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Thread: OT - Selling My Equities

  1. #16
    Quote Originally Posted by Robocheme View Post
    It sounds like you're not advocating equity or bonds. Does that mean cash is the preferred alternative? I ask because I'm getting very leery of the stock market, but the experts keep saying that you can't time the market. thanks
    Depends how long you are from retirement. I am not advising here. Lots to consider i.e. Tax on gains when you pair down your holdings. Be honest with yourself as to what you can handle as decline in portfolio and go see your adviser to come up with a plan that works for you.

  2. #17
    Quote Originally Posted by Cal89 View Post
    Across various accounts, about 60% long in stocks / ETFs. The other 40% - cash. I don't think I'll liquidate any further...

    The average bull run is about 4 years, the longest 13. We are now at 7+ years into this one, the second longest in our history... I monitor about a dozen or so "macro" indicators to help me decide to what degree I remain long. The average bear mkt last about a year as I recall. Just checked, 14 months. With that, I have found it prudent to remain net long, never fully invested, and never fully out. My long positions generate income too, another reason to hang-on...

    Having cash available is super important, because opportunities arise. Brexit was my last good shopping day. The Trump win did not afford the same type of opportunity, as many surmised, but I was ready though...

    Given my use of "long", I also play the downside, only with options, sometimes even with futures. So much easier to stay long when the market is getting hammered with put options on the SPY or QQQ. I also sell calls against my long positions to generate income as well. Actually, selling calls on AAPL today, which I do every quarter. I use these like a sell limit order at a desired target sell price. Might as well get paid to sell at a price you want, even if doesn't reach that price by expiration...

    I will secure some puts on the market by the end of this month or January. An insurance policy is some respects, a cost I'm willing to pay to keep me long and rest easier at night. I often can fund these downward positions from the income generated from selling calls against my long positions. When the market finally corrects, when I think it's a good time to go long (plenty of charting involved), I close the put positions and use the profits to enter long positions. Should the market present more buying opportunities (go lower still), the cash parked in the sidelines starts getting used. Of course, puts can be used again...

    I've come to embrace down markets, in some ways more than the up ones, because they don't last as long and can move quite bit faster than up markets.
    Stayed away from banks, defense, airlines since Trump election? All up double digits since November. BAC, ALK, NOC etc. Infrastructure not so much, yet (CMI, TRN)

  3. #18
    Quote Originally Posted by sp4149 View Post
    Inflation has been much higher for selected portions of our population, but ignored by politicians unwilling to treat all Americans equitably. I'm coming up to the fifth anniversary of my retirement. My retirement has been held steady for that period, no Cost of Living adjustments; however my cost of living has seen marked increases over that period. The reason is that I went from working full time and married to retired and widowed. My car and therefore gasoline usage went down 80%. I stay at home more so my home utility bills have gone up 50-100% or more (water) as my employer no longer pays my personal comfort needs from 8-6 each day. While my health the last 5 years has been good and doctor visits are way down, my health insurance premiums are double what they were 5 years ago and continue to go up (noting to do with ACA). Vision and dental insurance benefits have been reduced each year, annual eye exams at my local ophthalmologist are no longer free. Bills for dental services have doubled. But I shouldn't complain. my vet gave me an estimate for teeth cleaning of my 5 year old shelter dog, $1200; she eats dry food everyday and her teeth are not noticeably dirty, this was just their basic fee for a 14 pound canine. Point is: my monthly cost of living has increased 5-10% annually for the last five years; and I'm probably not alone in being hammered by unrecognized inflation for seniors (a frequent AARP subject). Trouble is for retirees who are not in upper income brackets, bonds, and especially municipal bonds provide a steadier income for seniors than stocks where income is mostly from capital gains and seldom quarterly dividends.

    Trump and the Republicans pledge to increase retirement benefits for the military and government employees who carry guns; to be revenue neutral, benefits for other retirees will have to be reduced.
    Very good post. I will be on Medicare and taking Social Security this year. My situation will be very different from this past year especially with a chronic retina problem and dental issues which are very expensive to treat and up to now have been covered by my employee healthcare insurance. Unrecognized inflation for seniors indeed.

  4. #19
    Quote Originally Posted by 82gradDLSdad View Post
    You should sign up on the boglehead site and post this there. There are some very smart people on that site who can explain why you are wrong in this move. Not that it won't work out just that this type of in/out of the market doesn't normally lead to long term gains over buy, hold, rebalance.
    I generally agree with this viewpoint 99% of the time.

    However, every once in a while. Like maybe once in a decade - the market is at such a juicy top or bottom that I feel obliged to make a move. One thing I've learned over the years is that liquidity is the biggest driver. In the current scenario, valuations, sentiment, and liquidity seem to be at odds. That seems like a rare opportunity to me.

  5. #20
    Quote Originally Posted by dajo9 View Post
    These are interesting times in the capital markets. Over the past month in my 401k / IRA I have reduced my equity exposure from 80% to 20%, making the last big move today. Here are the main reasons why:
    - Market sentiment is incredibly bullish
    - Margin (borrowing to buy stocks) is around the highest levels ever
    - Shorts on Treasuries are at incredibly high levels
    - Valuations are at higher levels than any period except the dot-com bubble
    - The rising dollar will hurt US exporters
    - The rising dollar is wreaking havoc in some foreign countries, particularly China
    - The US consumer will be hurt by the rise in interest rates (car purchases, home purchases, credit card purchases)
    - Last but most importantly, the Fed is raising rates and reducing liquidity

    I'm pretty confident in the move but I'm less confident in the timing. The market could continue to rise and my move into bonds could continue to hurt me (particularly with China selling US Treasuries in order to try to stop the decrease of the yuan) for many months. But I think over the next 6 months the market will have a sharp reversal and move back into safe bonds. Now I am positioned to profit off that move - if or when it happens.

    One last note - my portfolio change in my taxable, non-retirement account is less dramatic because I don't want to trigger capital gains. I'm about 50/50 there.
    Not that I disagree with you at all, for valuations are very, very high. But, what is wrong with picking at each day's end a sell point with your portfolio; the idea being you need not sell at the exact top, but let it go up to top but on its way up pick that point where if it came back to you would sell. For instance, if your portfolio hit a high last Friday and moved up again Monday and Tuesday, but reversed to just above Friday's old high after Yellen's announcement yesterday you would be still in today with very nice gains. If it went down again today, then consider selling thinking the crest may have been made. You may also be wrong, of course, and it could then go up again tomorrow; but just have a sell point defined for yourself, while at the same time taking a chance on further gains.

  6. #21
    How economics have changed, massive deficit spending has always triggered inflation.

    I noticed Trump saying recently that we are going to build a wall along our borderS (as part of his
    victory tour and in response to earlier comments of maybe a fence or something less than a wall,
    basically what we already have). We have two borders; previously I thought he was merely talking
    about our Mexican border; which has a real long water boundary and would require a dam not a wall.
    But now, if you can believe his words, he is really also talking about the Canadian border; maybe he told
    Canada that Mexico would pay for that border.

    And a couple of trillion in unfunded infrastructure improvements will really help build the deficit. However
    the Trump tax proposal would mean a massive increase in my Federal taxes since it would eliminate most if not all my
    Federal tax deductions. I would be in the 25% bracket proposed by The Trump; right now because of mortgage,
    and tax deductions I pay 5.3% of my gross income in Federal taxes. For many Red states with low property values and local taxes;
    the Trump plan might lower taxes; but for tax payers in blue states where real estate is more valuable and taxes
    are higher as a result; The Trump tax proposal would result in a massive tax increase for homeowners in the lower than,
    rich, tax brackets. Based on the tax proposal on donaldjtrump.com my federal income tax would increase five fold. Again seniors
    without childcare costs will be hardest hit. Renters with kids might get a refund. At what point do homeowners sell in mass
    to avoid massive tax increases and at the same time drive down real estate prices. And how low do residential real estate prices
    have to drop to be revenue neutral with the loss of mortgage and tax deductions on Federal income taxes?

    Generally as with most contracts, Trump's new Contract with America, will reaffirm the adage "the Devils in the Details".
    I suspect when we get the rest of the details; many other taxpayers will be less than thrilled.

    Quote Originally Posted by dajo9 View Post
    I don't see anything on the horizon that would trigger inflation. I see lots of deflationary activity though.

    Go Bears!
    Last edited by sp4149; 12-15-2016 at 10:02 AM.

  7. #22
    Quote Originally Posted by dajo9 View Post
    I don't see anything on the horizon that would trigger inflation. I see lots of deflationary activity though.

    Go Bears!
    I think if deflation was a concern, the Feds would not have signaled three increases next year. I do believe that increase in inflation and interest rates are going to accelerate (not that it is necessarily a bad thing as long as income goes up for people to afford the increase in prices), and as such, equities and real assets would be a better investments than cash or bonds. In addition, don't underestimate the effect that tax cuts will have on corporate profits. Having said all that, I think we are due for a recession within the next three years or so based on the recovery cycle from the last recession. When I start seeing recessionary signs and the interest rates have increased, I may invest in long-term bonds.
    Last edited by calbear93; 12-15-2016 at 10:04 AM.

  8. #23
    Quote Originally Posted by sp4149 View Post
    How economics have changed, massive deficit spending has always triggered inflation.
    This statement is just false. I don't know how you define "massive" but we have had major deficit increases during WWII, the 1980s/early 1990s, and after the Great Recession - none of which resulted in consumer inflation. Consumer inflation happens when there is too much money in the system AND that money finds its way to consumers. There is currently no mechanism for the 2nd part of that equation to happen. We will be left with asset inflation (which means lower rates).

    Quote Originally Posted by sp4149 View Post
    I noticed Trump saying recently that we are going to build a wall along our borderS (as part of his
    victory tour and in response to earlier comments of maybe a fence or something less than a wall,
    basically what we already have). We have two borders; previously I thought he was merely talking
    about our Mexican border; which has a real long water boundary and would require a dam not a wall.
    But now, if you can believe his words, he is really also talking about the Canadian border; maybe he told
    Canada that Mexico would pay for that border.

    And a couple of trillion in unfunded infrastructure improvements will really help build the deficit.
    I have bolded above the key issue I have with what you write above. I have no interest in what Trump says. I follow what he does. More importantly, I follow what Congress is doing since all legislation will come from them. To me, it appears they will pass large tax cuts which will build the deficit and lead to more asset inflation (risk on - good for equities / risk off - good for bonds which means lower rates).

    Congress appears to have no interest in infrastructure spending, which is the one action that could trigger inflation by driving up employment and wages. I would support this, but I am a Keynesian liberal. Congress is not.

  9. #24
    Real Bear
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    As has already been said, buy, hold and rebalance is the best proven long term approach.

  10. #25
    Quote Originally Posted by sp4149 View Post
    How economics have changed, massive deficit spending has always triggered inflation.

    I noticed Trump saying recently that we are going to build a wall along our borderS (as part of his
    victory tour and in response to earlier comments of maybe a fence or something less than a wall,
    basically what we already have). We have two borders; previously I thought he was merely talking
    about our Mexican border; which has a real long water boundary and would require a dam not a wall.
    But now, if you can believe his words, he is really also talking about the Canadian border; maybe he told
    Canada that Mexico would pay for that border.

    And a couple of trillion in unfunded infrastructure improvements will really help build the deficit. However
    the Trump tax proposal would mean a massive increase in my Federal taxes since it would eliminate most if not all my
    Federal tax deductions. I would be in the 25% bracket proposed by The Trump; right now because of mortgage,
    and tax deductions I pay 5.3% of my gross income in Federal taxes. For many Red states with low property values and local taxes;
    the Trump plan might lower taxes; but for tax payers in blue states where real estate is more valuable and taxes
    are higher as a result; The Trump tax proposal would result in a massive tax increase for homeowners in the lower than,
    rich, tax brackets. Based on the tax proposal on donaldjtrump.com my federal income tax would increase five fold. Again seniors
    without childcare costs will be hardest hit. Renters with kids might get a refund. At what point do homeowners sell in mass
    to avoid massive tax increases and at the same time drive down real estate prices. And how low do residential real estate prices
    have to drop to be revenue neutral with the loss of mortgage and tax deductions on Federal income taxes?

    Generally as with most contracts, Trump's new Contract with America, will reaffirm the adage "the Devils in the Details".
    I suspect when we get the rest of the details; many other taxpayers will be less than thrilled.
    There is no way that mortgage interest or charitable contributions will cease to be a deductible. In addition, for most in the blue states, the AMT has already eliminated the value of the other deductibles anyway (at least for those in the higher end of the income spectrum who do not rely on capital gains). Most of us in the blue states who did not vote for him will benefit the most from his tax cuts.

  11. #26
    Golden Bear Cal89's Avatar
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    5,161
    Quote Originally Posted by OdontoBear66 View Post
    Stayed away from banks, defense, airlines since Trump election? All up double digits since November. BAC, ALK, NOC etc. Infrastructure not so much, yet (CMI, TRN)
    I haven't stayed away from anything since Trump honestly. Same routine for me...

    Minus a couple core investments like AAPL, I've gone ETFs almost exclusively. Not the same bang as with an individual stock, but plenty sufficient for me; with less downside as compared to a single company f'ing up. Since I do a fair amount of options on ETFs, the percentage gains are there, for me at least...

    For those who don't have experience with options but still want downside protection, there are ETFs for that too. SDS is one of the more liquid ones, I believe -2x the SP 500... As an example, it's down about 18% since early November. The mkt is up about 9% during that time, so it is about 2x, but inverse.

    I'll likely go with puts at some point...
    The University of California - One of the finest universities in the world, is the oldest public university in our great state with origins dating back to 1855, and university status granted in 1868. Go Bears!

  12. #27
    I have no interest in the total deficit as that will always increase with an unbalanced budget . But the Kenynesian model better supports a change in annual deficits rather than an absolute deficit. If the annual deficit is unchanged it has no impact on the economy. One reason for the relatively poor economic growth the last 7 years is that the annual deficit has declined from $1,400 Billion (2009) to around $500 billion for the last four fiscal years (2014, 2015, 2016, 2017). A boost in deficit spending of a trillion dollars in infrastructure spending could jump start the economy for a couple of years. I should have said annual deficit increases like we had in the Bush administration as opposed to the annual deficit reduction of the last seven years. Many politicians point to the growing total deficit debt, ignoring the rate of change which has more immediate impact.



    Quote Originally Posted by dajo9 View Post
    This statement is just false. I don't know how you define "massive" but we have had major deficit increases during WWII, the 1980s/early 1990s, and after the Great Recession - none of which resulted in consumer inflation. Consumer inflation happens when there is too much money in the system AND that money finds its way to consumers. There is currently no mechanism for the 2nd part of that equation to happen. We will be left with asset inflation (which means lower rates).

    ...
    Congress appears to have no interest in infrastructure spending, which is the one action that could trigger inflation by driving up employment and wages. I would support this, but I am a Keynesian liberal. Congress is not.

  13. #28
    Published yesterday:

    "New Yorkers face a $15 billion net increase in their federal income tax bills if House speaker Paul Ryan’s plan to scrap a key deduction is enacted, according to an estimate by Gov. Andrew Cuomo’s administration.

    Ryan has proposed eliminating a rule that allows individuals to deduct state and city taxes, including real estate taxes, from their federal tax bill. The change would affect all 50 states, but would disproportionately hit California and New York because of their large populations and high state and city taxes. New York accounted for 13.2 percent of all deductions claimed in 2013, second only to California (19 percent) and well ahead of New Jersey (5.9 percent) in third place. New Yorkers claimed $68 billion in state and local tax deductions that year."

    Ryan has also floated the idea of eliminating the mortgage deduction which again would hurt more in blue states with larger mortgages. But just because the speaker of the House, where any tax legislation will be created, favors these changes; we really don't know what they actually will do when they have to get serious. But this has been on the Republican agenda for awhile; it's just now it appears to have broader support.

    I really don't think charitable deductions are as big a Fed tax deduction as state and local taxes, mortgage interest or even medical expenses for most taxpayers.


    Quote Originally Posted by calbear93 View Post
    There is no way that mortgage interest or charitable contributions will cease to be a deductible. In addition, for most in the blue states, the AMT has already eliminated the value of the other deductibles anyway (at least for those in the higher end of the income spectrum who do not rely on capital gains). Most of us in the blue states who did not vote for him will benefit the most from his tax cuts.

  14. #29
    Quote Originally Posted by sp4149 View Post
    Published yesterday:

    "New Yorkers face a $15 billion net increase in their federal income tax bills if House speaker Paul Ryan’s plan to scrap a key deduction is enacted, according to an estimate by Gov. Andrew Cuomo’s administration.

    Ryan has proposed eliminating a rule that allows individuals to deduct state and city taxes, including real estate taxes, from their federal tax bill. The change would affect all 50 states, but would disproportionately hit California and New York because of their large populations and high state and city taxes. New York accounted for 13.2 percent of all deductions claimed in 2013, second only to California (19 percent) and well ahead of New Jersey (5.9 percent) in third place. New Yorkers claimed $68 billion in state and local tax deductions that year."

    Ryan has also floated the idea of eliminating the mortgage deduction which again would hurt more in blue states with larger mortgages. But just because the speaker of the House, where any tax legislation will be created, favors these changes; we really don't know what they actually will do when they have to get serious. But this has been on the Republican agenda for awhile; it's just now it appears to have broader support.

    I really don't think charitable deductions are as big a Fed tax deduction as state and local taxes, mortgage interest or even medical expenses for most taxpayers.
    For most senior professionals, since state and local taxes are not deductible in calculating the alternate minimum tax, those deductions shouldn't be a factor. Most other deductions are phased out even without AMT. The only ones most of the people I know care about are the mortgage and charitable deductions. I just can't imagine mortgage deduction going away. It is too embedded in the way we view real estate, our homes, home ownership, etc. And it could create too much of a havoc on the real estate market.

  15. #30
    I can't see mortgage deduction ever going away - that hits too many people.

    I can see the state and local tax being capped (I think Trump suggested $100k for individuals / $200k for married) which would basically end up being a partial offset to the massive tax cut for the very rich (who would otherwise see their top tax rate go from 43.4% to 33%). Even in California, $200k cap on state and local tax deductions is a bigly number - you could live in a $5M home and earn more than $1M per year and still fit in comfortably under the cap. If that cap were to drop down to say $50/100 you would start hitting a number of California/NY upper middle class and they would end up being the only people with a higher tax bill under Trump than Obama. I mean, until the economy collapses from Trump's policies at which point many will have lower tax bills.




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