Is it time to liquidate your investments?

[menzies]

Well I don't mind sharing that I retired from J&J at the end of 2016 so still have stock options riding on them until 2026. So when the market tanked and J&J went from $154 to $117 in two weeks, plus a similar drop in my managed accounts, my paper losses were eye-watering.

The thing about granted stock options is that you are really playing with a lot of other people's money in a way (the strike value) so it is somewhat easier to just let them ride for the full term.

However, it is still scary to see what can happen, and quickly!

 

[caltexflanc]

Why?

You don't see most of the people on this forum owning up to bad decisions or how they sunk their boat.

Ted

I have to disagree Ted. Actually one of the things I like about this particular forum is that many people are quite open about their various mishaps and disasters. I've served up some graphic evidence myself. Go back through the archives and you'll see a lot of examples from a wide group of fellow yachtsmen and women.

"Now mother, tell your children.
Not to do what I have done..."

 

[catalinajack]

I once sat at a table at Foxwoods next to a guy who was reading a book and would only play hands with high potential. The table quickly figured him out and when he bet, only one or two other players would stay if they, too, had good hands to play. He left the table a loser. He thought he was smart but he was exceedingly easy to read.

My thoughts are consistent with Buffett's in general. A lot of attention on Berkshire's upcoming meeting. Now, BH has lost 13% the last 12 months but it's very much a buy and hold type entity. The belief is that even with all they have to invest, they're remaining cautious at this point.

As far as short term strategies, I'm not willing to work hard enough to learn and do short term trading. That's not an area I'm expert in. I understand buying and holding a good company. i don't understand buying futures or options and selling next week or filling the sell order or holding for only three days. And, like gambling, there are winners and losers in that. I always figured I'm an amateur in a world of professionals, I'm the loser. Vegas poker players would call me a fish.

My wife and I play a little poker. Game with winners and losers and guarantee to the house. We never play at a table that is majority professionals. We will play with one or two pros at a table full of amateurs. Inebriated amateurs are even better. Then those who are willing to lose big money just to say they played with famous pros.

 

[ssobol]

If you didn't get out in about mid February this year, you missed your moment.

 

[BandB]

I once sat at a table at Foxwoods next to a guy who was reading a book and would only play hands with high potential. The table quickly figured him out and when he bet, only one or two other players would stay if they, too, had good hands to play. He left the table a loser. He thought he was smart but he was exceedingly easy to read.

I've sat at tables with pros who were incredible. Then I've sat with players who had $50,000 in chips they'd bought and couldn't win in a home game against 12 year olds. The guy like you described wins a good number of hands but never any money in the pot. I can't believe those who get drunk while playing poker for high dollars. I've seen a guy thought he had it won with a flush. Had to be shown that one card wasn't a spade, but was a club. Then I've seen my wife take a few to the cleaners who couldn't read her eyes, because they never looked at them. 90% of good female poker players wear low cut tops which accomplishes nothing against pros but a lot against amateurs.

 

[menzies]

I've sat at tables with pros who were incredible. Then I've sat with players who had $50,000 in chips they'd bought and couldn't win in a home game against 12 year olds. The guy like you described wins a good number of hands but never any money in the pot. I can't believe those who get drunk while playing poker for high dollars. I've seen a guy thought he had it won with a flush. Had to be shown that one card wasn't a spade, but was a club. Then I've seen my wife take a few to the cleaners who couldn't read her eyes, because they never looked at them. 90% of good female poker players wear low cut tops which accomplishes nothing against pros but a lot against amateurs.

Well I guess she was using her investments wisely!

 

[O C Diver]

I follow the same rule for gambling that I do for playing the lottery. Can't lose if you don't play.

Ted

 

[BandB]

Well I guess she was using her investments wisely!

Wifey B: No investment. Using my assets to my benefit though. All natural.

 

[BandB]

I follow the same rule for gambling that I do for playing the lottery. Can't lose if you don't play.

Ted

I use to never play the lottery. Too logical in looking at the odds and average return, poor investment. Wife liked it and said nothing to lose and lots to win. I went along with her. First time you win anything significant, it's amazing how your view changes. I learned long ago, Wifey B knows best.

 

[O C Diver]

I use to never play the lottery. Too logical in looking at the odds and average return, poor investment. Wife liked it and said nothing to lose and lots to win. I went along with her. First time you win anything significant, it's amazing how your view changes. I learned long ago, Wifey B knows best.

I guess if you can view the expenditure as equivalent to doing something for entertainment and it has a zero impact on your finances, go for it. Watched too many people who hadn't funded their retirement, throw money at it.

Ted

 

[BandB]

I guess if you can view the expenditure as equivalent to doing something for entertainment and it has a zero impact on your finances, go for it. Watched too many people who hadn't funded their retirement, throw money at it.

Ted

If you must win to be happy, then don't play. I've seen people I felt sure couldn't afford it, spending $100 on it.

 

[BruceK]

The Australian Stock Market Indicator was sitting at around 7300. That was an unsustainable bubble, people were competing at shoveling cash into shares chasing a return they could not get elsewhere. Now it`s at 5300. Around 6000 is about right. Do not panic. There will be problems, there will be failures, but getting out now is probably not a good idea. Neither was getting out when this started. We`ve all seen this before and I hope it turns out ok again this time.
Money Does Matter, but Prince is not far off the mark:

"Just when you think you`ve got enough it all up and flies away". Hope not.
But it may not matter, my Municipality has just been declared a Covid19 hotspot.You still need a GP referral for drive thru testing.

 

[caltexflanc]

If you didn't get out in about mid February this year, you missed your moment.

Your moment for when? Look at that long turn GPSC chart again.

Besides, you gotta play the cards you have in your hand now and quit trying to play the hand you had 3 months ago.

There are occasional times when the lottery is a not a horrible bet; that is, when the after tax pay-off exceeds or comes close to the odds of winning .

 

[CarlF]

"Liquidate" is a loser investment strategy.

Investing is pretty easy if you don't "buy high and sell low". But you only know what you did looking back.

When you do buy or sell, do it with 20% of your money not 100%. Then wait a month and decide if you want to do another 20%.

Don't invest in equities if you aren't willing to sit on your hands with the market down 40%. That's what happened in 2008 - but only for six months. And it turned out to be the biggest buying opportunity in my lifetime.

Right now, I'm buying (slowly). If the market drops more I'll buy more.

 

[Group9]

Only sell at this point if you want lock-in your losses. IMO.

THis. This is my fourth stock market crash in my lifetime (1987, 2001, 2008). It always comes back.

 

[Steve DAntonio]

You are asking boat owners for investment advice? ;-)

Seriously, there are a few market adages that hold true, the market always falls faster than it rises, and it always rises past where it was before the fall. And, as you noted, you don't lose anything until you sell.

I'm no investment guru, but I've been in the market for 30 years, my retirement is bound up to the market, I'm happy with the growth I've realized, and selling in a down market has never occurred to me.

I have not changed my regular buying strategy during this drop, if there's ever a time to buy...this is it.

I know a few people who liquidated at what is now the bottom, to me that's foolish

As your retirement horizon approaches you do need to be more conservative.

Once again, I'm not a professional investment advisor.

 

[Bryant]

liquidate

I got a text this afternoon from a person who I feel is a fairly knowledgeable investor. He's made quite a pile of money by being prudent, investing wisely and paying close attention to what's going on in the world.

His text said that he's thinking seriously about liquidating his entire portfolio within the next month.

I'd be lying if I said that thought hadn't crossed my mind. I'm still fully invested but giving some thought to pulling the plug. I know all the tales about "you don't actually have losses until you liquidate" but given what's going on in the world, what are your thoughts? Is it time to pull the plug, go to all cash and sit on the sideliines?

What say you?Is

Because of my age, I got completely out of the mkt in 07 before the mkt crashed and I saw it coming. CD interest was still 5% and I invested in the longest term I could. I've kept that strategy and have had my investments in CD's and treasury bonds. It's a conservative approach, but I've never lost a penny in principal and have continued to earn interest at the best rate possible. Additionally, I own my house, cars, boats etc and don't carry credit card debt. In other words, I think investing in yourself is a good strategy. If you own your house, boat, cars they can't take them away and if you aren't throwing money away on high interest credit card payments then that's money in your pocket.
With this strategy you will never make a "killing in the market", But you will know what you have and barring a total dissolution of our country and system, what you have will be protected and growing. And you'll have security.

Having said all that, I'd hold on to what you have for the time being because when we come out of this, and we will, I have a feeling that our economy is going to once again explode so I think you'll get your money back. Once you do, depending on your age and situation, you might want to consider less volatile investments and accept a lower short term return in exchange for long term security and smaller, albeit steady, growth.

You asked. Just my opinion.

 

[timb7734]

And I rely on Trawler Forum for my financial advice

 

[firehoser75]

Do I owe any of you for this great advice???
If so, give me your banking info, passwords, etc. along with full name and SIN number so I can "pay you" for it. Just kidding of course.


But seriously, it is interesting to hear the diverse opinions and predictions.

 

[Frosty]

But seriously, it is interesting to hear the diverse opinions and predictions.

I agree. My other sources are an investment person (but I only have the one, and it's not like he's on the edge day-trading so his advice is fairly predictable) and then articles I seek out for self-education. So hearing what "real world" people think and do here is interesting. Your ideas run the gamut and it's a more fun read than financial articles.

 

[tiltrider1]

I asked the Motley Fool Investment forum what they thought about isolation transforms for the boat. They thought the reward vs risk was all out of line for the capital expenditures required.

 

[BandB]

I agree. My other sources are an investment person (but I only have the one, and it's not like he's on the edge day-trading so his advice is fairly predictable) and then articles I seek out for self-education. So hearing what "real world" people think and do here is interesting. Your ideas run the gamut and it's a more fun read than financial articles.

I agree and fear for those who leave all the decisions to their investment person. I can't imagine not educating oneself and either making the decisions or being very involved in them. Reading and hearing a variety of information is helpful.

There are so many styles and types and kinds of trading. I know the technical sides but nothing from the investor side about options, about day trading. I really don't know much about the market and couldn't tell you what it will do on Monday. The only thing I do know is how to evaluate businesses and it's that knowledge I use to invest in stocks. That means I'll miss investing on the speculative high flyers that make people millions. I haven't invested in the biomedical firm that was just paid huge amounts toward a Covid 19 vaccine and they've never taken anything to market successfully. I didn't invest in Tesla or Uber or Lyft as I just am unable to see the value of companies that have never made a profit. After all these years it's still difficult for me to tell market value from business value.

I remember years ago a young accountant invested in our company stock right before an earnings release. Very unwise. Our earnings did beat all estimates as he knew they did. I called him in and said "The good news is we don't have to undo your purchase as an insider. The bad news is you've lost several hundred dollars. The instruction is never do that again because you won't be allowed to keep profits, but you'll get the losses."

 

[Bacchus]

I agree and fear for those who leave all the decisions to their investment person. I can't imagine not educating oneself and either making the decisions or being very involved in them. Reading and hearing a variety of information is helpful.



I remember years ago a young accountant invested in our company stock right before an earnings release. Very unwise. Our earnings did beat all estimates as he knew they did. I called him in and said "The good news is we don't have to undo your purchase as an insider. The bad news is you've lost several hundred dollars. The instruction is never do that again because you won't be allowed to keep profits, but you'll get the losses."

I did my own for many years - knew little at start but learned and got better over time. I finally came to the realization that I didn't enjoy it any longer and welcomed some help. First step was a paid review of holdings, portfolio mix and investment strategy.

That went so well and I got to know the advisor as a results. Finally decided to " turn it over" to him.
I dont ask for or expect to give " permission" for every change in portfolio but choose rather to discuss strategy, emphasis, deemphasis, appropriate changes to portfolio mix. I dont care about nor want to get back into individual holding decisions.

I dont know how you categorize that approach - maybe informed "hands off" but it works for me.
I have an open door to email or call with any questions, suggestions, etc but in return advidor has my full confidence and ability to do what he feels is right for us and our goals.

BTW - while still " DIY" investing I decided that my employee owned stock was over valued and Qtrly earnings report (very favorable) was upcoming. Made a mental decision to sell half ahead of announcement and wait till after to sell other half.
That was 2001/2002 and telecom collapse...
The good news is I sold half at the absolute top
The bad news is I ONLY sold half at the top. It started a nose dive before I could act and ended up near zero!
Would an advisor helped? - will never know but a rational vs emotional mind can't hurt and DIY investing is by definition emotional.
After that incident I developed and documented my/our investment strategy and some guidelines. Referred to it often and revised it as needed but it helped guide the decision making and helped minimize the emotions.
I highly recommend the exercise to write it down!

 

[RickyD]

Yes, you want a picture of investing in retail one year ago.

Macy's $24.50 Now $5.02
JC Penney $1.36 Now $0.24
Gap $26.03 Now $6.90
Sears $0.69 Now $0.14
L Brands $25.90 Now $10.31
Ascena $23.20 (Hit $29.20 after) Now $1.13

Fortunately our stores haven't lost that much value, at least not in our minds. So, glad we invested in ours and not in theirs and glad we're not public and don't have to make SEC disclosures of how bad things are.

We invested in Dollar General at $95 two years ago, it was $195 recently. Now about $170. Still a good investment for retail because they are discounters where people shop when money is short. Buying Sears even 5 years ago was a bad bet. They didn't learn how to convert from catalogue to internet.

 

[Genecop]

Nope

 

[RickyD]

So I'm mostly a guy to sets up a portfolio and runs with it. I can go years without making any changes. But I am also aggressive. Back in December luckily I decided I liked the amount of money I had and figured I'd better put two years of need into cash. So that is where I sit. The money I need month to month is already in cash. I sit back and watch the gyrations up and down. I did buy Chevon at $65 recently because you know they'll be back. It was $90 I think yesterday. I bought Sunpower at $8.5 in February. It went way up. Then down. I bought more at $6.5. Then more at $4.5. Then it went back to $6.3 so I'm not hurting there too much. But, I can wait it out. Mostly I own mutual funds. I did give 20% of my portfolio to a manager who for two years did very slightly better than me but now, this last year, I have been beating him. I'm thinking about pulling all back to my control. I did it at first as a diversification move. But when you look at the securities, its just another iteration of what I invest in anyway. I do love investing but I have very little in individual stocks. I will not lock in my losses which are about 15% or so today. I believe this will all look much better in one to two years. Tracking my performance over the last 10 years you see the ups and downs along a rising trend line. Weather the storm and rise with the new tide.

 

[Newtrawlerowner]

Liquidate Investments

I got a text this afternoon from a person who I feel is a fairly knowledgeable investor. He's made quite a pile of money by being prudent, investing wisely and paying close attention to what's going on in the world.

His text said that he's thinking seriously about liquidating his entire portfolio within the next month.

I'd be lying if I said that thought hadn't crossed my mind. I'm still fully invested but giving some thought to pulling the plug. I know all the tales about "you don't actually have losses until you liquidate" but given what's going on in the world, what are your thoughts? Is it time to pull the plug, go to all cash and sit on the sideliines?

What say you?Is

I expect my heirs to do the liquidating. I have plenty of cash flow, a boat (need I say more) a beautiful partner and 2 grand kids that I get to see regularly (except now of course).
Enjoy your life and let go of the profits and losses unless you need the cash. But remember that if you have money in a qualified account, regardless of when you pull it out the tax man will need his share.


Another has posted that you should be well diversified. You should always have cash flow.

 

[BruceK]

... But remember that if you have money in a qualified account, regardless of when you pull it out the tax man will need his share.
Another has posted that you should be well diversified. You should always have cash flow.

Diversification is good. But what is the "qualified account" you speak of? If superannuation, is there is tax on money rightly taken out of super?

 

[Ric in Richmond]

Check Sven Hendrichs column and video. He was the primary reason I was out of the market Feb 20th.

https://northmantrader.com/2020/04/26/the-three-pillars/

Lots more down to come as explained above.....but don't fight the fed!

The Oracle from Omaha will be lie streaming his annual meeting Saturday.

https://finance.yahoo.com/BRKlivestream/

 

[menzies]

Diversification is good. But what is the "qualified account" you speak of? If superannuation, is there is tax on money rightly taken out of super?

Bruce, we have tax deferred plans here, really for retirement. If you take them out before retirement you get hit with a 10% extra tax. Otherwise you can let all of the money ride tax free when you put it in (with annual limits) and tax deferred on earnings. You can start withdrawing when you retire and have to start withdrawing at 70.5 years. Then you owe tax based on a regular income basis.

One of the biggest benefits of the 401K version of these is that there are many times a company match to what you put in - with limits. So free money if you will, also tax deferred.