Pulling out of the markets
You can’t time the markets. Why even bother? For the past year or so I’ve felt acutely in my gut that we’re due for a market correction. Today I finally decided to take action. I queued up a bunch of trades to begin taking place when markets open in 6 hours (they’ll clear over the next few days). I then came straight here to record my thoughts. In a few years, I want to be able to look back and reflect. I’ll probably be wrong but there’s a glimmer of maybe I’ll be right and a lot of gambler instinct that just wants to place a bet and ride the wave.
In fact, scanning my hapharzard portfolio cost basis, I see a random array of red and green numbers. If I keep going along these lines, I’ll probably be about half right and half wrong.
I currently invest in these places.
- Vanguard: Here’s where I originally attempted a balanced portfolio about 3 years ago. It started one day when I was sufficiently out of college to see some savings and thought “hmm it might matter that I invest this.” I found some suggestions in blog posts and tried a roughly 70–30 mix. Then over the years, various Wall Street friends and tip offs led me to add a bunch of things in small chunks. Needless to say, it no longer feels particularly thoughtful or balanced.
- Wealthfront: I basically put in as much as they would let me for no fees. This is the one place that my savings have actually thrived, probably because I didn’t make any decisions.
- Stock market: I started this about two years ago and have experienced some wild ups and downs. A lot of stupid trades leading to stupid taxes. I’m thankful that I’ve finally learned my lesson without going bankrupt. I’m currently only invested in TSLA and DIS. A lot of TSLA. And I’m not moving it until I hit long term so I don’t even bother checking. Portfolio still notifies me everyday though so I kind of know what’s happening.
- And a neglected pile of cash because I’ve been too chicken to invest the majority of my earnings these past 12 months. Oh and tech company equity from my previous employer.
About 10 minutes ago, I queued trades for 20% of my Vanguard portfolio and 60% of my Wealthfront portfolio. I plan to trade another hefty chunk of my Vanguard portfolio, but I’m curious about my cost basis and am waiting for them to calculate that (how long can it take?).
I’m thinking hard about what would be the right time to put my money back in the markets. I sincerely believe that investing is the right thing to do. Keeping a mattress stuffed with money isn’t very inflation proof. But how will I know? Here are some scenarios I’ve been considering.
- A very likely scenario is that the markets will continue to grow at a even and slow clip like it has been these past 6 months. Remember, the markets tanked at the started of the year. I was too scared to reinvest. That would have been smart in hindsight (20–20) because it’s been a solid recovery ever since. This is a tough scenario. I’ll probably just have to bite the bullet and slowly reinvest everything. A good time would be well after the election in November. I’ll miss out on some gains for my stupidity. On the bright side, it’ll probably ultimately be a good long term lesson in personal finance.
- I think it’s very unlikely that a crazy boom will happen. I’m not sure what would even cause that to happen. On the other hand, strong markets could make for a good environment to finally start a yoga or tiny house business.
- And that brings me to the last scenario, the whole reason for this journal entry/essay. It’s alarmingly easy to imagine the markets tanking. We’re projected to experience a downturn in 2018. That sounds too precise for something that can’t be timed, but it stands that we have observed downturns every “once in a while” and haven’t since 2008. Some legitimate causes: we’re in a tech bubble, Russia invades another country, Trump is elected and the world loses faith in American business. I don’t follow politics or news at all really, generally. Everything comes through a pretty solid filter: my friends. I live in San Francisco and work in tech so it’s not a very diverse perspective. Also apparently the world is much safer today than it has ever been and all this fear has really been fabricated by media outlets to be used as clickbait. But, in the event that this does happen and we go into a downturn, that would be a good time to reinvest. If this happens, it’s obviously very hard to time rock bottom. To be conservative, I’ll probably have to wait until things look pretty good again to reinvest.
I guess we’ll see what happens!