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Author: woodchuck102 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Doh! Is it time to take the loss? Date: 6/1/2012 5:16 PM
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Background:
- Married, 2 401K accounts, 15 years from retirement
- Total 4 mutual funds (2 growth stocks, 2 small-mid size company stocks)

After black monday in the 80's, I sold after the crash only to see the stock market kick ass shortly thereafter. Told myself I woundn't make that mistake again.

Now I'm 100% in stocks, or at least 90%, and fighting the urge to dump 1/2 into a bond fund just in case everything tanks.

After watching 2012 gains go down the drain, is it time to just take my lumps and avoid the risk of a major loss?

Any input is appreciated,

Thanks.
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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70729 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/1/2012 5:26 PM
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I don't sell into a down market. It's the best way to lose a lot of money many times during your life. When things settle down, you might want to reconsider your stock/bond allocation, though. Obama is going to do whatever it takes to get re-elected, and he doesn't stand a chance if the market is down and unemployment is up, so just wait for him to start another orgy of spending to shore things up...for at least a few months.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70730 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/1/2012 5:39 PM
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If you had been in an individual stock and its fundamentals changed -- and you wouldn't buy it today -- then yes, maybe it would be time to sell.

But if you are invested in the whole market (mostly) through mutual funds then "selling low" might be a mistake. The two main portfolio-killers in broad-market investing are the twin terrors known as "fear" and "greed". These tend to make us "sell low" and "buy high" respectively.

#29

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Author: joelxwil Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70733 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/1/2012 6:01 PM
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Well, it may or may not be the time to sell. Around 1/3 of the way through April there was a pretty good sell signal, however. Now this may or may not be the bottom - hard to know.

You need to be more proactive - look at the charts regularly and see how your stuff is doing compared to the various indexes. Try to spot a downtrend when it establishes itself, and not later.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70734 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/1/2012 11:39 PM
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I think its time to take a close look at your holdings and make sure they are quality. Well managed companies with solid earnings should hold up well and are likely to recover first. It could be time to trim weaker positions and take profits where you have them.

I still think the situation in Europe is the real driver, and people worry that their austerity may hit earnings of US companies. The election in Greece is only two weeks away. Perhaps a solution will be in hand soon. Otherwise, the situation could drag on for months--at least until the next round of earnings reports in July. No wonder people are selling stocks and buying Treasuries.

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Author: woodchuck102 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70735 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/2/2012 1:19 AM
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Thanks for the response,

As for quality, the 401k's are in 2 fidelity funds, and 2 american funds, both with 1 growth and 1 small/mid companies, mainly US.

I went back and looked at the major holdings, and for the most part they're what you'd expect (a lot of "Stock Advisor" companies, and that makes me feel a little better).

My goal was to retire at 68, but hey, if all goes south, maybe 78 will be the new 68!

Will hold for now and see how it goes.

Thanks again.

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Author: woodchuck102 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70736 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/2/2012 1:20 AM
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Good advice. I'm going to take a deep breath and see where this goes.

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70737 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/2/2012 2:18 AM
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ResNullius analyzes,

I don't sell into a down market. It's the best way to lose a lot of money many times during your life. When things settle down, you might want to reconsider your stock/bond allocation, though. Obama is going to do whatever it takes to get re-elected, and he doesn't stand a chance if the market is down and unemployment is up, so just wait for him to start another orgy of spending to shore things up...for at least a few months.

</snip>


Good Lord. I hope so. I just got back from a European cruise. Austerity isn't working over there any better than it is here.

intercst

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70738 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/2/2012 7:26 AM
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My risk tolerance is higher than most but even going into the 2000 popping of the tech bubble I was only 85% stocks. Between the market action and my own tweaks I'm down to 68% stocks, although my target is 70%. I'm retired and live on IRA withdrawals, Social Security, and a modest amount of interest and dividends.

Recovered nicely after 2000 and 9/11 downturns. 2008 crisis hit me much harder but I've recovered much of that too. In hindsight I wish I'd sold it all June 30 last summer and it's starting to look like this year will be a repeat but started early.

If I knew what was going to happen Europe I'd be able to give specific advice. For me a disproportionate part of this year's decline has come from international positions. I'm still bullish on America and American stocks. (Love anything with a solid balance sheet and good dividends.) I expect a bumpy ride well into next year.

Politically I have no hope Congress will do anything (Democrats, Republicans or Tea Party) until the gun is at their head. That uncertainty is riling markets and it will get worse as the end of the year approaches. We need compromise and none of the players are willing to do it. Slash and burn is pushing Europe into a recession. We don't need to go there but we can't continue on our current path either.

Americans and American businesses are amazingly adaptable and I still believe we will somehow stumble through this. I just don't know exactly how or when. So adjust your portfolio so you can sleep at night and hold on for dear life.

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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70739 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/2/2012 7:43 AM
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I just got back from a European cruise. Austerity isn't working over there any better than it is here.

Heh. From what I can see, their austerity consists mostly of saying that they'll stop spending like drunken sailors sometime in the future.

=================
Anyway, back to the OP: There are a couple of ways you can proceed. One is more-or-less the path you are on -- post frantic questions on messgae boards, read investment magazine & website headlines, and then either panic and sell out, or grimly hold on.

Another way is to somehow manage to check your emotions at the door, and delve into some non-standard education. Begin with these:
http://ssrn.com/abstract=962461
http://www.mebanefaber.com/
http://www.blackstarfunds.com/files/TheCapitalismDistributio...
http://www.blackstarfunds.com/files/Does_trendfollowing_work...

In a nutshell, use any of the common ways to (mechanically, unemotionally) determine if the market is trending up or trending down. If down, sell. If up, buy (or stay in).

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Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70740 of 75340
Subject: Re: Doh! Is it time to take the loss? Date: 6/2/2012 4:44 PM
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15 years from retirement

This is your key. Usually down turns don't last longer than 5 years. Yes, people will talk about the "lost decade", but if you keep putting money in, over time you will come out ahead more often than not.

The only consession, when you get to 5 years from retirement, start putting your living/wants/needs expense money into laddered fixed income. 5 year CDs is the easiest.

JLC

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