Stock Market hysteria

[Sallyr70]

I'm starting to get anxious. The market keeps climbing and it appears to be overvalued. Anyone else? I don't want to do anything rash but I have cash in my Roth and I'm considering moving it away from my regular stocks and getting into 'safer' funds (still trying to figure it out.)

[disneysteve]

I'm starting to get anxious. The market keeps climbing and it appears to be overvalued. Anyone else? I don't want to do anything rash but I have cash in my Roth and I'm considering moving it away from my regular stocks and getting into 'safer' funds (still trying to figure it out.)

Do you have an asset allocation? In other words, do you have a plan for what % of assets you have in stocks vs. bonds, and how that is broken down - domestic stocks, foreign stocks, domestic bonds, etc? If not, you need to establish an allocation that you are comfortable with and then stick to it.

How old are you? How many years until retirement?

I'm not sure what you mean when you say you have cash that you want to move away from your "regular stocks". If it's cash, it isn't in stocks.

[Singuy]

You know why you can't figure out where else to put your money? Because there are no other places to put your money to overcome inflation besides the market. This is also the very reason the stock market has overheated, and will continue until safer avenues open up(meaning interest rate hikes).

I say keep doing what you are doing since everyone else is doing the same. The market will correct itself as interest rate raises.

[TexasHusker]

What data leads you to believe "the markets" are overvalued? Which markets would you be referring to? Are you invested in "the markets" or some specific companies? Are they overvalued? If so, I'd sell. If not, I'd hold.

It's posts like this that lead me to believe that most people haven't the slightest idea what their hard-earned money is in. They are just hoping someone else does.

[Jluke]

TINA - There is no alternative.

Compare today's markets to the market of 2000... I think certain ratios were much higher than they are today.

Quite a few people have tried to outsmart this current market by going to cash or "safer investments". They lost.

If you have a 10+ year horizon on investing this money, it's very likely that you won't see a market this cheap 10 years from now.

[97guns]

I've been looking for ways to make some extra income and have been looking at the market but this Story of bubbles keeps making me think twice...



A famous market lore tells of how Joseph Kennedy (JP Morgan is also mentioned sometimes) decided to sell his stock portfolio as the market crash of 1929 approached. As the tale goes, Joseph Kennedy decided to get out of stocks when he started getting stock tips from a shoeshine boy. Joseph Kennedy figured the market bubble had to be very advanced, if even shoeshine boys were handing out stock tips, and he was right given the market plunge which followed.

[cornfieldj]

The conventional wisdom from the financial services industry -- who admittedly has a lot to gain from having your money under their management -- is 1, invest to your own risk tolerance.

If you're afraid of the market tanking and losing everything, pull back and keep a specific amount in cash -- like a low-interest bearing account or something else with minimal risk.

I just spoke to someone today from TIAA (which mostly handles huge amounts of retirement money) who said their research showed the best thing to do with a lump sum of money -- say a bonus -- is to put it all in the market at one time. Over a 90-year period, that showed a higher return than investing slowly over a 3-, 6- or 12-month period. This is based on a 60/40 allocation, by the way.

Another thing to remember: if you move out of stocks, that is two decisions. When to go out, and when to go back in.

I'm personally irritated with myself for NOT putting money into an IRA a few weeks ago. I'm still going to do it, and I know the market's climbing higher and higher, but I honestly think it's just going to keep on going up.

The Dow is at 20,600. Last week it was just over 20,000.

[feh]

I'm starting to get anxious. The market keeps climbing and it appears to be overvalued. Anyone else? I don't want to do anything rash but I have cash in my Roth and I'm considering moving it away from my regular stocks and getting into 'safer' funds (still trying to figure it out.)

Don't try to time the market.

Read this page: https://www.bogleheads.org/wiki/Bogl...g_start-up_kit

[corn18]

I don't care.

I am invested in a 60/40 portfolio with 10% international. All low cost index funds.

If stocks tank, I'll sell my very high priced bond funds and buy cheap stock funds (sell high, buy low) to get back to a 60/40 allocation.

[Sallyr70]

I suppose I should provide more details.

I'm 46 and have been saving for my retirement since early 20s. I have a 401k in which I'm very aggressive. 95% stocks. I'm not too concerned about this because it's all mutual funds, although as I get closer to retirement I will gradually rebalance. I put 4-5% of my salary into this, and my company matches 100% up to 4%.

I also have a Roth IRA I opened 10 years ago. I mostly buy individual stocks but have a few ETFs. The reason I have cash in there is one of the ETFs was closed (it was a Russell 2000) and I have been slowly using those funds (almost $15k- now it's down to $4k) in my monthly trades, as well as special buying opportunities (like when Netflix declines 10% and I can pick up a bargain). When the markets crashed, I kept buying stocks and I'm very glad now that I did (when many others I know were selling or not investing.)

To answer Steve's question, I don't have a formal asset allocation. When I started investing, I decided to be very aggressive since I was young. I didn't really pay attention to my investments for several years. For example, I looked at how much dividend income I have from those stocks and was really surprised. Now that markets are up, i realized that my accounts are pretty big now and I've started analyzing the individual investments. How the market is going up and up the last month takes me back to right before the crash, and that is scary. I know that you can't time the market. I certainly am not going to sell all my stocks, but doing nothing may not be the best plan either.

[corn18]

I suppose I should provide more details.

I'm 46 and have been saving for my retirement since early 20s. I have a 401k in which I'm very aggressive. 95% stocks. I'm not too concerned about this because it's all mutual funds, although as I get closer to retirement I will gradually rebalance. I put 4-5% of my salary into this, and my company matches 100% up to 4%.

I also have a Roth IRA I opened 10 years ago. I mostly buy individual stocks but have a few ETFs. The reason I have cash in there is one of the ETFs was closed (it was a Russell 2000) and I have been slowly using those funds (almost $15k- now it's down to $4k) in my monthly trades, as well as special buying opportunities (like when Netflix declines 10% and I can pick up a bargain). When the markets crashed, I kept buying stocks and I'm very glad now that I did (when many others I know were selling or not investing.)

To answer Steve's question, I don't have a formal asset allocation. When I started investing, I decided to be very aggressive since I was young. I didn't really pay attention to my investments for several years. For example, I looked at how much dividend income I have from those stocks and was really surprised. Now that markets are up, i realized that my accounts are pretty big now and I've started analyzing the individual investments. How the market is going up and up the last month takes me back to right before the crash, and that is scary. I know that you can't time the market. I certainly am not going to sell all my stocks, but doing nothing may not be the best plan either.

It sounds like you have done very well with your approach to date. Congrats! But the fact that you are nervous (and older) may indicate a changing tolerance for risk. I was the same way and fretting about my stock picks and market all the time.

I would recommend a visit to bogleheads.org wiki and see if that fits your style. It's almost completely hands off, so maybe you could start a glide path towards the boglehead approach and not make drastic changes.

I wish I could time the market. All I manage to do is get it wrong every time. Which I guess others could use to time the market as a contra indicator.

Tom

[StormRichards]

I suppose I should provide more details.

I'm 46 and have been saving for my retirement since early 20s. I have a 401k in which I'm very aggressive. 95% stocks. I'm not too concerned about this because it's all mutual funds, although as I get closer to retirement I will gradually rebalance. I put 4-5% of my salary into this, and my company matches 100% up to 4%.

I also have a Roth IRA I opened 10 years ago. I mostly buy individual stocks but have a few ETFs. The reason I have cash in there is one of the ETFs was closed (it was a Russell 2000) and I have been slowly using those funds (almost $15k- now it's down to $4k) in my monthly trades, as well as special buying opportunities (like when Netflix declines 10% and I can pick up a bargain). When the markets crashed, I kept buying stocks and I'm very glad now that I did (when many others I know were selling or not investing.)

To answer Steve's question, I don't have a formal asset allocation. When I started investing, I decided to be very aggressive since I was young. I didn't really pay attention to my investments for several years. For example, I looked at how much dividend income I have from those stocks and was really surprised. Now that markets are up, i realized that my accounts are pretty big now and I've started analyzing the individual investments. How the market is going up and up the last month takes me back to right before the crash, and that is scary. I know that you can't time the market. I certainly am not going to sell all my stocks, but doing nothing may not be the best plan either.

One important piece that you left how is when you plan to retire? If you are planning to work until mid to late 60s, then you have plenty of time to recover from a market correction.

[rennigade]

What is your asset allocation? YOu said you dont have a formal asset allocation? Yes you do...Do you have 100% stocks? 90% stock and 10% bonds? You should be able to figure this out pretty easily.

I guess it depends on when you want to retire? If you're looking to retire early 50's you need more bonds in your life.

Ive been adding more bonds to my portfolio. Im 33 and currently at 90/10 stocks/bonds. Ill keep adding till im around 80/20...then ill keep it there for a while.

[feh]

I suppose I should provide more details.

My previous answer still applies.

https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit

[TexasHusker]

If you are happy with your overall return so far, I would keep pouring the money in.

For those who want a blend of stocks, bonds, and some dry powder, that is easily accomplished by purchasing a high quality growth and income fund. Dodge & Cox is as good as any and cheap expense ratio.

Buying several different funds so that one can "diversify" is redundant, since a mutual fund is diverse by its nature - investing in a broad spectrum of companies, bonds, and short term instruments.

The only exception is sector funds, which can give you greater growth potential, or loss potential, by focusing on a specific part of the economy - healthcare, basic materials, precious metals, and so on.

For several years I absolutely rocked it and with Vanguard Energy and Blackrock Natural Resources with stunning returns. And then they dropped 60 percent.