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I had the idea that I should park my 401k into a stable fund a couple of weeks before Brexit because of the probable (and almost certainly negative) shock-wave it's like to send the world economy. Good idea? Bad idea? Caveats? Please advise. Thanks.
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I had the idea that I should park my 401k into a stable fund a couple of weeks before Brexit because of the probable (and almost certainly negative) shock-wave it's like to send the world economy. Good idea? Bad idea? Caveats? Please advise. Thanks.

Don't you think much of Brexit is already built in? I mean, it's been known about for 2 years now.

What I heard being talked about yesterday, when 7 MPs quit the Labour Party, was that there was a building sentiment for a delay. So, if that happens and you had pulled your money out just before it was announced, you would potentially miss a market pop. Missing the best up days in the market is really bad for your return: https://www.marketwatch.com/story/how-missing-out-on-25-days...

But, hey, it's your money - you should do what you want with it.

AJ
- Many have tried to time the market, few have succeeded.
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- Many have tried to time the market, few have succeeded.

it409 posted this on the Humor board

http://www.retro.ms11.net/InvestorMind.gif
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The day Brexit was approved, the Dow dropped 1000 points before closing down over 600 points.

The very next day, the Dow closed up more than it lost the previous day.

The only losers over that two day stretch were those that sold.

All else being equal, that is likely to be the result for anyone selling due to Brexit over the next few weeks.
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I had the idea that I should park my 401k into a stable fund a couple of weeks before Brexit because of the probable (and almost certainly negative) shock-wave it's like to send the world economy. Good idea? Bad idea? Caveats? Please advise. Thanks.


Go for it.
If nothing happens, you'd have missed the market gains for a couple of weeks. You might lose ~10% at most (in opportunity cost.) Can you live with that?
If a negative shock-wave happens, you can feel good about it.
Just don't sit on the sidelines for long. And don't think sitting out now means you will never have a big draw-down.
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I couldn't disagree more. One of the values of 401k investing is dollar cost averaging, which means consistently putting money into your investments regardless of market conditions. Outside of the occasional (annual at most) rebalancing, I would caution against market timing 401k investments based on something that may or may not happen.

Fuskie
Who doesn't ever diverge from his long term investment strategy due to immediate or short term events...

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I couldn't disagree more. One of the values of 401k investing is dollar cost averaging, which means consistently putting money into your investments regardless of market conditions. Outside of the occasional (annual at most) rebalancing, I would caution against market timing 401k investments based on something that may or may not happen.

This sounds rigid and overly theoretical. How much is the downside of converting to cash for a couple of weeks because it's not strict DCA? OP s not trying to time the market over years or even months.
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Market timing is about picking specific moments in time to get in or out of an investment. It is based on the notion that you can predict the future. You can no more predict the future than you can explain how Phineas & Ferb can construct the things they on a child's allowance. There's just no value in it for a long term buy-and-hold investor, and that is what you should consider your 401k to be.

Fuskie
Who has been investing for some 30 years, if you want to consider his approach to be theoretical, and thinks whether you try to time the market once or many times, it's still not a Foolish approach to investing...

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OP s not trying to time the market over years or even months.

Missing just the top 10 days every year will cost you about half of your total return. Heck, missing a single day in December of last year would have doubled many people's S&P losses for the year in 2018.

Got to be in it to win it.

Personally, I would be more concerned about a failed China trade deal than I would be over Brexit.
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Missing just the top 10 days every year will cost you about half of your total return. Heck, missing a single day in December of last year would have doubled many people's S&P losses for the year in 2018.

I can't argue with purists.
What is the likelihood that these ten days will be exactly in the two weeks that OP wants to sit out?
What is the big deal with "doubled losses" when the losses are in single digits?
OTOH if the stock market does tank due to Brexit (as it did briefly in 2016 IIRC) the OP would be pretty sad.
Whatever dudes. You believe your religion and I will believe my (non-)religion.
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What is the likelihood that these ten days will be exactly in the two weeks that OP wants to sit out?

Can anyone predict when those days would be?

Would anyone in December of last year have predicted that January 2019 would be the best January in the last 30 years?

What is the big deal with "doubled losses" when the losses are in single digits?

*chuckle* Really? Losing 10% is the same as losing 5% to you? No big deal? Ok...

OTOH if the stock market does tank due to Brexit (as it did briefly in 2016 IIRC) the OP would be pretty sad.

The market tanked for a SINGLE DAY. The only people that were sad in 2016 were those that sold. Brexit was an outstanding buying opportunity. In fact, it was the absolute best buying opportunity of 2016.

You believe your religion and I will believe my (non-)religion.

LOL, you don't know me. The fact that you are trying to paint beliefs on me says more about your "non-religion" than it does about my beliefs, dude.
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knighttof3,

You wrote, Whatever dudes. You believe your religion and I will believe my (non-)religion.

Dude! Math, science and statistics. Those are key tenants of my religion too.

- Joel
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I had the idea that I should park my 401k into a stable fund a couple of weeks before Brexit because of the probable (and almost certainly negative) shock-wave

1. You have to correctly time your exit from stocks, and also your re-entry.
2. You have to out-think your fellow individual investors and also people who get paid to make these decisions (and who have massive research staffs).
3. You have to be correct in the short-term ramifications of everything. That is, you have to find mis-pricing in the market where everyone else knows that Brexit is coming and has some ideas of what that will imply to:
a. Economies
b. Stock markets, which are driven by economies but not linked especially in the short term. IOW, "The Market" may overvalue or undervalue stocks despite you being correct on the economic impact of whatever event. People overvalued Internet stocks for a long time, against any traditional common sense that companies should have earnings or at least the *prospect* of earnings.
4. You have to decide this round-trip of sell/buy from a game theory perspective: What's your maximum and minimum loss or gain? If you're right, might you make an extra 3% or 4%, but if you're wrong about the timing of selling then re-buying, could you lose >10%?
4.1. If the numbers in item 4 are correct, will a 4% extra gain move your FI date forward? Will a 10% loss move it back? Part one of that question isn't a no-brainer--having 4% more may not change the date you can retire if you need X years in to get a pension, or if you're counting on Medicare eligibility to free you from your wage-earning shackles. But, a loss might delay your date.

Cautionary example: I recall the trepidation during Desert Shield that a "shooting war" could break out. The stock market was down during that period. Then, Desert Storm occurred--the shooting war that everyone feared became reality! But, the US stock market went up. So, the fear was realized, but the stock market went up? That was right when I was becoming interested in investing, and the lesson stuck with me: You'll have a hard time determining short term movements of the market.
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