S&P500 at record highs - time to stay in or pull out?
Discussion
simon800 said:
OP trying to call the market top, correctly timing pulling money out, reinvesting using magical powers of foresight at the low only to rinse and repeat ongoing (for the next 10/20/30 years) would be an incredible feat, if you pulled it off.
You could write textbooks about how you've successfully achieved something no one else has ever achieved (including the various professionals with their teams of analysts, economists, quantitative analysts, statisticians, etc).
My take is if you feel you need to pull all out to cash and go back in, then your asset allocation and risk exposure isn't correct. This is what I'd be looking into personally rather than some market timing exercise. You're thinking of becoming a trader instead of an investor, I'd be thinking about sticking with being an investor but actually doing it properly.
Good investing is having an asset allocaiton you are comfortable with, then riding the ups and downs of the market (and there will be many over your investing lifetime), whilst keeping your eye on the long term prize which is that generally over time markets go up (the longer the timeframe the higher the chance of this).
Rather than going all in, all out, trying to time the market etc. You may get lucky once or twice but you're almost guaranteed to lose longer term.
Here's a nice chart, 50 years of reasons to not invest;
Thanks, and yes I'm not professing to have any ability to gauge the market highs/lows and in between. No one can right. You could write textbooks about how you've successfully achieved something no one else has ever achieved (including the various professionals with their teams of analysts, economists, quantitative analysts, statisticians, etc).
My take is if you feel you need to pull all out to cash and go back in, then your asset allocation and risk exposure isn't correct. This is what I'd be looking into personally rather than some market timing exercise. You're thinking of becoming a trader instead of an investor, I'd be thinking about sticking with being an investor but actually doing it properly.
Good investing is having an asset allocaiton you are comfortable with, then riding the ups and downs of the market (and there will be many over your investing lifetime), whilst keeping your eye on the long term prize which is that generally over time markets go up (the longer the timeframe the higher the chance of this).
Rather than going all in, all out, trying to time the market etc. You may get lucky once or twice but you're almost guaranteed to lose longer term.
Here's a nice chart, 50 years of reasons to not invest;
I take your points on the asset allocation and risk exposure not being right if I want to go in and out. I am proposing potentially a market timing exercise, but again this may be completely incorrect and hold and see over 20 years may be the best strategy. I think what I'm trying to do here, even if the outcome is "do nothing" is explore some options. During Covid I didn't explore any options and whilst 3 years later yes everything looks rosy I kind of kicked myself for not seeing the bigger picture back then and obvious warning signs of what "could" come.
You are also very right I'm not a trader, and my pension is a long term investment, and yes maybe the right thing to do is just leave it alone.
I love the 50 years of reasons not to invest, I will save that as my screensaver!
Again all good valid points and things to consider, many thanks.
clubsport said:
Just chatting with a US stock chap discussing how the S&P may stall and push through the 5000 level any time soon?
He was unfazed and reminded me it was November '95 when the Dow first pushed through the 5000 level.
Ok, it was 28+ years ago, but some comfort for investors who drip money in and hold equity indices, the DJIA closed yesterday at 38,677 !
I would not be foolish enough to speculate where the S&P 500 may be in 28+ years time?
good point. I don't think anyone not drinking the "US dream" cool aid thinks over a long period that the S&P won't rise, and looking at the time horizon in decades flattens the peaks and troughs nicely to give a decent enough return.He was unfazed and reminded me it was November '95 when the Dow first pushed through the 5000 level.
Ok, it was 28+ years ago, but some comfort for investors who drip money in and hold equity indices, the DJIA closed yesterday at 38,677 !
I would not be foolish enough to speculate where the S&P 500 may be in 28+ years time?
We are at 5,021 now, let's see how the week pans out.
More uncertainty in the Middle East is still making me nervous.
UrbanAchiever said:
If you're worried about the S&P500s highs and want to "time" the market. Another option is not to sell your holdings but stop buying any more. Divert what you would have invested to cash. Then wait for the crash you are expecting. If it doesn't materialise in the timescale you'd like. Start buying again. In that scenario you'll still be worse off, but not as badly as if you sell out then try to buy back cheaper.
Thanks for that, yes this is something I have also considered, my pension managers invest manually in the S&P tracker I specified to them, and haven't bought anything for a while, may ask them to hold as cash for the time being...Mazinbrum said:
Why do you pay for a pension manager if you specify which fund they should invest in and ask them to go into cash? Why not do it yourself?
My work pension scheme is operated like that, you can't execute any trades or sell to cash yourself although there is an online portal to keep track of things (AJ Bell). You just instruct the pension manager to do it and they complete it their end.I have a previous scheme operated by Scottish Widows which I can manage myself online, although you can only buy and trade funds on it, you still can't sell to cash on that one either, you have to contact them to do it on your behalf.
skilly1 said:
Whilst interesting, I don't think markets follow past patterns with that level of regularity, and the shocks than cause crashes are usually unique complex events, so I would say following any previous pattern with an expectation that it will be repeated is foolish. You hear the crypto god traders go on about cycles, I don't buy it personally.
DonkeyApple said:
In response to the OP's original question:
We are at an interesting point for the S&P, not per se because it is around new highs but because around 30% of recent performance and a large part of its value is being defined by a single sphere, AI.
For the last 20 years all I have done is invest in the SNP and FTSE. I've never sold down any position. Alongside that I have held a trading account where I aim to take advantage of massive sell offs that occur from time to time in key global markets. The most common event over the years has probably been oil as it will always be hauled back to OPECs publicly defined price so after a major sell off it tends to be relatively easy to slowly build a long position as it eventually starts to move back. The other activity is to go long or short equity sectors, which again, are prone to falling in and out of fashion with global economics. The max exposure of these positions around the investment portfolio would never exceed more than 10% and the fund utilises 5% cash, so for every £95k of SnP and FTSE holding there is about a 5% cash float held as GBP. This actually sits as cash pretty much all of the time as the events I look for don't occur regularly, maybe one a year on average.
Since about 2019 the most common event has been to watch the sector or stocks that global private investors have ramped to excessive levels and wait for the implosion and then short part of that downward rebasing.
AI potentially looks like not just another of these plays but a huge one that has the ability to drop certain indices heavily. We've seen this before with chip companies and tech. The tech always becomes normalised and the profits per unit of whatever is being sold slumps and the stocks that were ramped up come back down.
So to answer the original question as to whether to sell down some S&P exposure, my plan is to sit tight as always on those holdings but I'm waiting for the AI sell off and should it appear then a series of short positions in key stocks will be taken that hedge any S&P falls.
I don't plan to pre-empt anything but wait until it happens because if it does then there will be more than enough downward action to step in periodically with shorts to take a slice.
Very interesting, thanks for the thoughts.We are at an interesting point for the S&P, not per se because it is around new highs but because around 30% of recent performance and a large part of its value is being defined by a single sphere, AI.
For the last 20 years all I have done is invest in the SNP and FTSE. I've never sold down any position. Alongside that I have held a trading account where I aim to take advantage of massive sell offs that occur from time to time in key global markets. The most common event over the years has probably been oil as it will always be hauled back to OPECs publicly defined price so after a major sell off it tends to be relatively easy to slowly build a long position as it eventually starts to move back. The other activity is to go long or short equity sectors, which again, are prone to falling in and out of fashion with global economics. The max exposure of these positions around the investment portfolio would never exceed more than 10% and the fund utilises 5% cash, so for every £95k of SnP and FTSE holding there is about a 5% cash float held as GBP. This actually sits as cash pretty much all of the time as the events I look for don't occur regularly, maybe one a year on average.
Since about 2019 the most common event has been to watch the sector or stocks that global private investors have ramped to excessive levels and wait for the implosion and then short part of that downward rebasing.
AI potentially looks like not just another of these plays but a huge one that has the ability to drop certain indices heavily. We've seen this before with chip companies and tech. The tech always becomes normalised and the profits per unit of whatever is being sold slumps and the stocks that were ramped up come back down.
So to answer the original question as to whether to sell down some S&P exposure, my plan is to sit tight as always on those holdings but I'm waiting for the AI sell off and should it appear then a series of short positions in key stocks will be taken that hedge any S&P falls.
I don't plan to pre-empt anything but wait until it happens because if it does then there will be more than enough downward action to step in periodically with shorts to take a slice.
Are you trading as an institutional investor or this is all your private account? You mention fund.
I didn't think it's easy to take short positions outside of being either an institutional investor or via some commercial type software?
I am seeing a trend from most contributors on this thread stating they hold their positions long terms and just take advantage of the dips/crashes, and I'm starting to lean towards that as being most prudent. I did see if I could sell some of my position on the S&P via my online platform, but as mentioned I have to get in touch with the pension manager to do that and I didn't end up doing that. Maybe I'll just hold firm for now and see how things pan out. We haven't seen a clear breakthrough of the 5,000 mark yet tho - just a bit of a turtle head poking up and then going back down.
If it does crash next week I hold you all responsible
asfault said:
2weeks on from this I was a little out but roughly right.
You have been charged 2.2% of your portfolio for this update.
pretty much. Do you take paypal?You have been charged 2.2% of your portfolio for this update.
Powering on today, whose idea was it for me to sell to cash again? Oh.............
As I always say, it's very easy to make money on equities in a bull market.........
Hopefully it doesnt turn into BS soon
t is ever right and if it was it was luck, I reckon. chip* said:
I have not kept up on this thread since the initial post, but can someone enlighten me if they found the pot of gold at the end of the rainbow yet?
To highlight the thoughts:most people think it's a bit silly to try and predict highs and lows, and the DCA method over time should give good results on something like the S&P500.
I have not moved any money out of the S&P funds I am in, it has since gone up.
What happens next is up to the Gods
Just under 6 months since I started this thread, I wanted to revisit to see what the current state of play is.
On 6 Feb 2024 when I started this thread, the S&P 500 closed at 4,954.23, today we are at 5,522.30.
If I'd pulled my pension savings out of the S&P 500 to cash back in Feb, I would have lost just under £27k in investment gains.
Now in 6 months time the story may be substantially different, but I think the lesson learned is that you shouldn't try to predict highs and lows for long term investing and the DCA method of drip feeding your pensions/investments is the way to go, for me at least! Even tho I was using some sort of logical argument as to shy we may see a crash, I discounted the flip side of stock price gains - nvidia as an example has more than doubled its market cap since Feb 2024.
I learned a lot from you guys on this anyway, so thanks for the points and advice and for sharing.
On 6 Feb 2024 when I started this thread, the S&P 500 closed at 4,954.23, today we are at 5,522.30.
If I'd pulled my pension savings out of the S&P 500 to cash back in Feb, I would have lost just under £27k in investment gains.
Now in 6 months time the story may be substantially different, but I think the lesson learned is that you shouldn't try to predict highs and lows for long term investing and the DCA method of drip feeding your pensions/investments is the way to go, for me at least! Even tho I was using some sort of logical argument as to shy we may see a crash, I discounted the flip side of stock price gains - nvidia as an example has more than doubled its market cap since Feb 2024.
I learned a lot from you guys on this anyway, so thanks for the points and advice and for sharing.
Jawls said:
Nobody should consider leverage before reading this thread:
https://www.bogleheads.org/forum/viewtopic.php?t=5...
Exec summary is that someone starts with the idea of leveraging their portfolio, but starts in 2007. Suffice to say, it does not go well.
I have read through some of that thread, and its very interesting.https://www.bogleheads.org/forum/viewtopic.php?t=5...
Exec summary is that someone starts with the idea of leveraging their portfolio, but starts in 2007. Suffice to say, it does not go well.
To be fair to the investor that got smashed, he chose the wrong timing to go in pre GFC. The theory would stack up if he wasn't unlucky with his timing. But then you could say that about any investment strategy based on the markets rising.
End of the day the model of maxxing out credit cards and loans inc from family is not a prudent strategy, unless you are banking on something more predictable, which the markets are not!
Again we come back to short term vs long term investing. How short term investing can be seen to be anything more than taking punts I do not know.
Jus on this USD exposure, I have seen some S&P 500 trackers with currency hedging (GBP to USD hedge),
Can someone explain how these work, what they invest in to hedge (is it literally just a cable FX future? or other instrument) and what the implications are for a cable hedged S&P 500 tracker, vs a non-hedged one. I assume if GBP weakens against the USD you don't get the benefit with the hedged ETF, but is there still some movement in the GBP value of the fund even when hedged when the FX moves?
Can someone explain how these work, what they invest in to hedge (is it literally just a cable FX future? or other instrument) and what the implications are for a cable hedged S&P 500 tracker, vs a non-hedged one. I assume if GBP weakens against the USD you don't get the benefit with the hedged ETF, but is there still some movement in the GBP value of the fund even when hedged when the FX moves?
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