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I have sold off all of my investments

 
 
Reply Wed 18 Mar, 2020 10:16 am
Based on how this coronavirus is affecting the world's economies, I have taken the precaution to sell all of my investments until this situation settles down. My wife is still hanging onto her's. I'm not sure what the correct strategy should be in this kind of environment, and can offer no advise, only what my wife and I are doing. Perhaps, something in between the two extremes would be the correct response. I just don't know. Good luck to everyone. We all need it.
 
roger
 
  1  
Reply Wed 18 Mar, 2020 10:45 am
@cicerone imposter,
Even bonds?

None of my business, but if you feel like answering, what did you do with the proceeds.
hightor
 
  2  
Reply Wed 18 Mar, 2020 10:53 am
@cicerone imposter,
It's good that your wife is hanging on to hers. Usually the advice is that if you don't need the money, don't sell. Eventually this thing should turn around and your wife's holdings will regain some of their value. Good luck , CI.
cicerone imposter
 
  0  
Reply Wed 18 Mar, 2020 11:03 am
@hightor,
We all need good luck, on all fronts, including our health and wealth (however much that may be).
0 Replies
 
cicerone imposter
 
  0  
Reply Wed 18 Mar, 2020 11:06 am
@roger,
Roger, Sorry, but I was never a believer in bonds. If I considered bonds, it would have been muni bonds. I have always had faith in our country's
economy, and felt the best investments were in equities. That's been my mindset ever since I started investing. It's a different world today with the coronavirus. No economy will be protected. I put the proceeds into my bank account that's insured by FDIC up to $250,000. By my estimates, if I kept my investments, it would have lost over $10,000 by now, and it's just over 10AM pst. From my perspective, it's bound to go even lower. It's always been financial pundits recommendations to increase your bond holdings has you get older. I never believed in that recommendation, because equities always outperformed bonds. I believe I read someplace that bond returns were 4.5% and equities returned 10%. Those numbers can no longer hold with the coronavirus. For some people, bonds may still have a place in their portfolios. https://www.investopedia.com/terms/f/fixedincome.asp
Linkat
 
  2  
Reply Wed 18 Mar, 2020 12:30 pm
@cicerone imposter,
cicerone imposter wrote:

Based on how this coronavirus is affecting the world's economies, I have taken the precaution to sell all of my investments until this situation settles down. My wife is still hanging onto her's. I'm not sure what the correct strategy should be in this kind of environment, and can offer no advise, only what my wife and I are doing. Perhaps, something in between the two extremes would be the correct response. I just don't know. Good luck to everyone. We all need it.


I've worked in the mutual fund industry for over 30 years. I am holding onto my investments. Unless you need your money in the next year or so it is foul hardy and panicky to sell.

You should have some money already in a rainy day fund - that sort of investment that earns a little bit but with little or no risk. That way when something like this happens you have money if you need it. The other stuff you do not move -- by selling you just guaranteed a loss. Smart people do not panic but prepare.

If you are close to retirement you should have already moved into "safer" investments. I had moved some money not too long ago in my retirement funds to safer while still maintaining the other in riskier funds - but those will not move until the market is stronger - but having some in both I feel I am good for my retirement in about 10 years.
Linkat
 
  2  
Reply Wed 18 Mar, 2020 12:36 pm
@cicerone imposter,
Equities have out performed bonds --- in the long run. Equities fluctuate much more than bonds that is why you put money in bonds - to provide some stability. So if you have a situation like this and need money you sell bonds and therefore either do not lose money or lose significantly less.

It is a different world with coronavirus but unless you really believe it will stay this way in long term or you will need your money in the short term you were panicky to sell.

So how much did you lose? Your wife has lost $0. You do not lose money until you sell. So if she does not need the money until say a few years, she may recover all - it depends on when she first invested any of the money and what she has accumulated and re-invested from those investments.
cicerone imposter
 
  0  
Reply Wed 18 Mar, 2020 12:46 pm
@Linkat,
Quote:
So how much did you lose?
I didn't lose anything, because I started out investing with much less money from over ten years ago when I had $92k in my account. I've been withdrawing $3,000 a month since 1998 when I retired, and still had over $100k when I withdrew that amount to put into my bank account. According to today's financial news, the DOW lost over 10%. I lost zero.
cicerone imposter
 
  1  
Reply Wed 18 Mar, 2020 12:52 pm
@Linkat,
Quote:
I've worked in the mutual fund industry for over 30 years.
I've been investing for over 50 years, and I also studied Economics, Macroeconomics and Microeconomics. Been pretty successful in managing my finances. Was also controller and financial manager for several companies, and helped them build up their reserves when I worked. Also was on the Board of Directors of several nonprofit organizations to help them with their financial management. Also did small business consulting in Silicon Valley. From flowingdata.com PASSING $100K IN SAVINGS
When looking at only transaction accounts, such as checking and savings, the 1 in 6 figure, or 17%, seems high.

MORE THAN $100K IN… AGE 21 TO 36 (PEW) 23 TO 37 (BofA)
Savings 0.4% 0.9%
Checking 0.2% 0.3%
All Transaction Accounts 1.2% 1.8%
The older ages for the BofA definition pushes the percentages up, but none are close to 17 percent.

Although, the report never defines “savings.” It reads like money in a savings account, but maybe they also mean other sources, like a retirement account, stocks, and bonds. When you have that much money, I think most people don’t just leave it laying around in a low-interest bank account.
roger
 
  2  
Reply Wed 18 Mar, 2020 01:25 pm
@hightor,
I don't claim any special expertise, but I'm afraid CI might be right. In this special case, I think the fundamentals may well have changed, and that is reflected in market averages. Of course, there is also an emotional component, as well, but I am a fundamentalist at heart.
Linkat
 
  -1  
Reply Wed 18 Mar, 2020 03:55 pm
@cicerone imposter,
then you are not in as bad as spot as many that have panicked resulting in guaranteed losses.

A little bit different situation.

It honestly is about how much and when you will need your money - if you are relying on it to pull out $3k a month then your money really should be in mostly bonds. The stock market fluctuations way too much - stocks are for long term investing and bonds (and it really depends on the types of bonds) are generally for more intermediate and/or shorter terms.

If you do not have knowledge of the best investing strategy you should work with an adviser.
0 Replies
 
Linkat
 
  1  
Reply Wed 18 Mar, 2020 03:59 pm
@cicerone imposter,
And I have a master's in economics studying specifically money and finance. Still financial advisers are much more knowledgeable in this area. Even with my background I do speak with one - you can have one that you consult and does not actively manage your money - that is how I work it.

I am surprised that someone with this knowledge that is depending on the income in which he is invested is so heavily in stocks. You should quite honestly be in a mix of bonds and stock - you still want the growth potential but be able to pull from bonds in times like these. That is what forces your hand to sell out at not the most opportune time.
0 Replies
 
Linkat
 
  1  
Reply Wed 18 Mar, 2020 04:02 pm
@roger,
I guess I can pull up previous business cycles historically (one of my favorite course was business cycle analysis) and you can see - at other down turns and such how historically the market has moved. Now no one ever has a crystal ball that is why it is important not to have all your money in higher risk items like stocks. That is why you invest in a mix.

I have a mix - so I am not going out and selling everything I have.
roger
 
  1  
Reply Wed 18 Mar, 2020 04:09 pm
@Linkat,
Yes. And I agree. Still, as I mentioned, I believe many companies are facing radical changes in their fundamentals.
Linkat
 
  2  
Reply Wed 18 Mar, 2020 04:16 pm
@roger,
In CI's situation where his wife has money in stocks and hasn't sold and where he is relying on this for income (and has had it in long enough so that he did not lose) - it probably is best for him to sell under the circumstances. She could keep her money in for longer term and then they could rely his income for shorter term.

It is hard not to panic - but if you do not need the money now - and you have thicker enough skin, it is probably better not to sell (of course depending on when you bought).

Lots of things happened after 9-11 as well ... unexpected things have happened through out historically - why it is important to diversify your investments.
0 Replies
 
cicerone imposter
 
  2  
Reply Thu 19 Mar, 2020 07:22 pm
@roger,
roger, It's all a guessing game for all of us. What I'm seeing in the stock market today is a "false-negative" of higher value. When the world's economy is getting destroyed by this coronavirus, I don't see the economy regaining the economic growth we had before this crisis hit. The world economy can't recoup that quickly. My education in macroeconomics is telling me there's a whole new ball game in the park today.
0 Replies
 
maxdancona
 
  1  
Reply Thu 19 Mar, 2020 08:54 pm
@Linkat,
Quote:
You do not lose money until you sell.


I fully agree with Linkat here. Selling out of fear in reaction to a news story is not a good financial strategy. Think of it this way.

The coronavirus pandemic will end sometime. The markets will stabilize. People will start buying again. Factories will start cranking out products. Some people are losing their jobs. Other people are working and earning... and now are accumulating wealth with nothing to spend it on. When this ends there will be a lot of economic activity. No one knows exactly when this will happen... but it will.

This is a volatile time, meaning that likelihood is that we will see big swings in both directions.



maxdancona
 
  1  
Reply Thu 19 Mar, 2020 08:59 pm
@maxdancona,
I think you should talk to a financial planner before making any drastic decision. The interest rate earned by money in a bank account is basically zero... actually it is probably losing value since the interest rate is lower than the rate of inflation. If you have zero appetite for risk, even a CD is better than just a savings account.

I would think safe bonds would be a better choice. But please talk to a financial planner.
0 Replies
 
cicerone imposter
 
  0  
Reply Thu 19 Mar, 2020 09:15 pm
@maxdancona,
Quote:
Selling out of fear in reaction to a news story is not a good financial strategy.
There's a huge difference between selling out of fear, and having the educational background to determine what can be expected from this world crisis. The governments attempts to prop up the economy through cash and attempts to stabilize the stock market are outside the scope of this coronavirus. MEDIA: Italy’s death toll soars, surpassing China’s, as other nations in Europe report upticks. We did this during our recent visit to Hollywood. When we were there, the streets were crowded with people, and there were lines everywhere you went. This is reflective of what is happening around the world. https://www.nytimes.com/2020/03/19/world/coronavirus-update-cases.html

maxdancona
 
  2  
Reply Thu 19 Mar, 2020 09:23 pm
@cicerone imposter,
It is your money. It is your choice.

Personally, I would seek expert advice. I do not have a financial education, nor do I any financial expertise other than as a layman.

If it were me, I would worry that I was falling for the Dunning Kruger effect (where you think you know more than you actually do). Financial decisions like this are important and selling is at least as dangerous as not selling.

I think Linkat has real expertise.
 

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