head around a lot of things that most people consider normal. Its not necessarily wrong...just not right for you.

[msomnipotent]

I just sold one stock the other day. Mainly it was because the reason I bought it and then the reason I kept it didn't quite pan out, but I also sold it because more and more people on the message boards and business channels are getting spooked. I felt that I could either sell now and lock in a profit, or wait another year or so to get back to the place I'm currently at. I have other things to do with my money, so I sold it.

I'm repositioning more than half of the money in my "fun money" account. It isn't just that some investors are getting spooked, but I also think that a decent sell-off will happen once the tax on investment income is lowered. Honestly, I think Trump could just tweet that lowering it was right around the corner, and we are off to the races. But the vast majority of our money is in mutual and target date funds, so I'm not as risk-prone as it seems.

[Atretes1]

Dollar cost averaging just like normal. If there is a correction or or crash I'll just up my contributions to buy more, if funds are available. (Not sure if that's considered timing or not).

[Sammydabullz]

I don't understand why your listening to the media and calling the stock market a trump bubble???

We have had 7 long years of economic stimulus money being pumped into the markets. It's a no brainier that all that money when put into use to create growth will create a massive jump in stock prices.

[tripods68]

Not concern at all. I just transferred $3800 to fully fund my Roth in Vanguard for 2017 than DCA. I transferred another $15k from savings to Betterment 60/40 allocation last week.