S&P500 at record highs - time to stay in or pull out?
Discussion
BobToc said:
OP, options trading is not the answer you’re looking for.
On the contrary, if it was more widely understood I believe it would feature in more people's investment plans.If anyone wants a basic strategy, this is a pretty good starting point. I don't run the particularly strategy outlined by the owner of that website myself, but I know others who have, and it can work as a useful diversification strategy.
https://earlyretirementnow.com/2016/09/28/passive-...
Fundamentally you have a 15-20yr time horizon until you need to tap the pot.
You should absolutely not be contemplating moving to cash now.
The common suggestion would be an index tracker (of sorts - ie. s&p 500 or global) and fuggedaboutit already.
Put a calender alert in for 10yrs time - come back and let us know how it's going.
My 1% invoice is on it's way.
clubsport said:
S1MMA,
As expected the general consensus was always going to be stay in and invested. PH is predominantly a car forum after all!
That slightly ignores the question you originally asked?
It does make you wonder if everyone is so convinced the S&P is a one way street to positive returns, why they are not invested to their maximum exposure or borrowing from their mortgage to see a repeat of the 24% gains seen in 2023?
This is a fair comment, and something I also state to friends (especially those in crypto) who feel like they can predict the future. Why haven't you sold your house if BTC will be 100k by year end and gone all in? As expected the general consensus was always going to be stay in and invested. PH is predominantly a car forum after all!
That slightly ignores the question you originally asked?
It does make you wonder if everyone is so convinced the S&P is a one way street to positive returns, why they are not invested to their maximum exposure or borrowing from their mortgage to see a repeat of the 24% gains seen in 2023?
I think the reality is that hype and positive sentiment help people make investments generally, if we all were pessimistic would we invest at all? Tough one...
I do agree though that long term it's best to stay in and the DCA investment method is something I support.
skilly1 said:
Been following this guy for a while. His outlook is not good.
https://www.tramlinetraders.com/the-french-are-rev...
very interesting, thanks for thathttps://www.tramlinetraders.com/the-french-are-rev...
BobToc said:
The flipside is that if you sold at 4,900 and the index rose, at what level would you buy back in? 5,200? 5,500? 6,000? My best guess is that you’d find it very mental challenging to back in at a number above what you sold at.
Yes, as mentioned above I need to nail down a plan which goes both ways, when do I buy back in if the market goes either way? I'm leaning towards a split plan i.e. not 100% in or out but something that hedges both ways.okgo said:
You’ve got a Ferrari F40 that you paid £1m for apparently but you don’t have any money elsewhere to capitalise on a big dip if that should happen? Right.
My personal take is that it’s pointless, especially as you’re probably in your mid 30’s and if the cars in your profile are real you’re likely doing something right elsewhere that should take precedence over trying to become a trader. You hear of the people that try and flog their house and rent and then buy back in for less - it almost never works out for a multitude of reasons (mostly in the mind I’m sure).
I haven’t been quite as bold as you in that I tend to be a bit more diversified than just NAMER but I shan’t be worrying about anything for at least a decade (same age as you I expect). And as b
hstewie says, as times goes on there is significant modulation available to de-risk/diversify rather than go extreme and move to full cash.
lol, good spot on the F40, I haven't updated my garage on here for 5 years due to lack of activity. The F40 was a fantasy car stuck on here a long time ago for an offline joke with friends, we have a whatsapp group titled "F40 Investment club". You are right - if I was that successful I wouldn't be bothered about 6 fig pensions!My personal take is that it’s pointless, especially as you’re probably in your mid 30’s and if the cars in your profile are real you’re likely doing something right elsewhere that should take precedence over trying to become a trader. You hear of the people that try and flog their house and rent and then buy back in for less - it almost never works out for a multitude of reasons (mostly in the mind I’m sure).
I haven’t been quite as bold as you in that I tend to be a bit more diversified than just NAMER but I shan’t be worrying about anything for at least a decade (same age as you I expect). And as b
hstewie says, as times goes on there is significant modulation available to de-risk/diversify rather than go extreme and move to full cash. I'm early 40s, done alright at work (city for 20 years), and I get your point about sitting tight. It's just if there are some signs pointing to a bear market why not click a few buttons to make a move? I get the "selling your house" thing - but this doesn't really compare right, all you are doing is moving numbers around on a screen. No tax implications / stamp duty / cap gains etc.
More to think about for me really, but good to get the diversity of views.
deggles said:
Good thread.
OP you seem to be alluding to some sort of imminent Black Swan event. As you say, no one can predict the future. By definition these events are rare and unpredictable. We know they happen (dotcom crash, GFC, Covid in recent memory) and will again, we just don't know exactly when.
Surely to invest in equities you have to believe that in the long term, markets will continue to rise? Of course even this is not always true (see Japan!) but if you don't accept that small risk then equities aren't really where you should be. I would add that you can also mitigate that risk through diversification (e.g. global rather than specifically US markets)
Correct, I'm just looking at a basket of variables and thinking if one of them goes pop then what does that mean for the S&P 500, it's quite specific. As above the upcoming US elections will also play a pivotal role here.OP you seem to be alluding to some sort of imminent Black Swan event. As you say, no one can predict the future. By definition these events are rare and unpredictable. We know they happen (dotcom crash, GFC, Covid in recent memory) and will again, we just don't know exactly when.
Surely to invest in equities you have to believe that in the long term, markets will continue to rise? Of course even this is not always true (see Japan!) but if you don't accept that small risk then equities aren't really where you should be. I would add that you can also mitigate that risk through diversification (e.g. global rather than specifically US markets)
I do look at equities as a long term plan (we are talking about my pension here, which has a good 20 years left to run before being drawn most likely). It's just the previous events had some warning signs before the drops, are we in that place now is my musing?
The diversification point is really what I'm thinking now, to hold US equities, cash and maybe something else yet to be decided
S1MMA said:
...
It's just the previous events had some warning signs before the drops, are we in that place now is my musing?
....
You're right that previous big downturns don't just happen out of the blue; instead there is a bubbling up period, where the alarm bells are starting to ring. A good leading indicator of this is when US institutions start buying larger than normal quantities of SPX 'put' contracts, which becomes evident as put prices rise sharply. However, we aren't in a period like that at the moment. It's just the previous events had some warning signs before the drops, are we in that place now is my musing?
....
EddieSteadyGo said:
You're right that previous big downturns don't just happen out of the blue; instead there is a bubbling up period, where the alarm bells are starting to ring. A good leading indicator of this is when US institutions start buying larger than normal quantities of SPX 'put' contracts, which becomes evident as put prices rise sharply. However, we aren't in a period like that at the moment.
thanks, something else new for me to look at! My background is not in trading or banking from a work perspective, so good to understand these indicatorsEddieSteadyGo said:
BobToc said:
OP, options trading is not the answer you’re looking for.
On the contrary, if it was more widely understood I believe it would feature in more people's investment plans.If anyone wants a basic strategy, this is a pretty good starting point. I don't run the particularly strategy outlined by the owner of that website myself, but I know others who have, and it can work as a useful diversification strategy.
https://earlyretirementnow.com/2016/09/28/passive-...
It's not neccesarily a bad strategy, but the way the "greeks" interact can cause issues for those selling options without much experience, it's a case of it being fine until, ...it's really not!
In some ways everyone is now an equity trading god having ridden the equity wave for the last few years, fuelled by cheap money, it's too easy to get comfortable if not complacent?
S1MMA said:
thanks, something else new for me to look at! My background is not in trading or banking from a work perspective, so good to understand these indicators
So do you really think you’re equipped to do what you’re suggesting better than the people that do this for a living?You are basically suggesting you are going to perform an action that will result in huge gains, if it was so easy why wouldn’t everyone be on this?
okgo said:
So do you really think you’re equipped to do what you’re suggesting better than the people that do this for a living?
You are basically suggesting you are going to perform an action that will result in huge gains, if it was so easy why wouldn’t everyone be on this?
I'm sensing some hostility here from you mate, just take a breather and chill. I'm asking the question to get the insight of people with experience and professional expertise on this, if I wanted to put my head down and do something with no guidance I wouldn't ask the question would I.You are basically suggesting you are going to perform an action that will result in huge gains, if it was so easy why wouldn’t everyone be on this?
There are a mix of views above, all useful to take into account and learn from. Whilst I'm not a trader by background I have a high level educational background in Economics/Finance and 2 dissertations on stock market/pricing volatility so I wouldn't say I'm the average punter feeling around in the dark, whilst that was 20 years ago I have worked for BRK and other financial institutions, so I have a half decent general understanding of the market. I don't know the minutia detail which is great to gain from the experience of posters above.
If your strategy is to hold and forget then great, say that and that's all good. I'm not diversified at all, so looking to change that, and I have said many times no one can predict the future, just react to signs and indicators that a corner may be turned, if they want to risk it!
No hostility, perhaps just a more pointed question - working for BRK surprises me given his mantra. I’d imagine you are closer to the action than 99% of this thread but what you’re suggesting is a bit like asking if anyone has tomorrow lottery numbers.
Good luck with it, amusingly I did exactly what you’re suggesting on one of my fun accounts in Plum just as Covid began gathering steam. Bought back in almost perfectly at the bottom and made something like 50% gain in a few months. It was total luck.
Good luck with it, amusingly I did exactly what you’re suggesting on one of my fun accounts in Plum just as Covid began gathering steam. Bought back in almost perfectly at the bottom and made something like 50% gain in a few months. It was total luck.
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;
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;
clubsport said:
S1MMA,
It does make you wonder if everyone is so convinced the S&P is a one way street to positive returns, why they are not invested to their maximum exposure or borrowing from their mortgage to see a repeat of the 24% gains seen in 2023?
I suspect most people are invested in a diverse portfolio rather than betting their entire wealth on a single country's stock market to be fair! It does make you wonder if everyone is so convinced the S&P is a one way street to positive returns, why they are not invested to their maximum exposure or borrowing from their mortgage to see a repeat of the 24% gains seen in 2023?
okgo said:
No hostility, perhaps just a more pointed question - working for BRK surprises me given his mantra. I’d imagine you are closer to the action than 99% of this thread but what you’re suggesting is a bit like asking if anyone has tomorrow lottery numbers.
Good luck with it, amusingly I did exactly what you’re suggesting on one of my fun accounts in Plum just as Covid began gathering steam. Bought back in almost perfectly at the bottom and made something like 50% gain in a few months. It was total luck.
For BRK I was on the side providing the "float" rather than deciding what to do with it, hence my specialisation not being on the equities/investment side.Good luck with it, amusingly I did exactly what you’re suggesting on one of my fun accounts in Plum just as Covid began gathering steam. Bought back in almost perfectly at the bottom and made something like 50% gain in a few months. It was total luck.
Investing in equities is all about risk as you know, you should be able to have better luck with an informed strategy but even the best of us (inc Warren with the purchase of the airlines pre covid as a more recent example), don't always get it right. Funnily enough BRK mantra isn't actually about diversification, if they like something then they go all in on it. On the insurance side Ajit Jain is regularly quoted as saying it's better to take a bigger share of a single risk you like, rather than a small share of 10 risks which are more "average" in performance or expectation. So they do not advice diversification as a rule, which is at odds with most other major players.
So whilst you are mentioning a strategy akin to playing the lottery, you have done the same yourself during covid and done well out of it. That's really my point here, could there be an opportunity to take advantage of a imminent crash. Again I know the answer is no one knows, but having a strategy to potentially take advantage of it may be worth considering.
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.
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