Is a recession coming? Sell stocks? (2 Viewers)

[hdgeno]

I hope you have that in a TFSA (or at least a large portion of it), that way you don't need to worry about any taxes.

I don’t have it in a TFSA, probably something I should have done.

 

[hdgeno]

Similar moves here.

I made most of my plays in the last week of March. It has paid of mightily thus far. Looks like we got in around the same time frame... and the last few days have seen some unreal returns.

This week has been fantastic, especially the last three days!

 

[timinater]

I don’t have it in a TFSA, probably something I should have done.

I would definitely speak to an advisor on what to do about that, especially if you are considering selling. Once you sell (realize the gains) that will be income and taxed accordingly (capital gain, i think). Once you have maxed out your RRSP and TFSA, then you can start investing in taxable account.

Re: selling, I'd think about why you invested in the first place.

• Was it a hunch to buy the dip, ride the inevitable increase whenever that happened and make a quick buck? In that case - it's functionally gambling and you should quit while you're ahead, go buy the thing you've had your eye on and enjoy your good fortune.
• If you made the investment to start putting your dollars to work for you and your family's future, selling now would be counter to that goal. Sure you can cash out and net a profit, but the market is going to keep chugging right along with or without you. Buying back in is going to be more expensive in the future than it is today, barring a mass panic event like we just saw. Even then... This.

my $0.02.

 

[jcooper911]

If you have a 20 year time horizon, leave it in. If you need the money next year for a house payment or whatever, take it out.

If you are putting money you need for a house next year in the stock market, particularly a market with even the possibility to be as volatile as this one now, you are a certified idiot and I have a monorail to sell you and your township.

 

[hdgeno]

I would definitely speak to an advisor on what to do about that, especially if you are considering selling. Once you sell (realize the gains) that will be income and taxed accordingly (capital gain, i think). Once you have maxed out your RRSP and TFSA, then you can start investing in taxable account.

Re: selling, I'd think about why you invested in the first place.

• Was it a hunch to buy the dip, ride the inevitable increase whenever that happened and make a quick buck? In that case - it's functionally gambling and you should quit while you're ahead, go buy the thing you've had your eye on and enjoy your good fortune.
• If you made the investment to start putting your dollars to work for you and your family's future, selling now would be counter to that goal. Sure you can cash out and net a profit, but the market is going to keep chugging right along with or without you. Buying back in is going to be more expensive in the future than it is today, barring a mass panic event like we just saw. Even then... This.

my $0.02.

It was a hunch to buy the dip and make a few bucks. But then as I started learning more about the markets and thinking about putting money to work it became more about long term growth of savings which were doing nothing but sitting there. So a bit of both but more so #2 after two months of learning.

 

[ReallyGoodUsername]

Bought in right when it dipped below 2300, haven’t looked back since . I do a lot of financial valuations at work but nothing stock related so it was really great hearing from some more seasoned members here and made the moves a bit less nerve racking.

 

[BNM]

You're not up (or down) until you sell and realize the gain or loss.

Volatility. Hard to believe its over. But, with the USG monetizing corporate debt now...who knows. The Street loves good news and itself and will believe both until it gets kicked in the teeth. Caution needed.

 

[DrStrange]

Don't let anyone kid you. You are up and/or down in real time. If your account is +30% at close of business today, that is how you are doing. If the market plunges 50%, you have lost half of your money.

Have doubts? Let's do some thought exercises.

If I had the misfortune to own Enron stock and lost everything but still held the stock certificate, would it be worth the $20,000 I paid for it? I haven't sold it and realized the loss.

If I were playing poker and grew my $200 buy-in into $3,000, am I ahead? If I play another hand, am I only risking my $200 buy-in or my $3,000 stack? How about a bad night where your $800 buy-in is down to $50 - are you still "even" because you haven't cashed out?

What are my Bitcoins worth? I did my own mining, using the office network at night and the company's electricity. Does it even matter what the current price for a bitcoin is? Is my horde worth $0 because that is my cost and I haven't sold?

Your investments are always worth the current market price. If this is less than your investment, you have lost money. If it is more than your original investment, you have made money. "taking" your gains / losses has tax consequences but aside from taxes and fees, changing your stocks into cash or switching stocks or buying bonds etc. hasn't changed your net worth at all.

This is a terrible line of thinking because it will encourage you to hold onto securities that have become bad investments. "You haven't really lost money until you sell." Except you have lost money, exactly why you feel a bit sick to your stomach when you look at your account. Don't be "that guy" Make your investment decisions with a clear understanding of the situation.

DrStrange

 

[hdgeno]

Don't let anyone kid you. You are up and/or down in real time. If your account is +30% at close of business today, that is how you are doing. If the market plunges 50%, you have lost half of your money.

Have doubts? Let's do some thought exercises.

If I had the misfortune to own Enron stock and lost everything but still held the stock certificate, would it be worth the $20,000 I paid for it? I haven't sold it and realized the loss.

If I were playing poker and grew my $200 buy-in into $3,000, am I ahead? If I play another hand, am I only risking my $200 buy-in or my $3,000 stack? How about a bad night where your $800 buy-in is down to $50 - are you still "even" because you haven't cashed out?

What are my Bitcoins worth? I did my own mining, using the office network at night and the company's electricity. Does it even matter what the current price for a bitcoin is? Is my horde worth $0 because that is my cost and I haven't sold?

Your investments are always worth the current market price. If this is less than your investment, you have lost money. If it is more than your original investment, you have made money. "taking" your gains / losses has tax consequences but aside from taxes and fees, changing your stocks into cash or switching stocks or buying bonds etc. hasn't changed your net worth at all.

This is a terrible line of thinking because it will encourage you to hold onto securities that have become bad investments. "You haven't really lost money until you sell." Except you have lost money, exactly why you feel a bit sick to your stomach when you look at your account. Don't be "that guy" Make your investment decisions with a clear understanding of the situation.

DrStrange

Appreciate this post as well as the many others you’ve made in this thread. You seem to have a lot of knowledge when it comes to investing.

 

[BNM]

Don't let anyone kid you. You are up and/or down in real time. If your account is +30% at close of business today, that is how you are doing. If the market plunges 50%, you have lost half of your money.

Have doubts? Let's do some thought exercises.

If I had the misfortune to own Enron stock and lost everything but still held the stock certificate, would it be worth the $20,000 I paid for it? I haven't sold it and realized the loss.

If I were playing poker and grew my $200 buy-in into $3,000, am I ahead? If I play another hand, am I only risking my $200 buy-in or my $3,000 stack? How about a bad night where your $800 buy-in is down to $50 - are you still "even" because you haven't cashed out?

What are my Bitcoins worth? I did my own mining, using the office network at night and the company's electricity. Does it even matter what the current price for a bitcoin is? Is my horde worth $0 because that is my cost and I haven't sold?

Your investments are always worth the current market price. If this is less than your investment, you have lost money. If it is more than your original investment, you have made money. "taking" your gains / losses has tax consequences but aside from taxes and fees, changing your stocks into cash or switching stocks or buying bonds etc. hasn't changed your net worth at all.

This is a terrible line of thinking because it will encourage you to hold onto securities that have become bad investments. "You haven't really lost money until you sell." Except you have lost money, exactly why you feel a bit sick to your stomach when you look at your account. Don't be "that guy" Make your investment decisions with a clear understanding of the situation.

DrStrange

Doc, I am a bit mixed on your views here. You may be up or down in real time but you don't realize that until you sell. There are a lot of people like @hdengo who are up or down right now, on paper. That could change in a day or a week, so if they want to realize that then they need to act. What am I missing?

Of course your investments are always worth market price, and if you have to sell when the market is down or you buy into a company that busts out (Enron) or files (GM, United, etc.) then your paper is worth nothing, and holding the paper doesn't mean you're even, or ever will be. Just a bad investment choice. Everyone makes those, even The Oracle.

It seems like your last paragraph, in particular, only tracks if your investment was a poor one from the start. Exxon was down to low 60s in 2009. Was that a bad investment because it was down? It would have been if anyone who had purchased at a higher price had sold when it was at that low. But it was a fine company, at very good valuation, it was just down, and made a full recovery and swung to the upside, with a very solid dividend, for the next many years.

Maybe I'm missing your point.

 

[DrStrange]

Your cost basis and your gains / losses should not influence investment decisions, aside from tax considerations. Tax considerations can be consequential. Sell before a year and perhaps pay 22% - 24% in taxes, but hold for over a year and likely pay no tax at all. A married taxpayer is taxed at 0% for the first $78,000 in capital gains and at 15% there after until the gains reach $488,000.

it begs the question to ask what to do if an investor needs to 'realize their gains'. If one needs the cash, of course you sell. This is not so much an investment decision as it is a life decision. If you need the cash now, well it doesn't matter where the market is going.

People tend to let their bad decisions fester. Often they think holding on will be lead to better results in the future. Which might be correct - good companies go through rough patches and then recover better than ever.

Other people take their wins quickly, selling to lock in the profit. Think of them like a "hit and run" poker player. Again, this might be correct. There have been decades of a "choppy" market where the values don't stray far from the averages. Not been the case so much since 1980 for the market as a whole, but for sure there are sectors where the market went sideways for a year or more.

The point is, investors should make decisions based upon market conditions and future expectations. What was paid for the investments does not matter. Again, except for tax considerations. That being said, if someone needs the money it becomes a something other than an investment decision - still the cost basis matters not.

As for @hdgeno - - - if his funds were slated for a long term investment, then he should be asking himself about the future of the market and the stocks he holds. The last 40 years have been very good for investors. Buy and hold can be a pretty easy way to make big gains. You do have to pay more attention to individual stocks vs funds. Even blue chip stocks can devolve into turds. But the biggest wins are found in accounts with long holding periods.

On the other hand, perhaps he was purely speculating. Buy now, sell a bit higher and wait to buy again. That isn't a bad strategy in a recession as the market tends to be choppy and rotational.

Lastly, do not ignore dividend income. The S&P 500 pays 2% A 30 year treasury note pays 1.68% (as of 6/5/2020) Worth more than just icing on the cake I think.

DrStrange

 

[BNM]

Ah, okay, you're speaking very broadly. Got it. Yes, many factors to consider. Not an afternoon game.

 

[justsomedude]

You check your portfolio yet this morning @hdgeno??

 

[hdgeno]

You check your portfolio yet this morning @hdgeno??

I sure did lol, the markets have been very kind to me since I started!

 

[hdgeno]

So I sold all Boeing and Delta holdings last Friday at $208.03 and $34.35 respectively. Both of them seem to be falling down to levels this week where I’ll be a buyer again soon, try to ride another uptick.

I moved the majority of my investments to a TFSA this week, and the plan with that is to keep investing and growing that with stocks and bonds ETF’s. I did leave a portion in my personal account to play with and do some speculating. It’s kind of fun to play with this money, maybe because live poker here is dead.

 

[Eloe2000]

The bear woke up this morning... seemingly out of nowhere, with quite a roar.

 

[Darson]

Nice article: https://www.marketwatch.com/story/l...very-cent-2020-06-11?siteid=yhoof2&yptr=yahoo

 

[beyondtilt]

So I sold all Boeing and Delta holdings last Friday at $208.03 and $34.35 respectively. Both of them seem to be falling down to levels this week where I’ll be a buyer again soon, try to ride another uptick.

I moved the majority of my investments to a TFSA this week, and the plan with that is to keep investing and growing that with stocks and bonds ETF’s. I did leave a portion in my personal account to play with and do some speculating. It’s kind of fun to play with this money, maybe because live poker here is dead.

So buy the SDPM

 

[justsomedude]

So I sold all Boeing and Delta holdings last Friday at $208.03 and $34.35 respectively. Both of them seem to be falling down to levels this week where I’ll be a buyer again soon, try to ride another uptick.

I moved the majority of my investments to a TFSA this week, and the plan with that is to keep investing and growing that with stocks and bonds ETF’s. I did leave a portion in my personal account to play with and do some speculating. It’s kind of fun to play with this money, maybe because live poker here is dead.

If you're into the risky short term plays, check out Tellurian [TELL]. It's probably better as a long term LNG buy, but it's been insanely volatile the last few weeks, which has provided some profit taking opportunities. My brother in law told me about it, and we've both made some fair earnings off the last two peaks.

I've bought sold twice so far, once at $0.87 and sold at $1.40 in April... then recently had a DCA of $1.13 and then sold this week at $1.68. It's dropping back down again to where it could be a potential buy for me again.

But they're incredibly unstable right now, managing layoffs, carrying lots of debt, dealing with dilution, and require a few risky LNG contracts to go through to remain sustainable. Last week they were given a $0.10 price target by Stifel. But then a $5.25 target this week by Roth.

I'm not a stock broker or analyst, so don't listen to a damn word I say about stocks! Proceed with caution if you dive into that one... as it could easily go to $0.10 ...and keep an eye on it daily for drastic instability.

 

[hdgeno]

Nice article: https://www.marketwatch.com/story/l...very-cent-2020-06-11?siteid=yhoof2&yptr=yahoo

Seems like this article was aimed at me, you don't approve?

So buy the SDPM

So offer me a better price.

If you're into the risky short term plays, check out Tellurian [TELL]. It's probably better as a long term LNG buy, but it's been insanely volatile the last few weeks, which has provided some profit taking opportunities. My brother in law told me about it, and we've both made some fair earnings off the last two peaks.

I've bought sold twice so far, once at $0.87 and sold at $1.40 in April... then recently had a DCA of $1.13 and then sold this week at $1.68. It's dropping back down again to where it could be a potential buy for me again.

But they're incredibly unstable right now, managing layoffs, carrying lots of debt, dealing with dilution, and require a few risky LNG contracts to go through to remain sustainable. Last week they were given a $0.10 price target by Stifel. But then a $5.25 target this week by Roth.

I'm not a stock broker or analyst, so don't listen to a damn word I say about stocks! Proceed with caution if you dive into that one... as it could easily go to $0.10 ...and keep an eye on it daily for drastic instability.

I'll look it up, sounds like a fun little gamble with some potential upside.

 

[Darson]

Seems like this article was aimed at me, you don't approve?

Not that I don't approve; I was you a few years ago. Made a lot of money and then lost a lot of money because I didn't know what I was doing. I never played with money I couldn't afford to lose but that doesn't mean it didn't hurt!

 

[hdgeno]

Not that I don't approve; I was you a few years ago. Made a lot of money and then lost a lot of money because I didn't know what I was doing. I never played with money I couldn't afford to lose but that doesn't mean it didn't hurt!

The bulk of my investments now are in three ETF’s (VFV, VDU, VAB) in a 30-30-40 split. After a lot of reading this seems like safe investing. If that strategy looks wrong to you I would welcome another perspective. Those funds were recommended specifically for Canadian investors.

I have a little money that I’m kind of gambling with, but all of the companies there are still reputable names in Canada, so maybe not as much of a gamble as i made it sound.

All of that said, I am new at this and certainly won’t claim to know what I’m doing. I’m also not a very risky person when it comes to money, I’m mostly hoping to make a little more money than the cash was making in a savings account at the bank.

 

[mummel]

Look at IJH. Great little ETF.

 

[Darson]

The bulk of my investments now are in three ETF’s (VFV, VDU, VAB) in a 30-30-40 split. After a lot of reading this seems like safe investing. If that strategy looks wrong to you I would welcome another perspective. Those funds were recommended specifically for Canadian investors.

I won't claim to be an expert either but I get a lot of ideas from the bogleheads forums (named after Jack Bogle, the founder of Vanguard).

Right now, my retirement investment mix (long term) is 60% in a S&P500 index fund, 30% in a foreign markets index fund and 10% in a bond market index fund. They say that the % you have in bonds should reflect the time to retirement; for my age they're recommending 15% in bonds but this is a generic recommendation and does not consider if you're looking to retire early or how long you expect to live after retirement or if you have other more stable assets that you can rely on. And pay attention to the fees for any ETFs or mutual funds. Index trackers are usually in the range of 0.03% but there are some funds that charge a lot more - any money lost in fees is reducing your growth.

 

[hdgeno]

I won't claim to be an expert either but I get a lot of ideas from the bogleheads forums (named after Jack Bogle, the founder of Vanguard).

Right now, my retirement investment mix (long term) is 60% in a S&P500 index fund, 30% in a foreign markets index fund and 10% in a bond market index fund. They say that the % you have in bonds should reflect the time to retirement; for my age they're recommending 15% in bonds but this is a generic recommendation and does not consider if you're looking to retire early or how long you expect to live after retirement or if you have other more stable assets that you can rely on. And pay attention to the fees for any ETFs or mutual funds. Index trackers are usually in the range of 0.03% but there are some funds that charge a lot more - any money lost in fees is reducing your growth.

So according to this I probably have too much in bonds then, I’ll have to consider moving some of the money around a little then.

 

[justsomedude]

Looks like we're not the only ones riding these wild swings...

Barstool Sports’ Dave Portnoy Is Leading an Army of Day Traders

https://www.bloombergquint.com/mark...ave-portnoy-is-leading-an-army-of-day-traders

 

[DrStrange]

Please keep in mind bond funds have become much more risky as the nominal interest rate falls. A "tiny" change in rates might have been actually tiny in years gone by, but at the moment rates are quite low making any rate changes more significant.

My fixed income portfolio is somewhat more volatile than I had expected. This is not wholly a surprise, as I don't have anything highly rated - I'd guess the average is equivalent to a BBB rated bond. Investment grade but barely.

Better to think of a fixed income portfolio as a form of diversification that provides an on-going income stream. Something that will let you ride that income rather than selling into a bear market to cover expenses in retirement. There is a fine line to walk. Too much safety means not enough income. Too much income <risk> means high default risk. There is a "goldilocks" sort of sweet spot but that will vary from person to person.

I think people in their 50s and 60s need to be taking risk to upgrade their returns. That doesn't mean you can't have fixed income iinvestments, you just can't have 10 year treasuries that yield 0.70% / year. Well you can have them but you will be losing money to inflation and taxes each year - a 100% certain loser, but never a loss of the nominal investment.

By the way. The only place I pay for professional advice is on the fixed income side. There it seems to be worth the cost. I don't own a single share / unit of a bond fund. It is all in specific issues, both debt instruments and "preferred" stocks. < preferred means equity offerings designed to perform like a fixed income vs a traditional stock. Such things don't rise/fall with the stock market they move in tandem with the bond markets >

 

[TheWhat]

I would definitely speak to an advisor on what to do about that, especially if you are considering selling. Once you sell (realize the gains) that will be income and taxed accordingly (capital gain, i think). Once you have maxed out your RRSP and TFSA, then you can start investing in taxable account.

Only because it's Canadians to Canadians (Not sure what the US does) important to clarify you should be looking for an "Adviser" in Canada, "Advisors" up here have no obligation to their clients, and are effectively salespeople for the banks.

Advisers are registered and have a professional obligation to their clients.

 

[DrStrange]

I see all sorts of reports of "bottom fishing" action in the shares of bankrupt companies. This can not end well for the "investors". There is no reasonable path for an insolvent company to restore value to the old shareholders. If you want to invest in the future of the business, better to be buying the right part of the company's debt. This is not easily done by a small investor. Normally destressed debt is still going to be a five figure investment with sizable fees.

I guess someone could be working with the hope of finding a greater fool. The shares are often priced close to zero, offering a huge potential upside if a wave of suckers can be found. Just be aware that $0.00 per share is almost certain eventual outcome. The last "investor" standing takes the final loss.

The reason companies are filing bankruptcy is either debts are greater than equity and / or cash on hand is insufficient to pay the current liabilities. Neither of these underlying situations is affected by the price of the shares. The status of the company is moderated by the court, but is driven by the interests of the debtholders. Any future value derived by the company is earmarked to pay off the debt holders. The old shareholders rarely get anything.

It can be fun to play the market. I certainly did my share of rank speculation in my youth. I still have the burn scars to remind me "the stove is hot". It is not harmless entertainment. Be careful out there.

DrStrange

 

[Frogzilla]

I see all sorts of reports of "bottom fishing" action in the shares of bankrupt companies. This can not end well for the "investors". There is no reasonable path for an insolvent company to restore value to the old shareholders. If you want to invest in the future of the business, better to be buying the right part of the company's debt. This is not easily done by a small investor. Normally destressed debt is still going to be a five figure investment with sizable fees.

I guess someone could be working with the hope of finding a greater fool. The shares are often priced close to zero, offering a huge potential upside if a wave of suckers can be found. Just be aware that $0.00 per share is almost certain eventual outcome. The last "investor" standing takes the final loss.

The reason companies are filing bankruptcy is either debts are greater than equity and / or cash on hand is insufficient to pay the current liabilities. Neither of these underlying situations is affected by the price of the shares. The status of the company is moderated by the court, but is driven by the debtholders. Any future value derived by the company is earmarked to pay off the debt holders. The old shareholders rarely get anything.

It can be fun to play the market. I certainly did my share of rank speculation in my youth. I still have the burn scars to remind me "the stove is hot". It is not harmless entertainment. Be careful out there.

DrStrange

Hey we agree! The Hertz (HTZ) exception is gonna cost the fire sale crowd so much more in the long run. Buy companies that are not bankrupt