patrick.net

YOLO baby.
I have to decide what to do with my upcoming RMD money.
I'm just patiently waiting (hoping) for WFC to get up to $54.
Maybe I will buy something high yield besides my Vanguard High Yield funds (stocks, corporate bonds, munis)
I am curious about the covered call funds which pay monthly.

clambo says

I am curious about the covered call funds which pay monthly.

I was thinking about those recently. The good is if all they do is sell covered calls, it seems unlikely they could blow up on you. The price should be pretty stable unless demand for calls falls through the floor, destroying their ability to generate income.

But I can also think of a new risk. Selling covered calls basically makes constant bets about how much capital appreciation will occur in a given time period, and is willing to discard the excess returns above the expected level in exchange for income. If the underlying stocks experience a sudden burst in value, possibly due to inflation adjustments, this might sting. Seems to me a covered call fund is likely to get devalued by inflation quite a bit more than an equivalent fund which just holds the same stocks, IF the inflation price adjustments are sudden/unexpected/bursty. But maybe the fund managers can anticipate some of it.

FarmersWon says

Too late.
You took all the losses and will lose on gains too.
Should have done few months ago.

A few months ago (August) the DOW had an extremely short term peak of 33900. I just sold at 400 less than that. I feel pretty good about my timing. If your crystal ball works better perhaps you can share?

Consumer sentiment crashes back down to all time lows…
This combined with shortages of fuel, diesel, gasoline, and food is going to be a serious drag on the economy even without the Fed constantly raising rates, Dems trying to cut oil/gas production MORE, and inflation roaring forth while we slip into a recession.
Bad news on the horizon!

https://www.breitbart.com/economy/2022/11/11/consumer-sentiment-crashes-back-down-toward-four-decade-lows/

When I starting investing in the stock market, I read an article by some guy who claimed that everyone should be fully invested in the stock market at all times. His argument was that over most time periods, the stock market is the highest return asset class. His next argument was that no one can effectively time the market.

Charles Schwab also argued something similar, that the majority of stock market gains happen rather suddenly, and the important thing is to be invested when they happen. If you miss the 10 best market days of the year, you miss half of the year's gains, or something like that.

And finally, I recently learned that "the dead make the best investors". There was some study of people's success in the market, and the most successful people were dead, with their assets in probate court, which can take a year. Being dead, they couldn't trade, they just held what they had. So the argument was to hold and not trade much.

And I had some frustrating years when working at Schwab where I tried to time things, and kept losing. That put me off of even trying to time things. Though I tried once again to time things in 2008, sold it all, but then missed out on historic gains in the subsequent years.

Summary, I'll probably do nothing and just ride it out.

Holy Christ! That seems like a super risky move. I'm hoping that a "set it and forget it" strategy pays off for me.

I have 6-10 more years of work, so I think I'll just keep putting $4000 a month into Vanguard funds in my 457/403b retirement accounts.

I've always read and heard that trying to time the market is a losing game, and I'd go crazy wondering if I'd done the right thing.

Selling all stock and going to all bonds takes balls of steel man.

I did have 30k of espp that I had been meaning to liquidate for the last 3 months (building a pool) and finally decided to pull the trigger today. Lost 3K over what I would have got if I had sold it 3 months ago but at least I can stop watching the market every day.

The good news is I always sell at bad times so we’ll probably get a 4th quarter rally now, but I’m just gonna be floating in my pool drinking a margarita and not worrying about it.

As Patrick mentioned, the highest total long term return is generally holding stocks, not trying to time the stock market.

Peter Lynch is a good mutual fund manager who said "never get out of the stock market".

I'm 90% stock allocation but I will eventually get into more income type investments, although I'm not sure when I'll do it. I'm a procrastinator which actually is good for investing.

pudil says

The good news is I always sell at bad times so we’ll probably get a 4th quarter rally now, but I’m just gonna be floating in my pool drinking a margarita and not worrying about it.

This is the best advice. You live once. Enjoy it. Don't freak out or try to time something you have no control over. Have a drink and enjoy. Cheers. We all die in the end. No need to stress in the meantime. You don't take your debt OR wealth with you.

The last time I felt this sure about things was December 2007. Going to all bonds was a great move for me at that time, and while I made little money over the next year as the market cratered, the move positioned me great for yuuuge yields when things finally turned around. Dollar cost averaging back into stocks around the bottom, and rode the wave up, leaving things mostly alone for the next 14 years.

My understanding is bonds are relatively cheap now.
I am assuming the trade of the original post is to buy bonds before they go back up a little bit if interest rates stop rising or are cut?
My bond funds all fell this year, but they are for income so I don't think about them much.

Patrick says

When I starting investing in the stock market, I read an article by some guy who claimed that everyone should be fully invested in the stock market at all times. His argument was that over most time periods, the stock market is the highest return asset class. His next argument is that no one can effectively time the market.

Charles Schwab also argued something similar, that the majority of stock market gains happen rather suddenly, and the important thing is to be invested when they happen. If you miss the 10 best market days of the year, you miss half of the year's gains, or something like that.

And finally, I recently learned that "the dead make the best investors". There was some study of people's success in the market, and the most successful people were dead, with their assets in probate court, which can take a year. Being dead, they couldn't trade, they just held what they had. So the argument was to hold and not trade much.

And I had some fr...

I read those same things, and adopted a set and forget portfolio of diverse low fee etfs. It's served me pretty well this past decade.

To scratch my trading itch, I do use my roth (a small fraction of my total stocks) as a trading account where I make lots of option bets. It's fun, and so far has done a good job of keeping me from making stupid trades with the bulk of my money thats in my set and forget portfolio. Early on, I made a couple really good call option bets and made incredible returns. But it was luck IMO - I didn't expect the underlying stock to fly anywhere near so high. I've placed tons of option bets since then, usually just a few k each, but almost all of them have been losers, even the ones where leverage and risk werent so high, and I felt very confident. It really shows me that I'm not a good trader, and the sage advice to not try to be one is probably very good advice for me.

I see a lot of people actively trading on here and other sites, and while I dont know all their moves, I feel like I frequently recall hearing someone say "im selling it all now" and then I observe record market gains over the next year. Friends and coworkers too - I've heard them talk about many bets that I know didnt work out for them. I believe the studies that say most people who try to market time / trade end up underperforming over a long time window. I know there's some who can pull it off, but I think them to be rare, and also that many mistake luck for skill.

Hircus says

To scratch my trading itch, I do use my roth

Several friends and I all use our retirement accounts for gambling. It's ironic that the tax rules push us to gamble with the retirement funds!

Mathematically, the vast majority of people must lose value on their "investments".

--- Good luck to all ! ! ! ! !

I don't try to time the market. Just still collecting my dividends. Someday I'll have enough dividends to live in Caligulan splendor without touching the principal.

I need some accountability to set some trailing stops on a couple of stocks. Anyone have a favorite method? 10%? 11%? 12%?
Already losing the will to do this when I get home...

The US economy may not be screwed after all — but the stock market sure is

https://www.businessinsider.com/stock-market-crash-wall-street-2023-us-economy-avoids-recession-2022-11

Over time, I've come to embrace the "Permanent Portfolio." It's an even mix of cash, treasuries/bonds, stocks, and commodities/precious metals (preferably physical). It performs really great when the shit hits the fan (so I'm less likely to bail out of panic),but underperforms stocks during "the good times."

At a certain point, capital preservation becomes more important than capital appreciation. The older you are, the less chance you have to recover from a financial wipeout.

Misc says

Mathematically, the vast majority of people must lose value on their "investments".

--- Good luck to all ! ! ! ! !

Not true. Value of the stock should roughly approximate the value of the company. Because the economy has to grow, overtime everyone has to make money if they stay in and are diversified. If you’re talking about crazy trades like selling all stock and going to bonds for a few years then jumping back over to stocks, then yeah, one side of that trade has to lose because you aren’t investing, you’re hoping you get lucky.

WookieMan says

You live once.

Buddhists would say you are being too optimistic.