Art by Tim Robinson, Source: http://www.flickr.com/photos/myeye/3194307900/
I recently sold off a good chunk of my precious metals at the market peak, and with the recent market turmoil that doesn’t seem like it was such a bad decision.
However, I am in a bit of a dilemma: I have a downpayment to pay, and I have a choice to draw on mutual funds or the remainder of my precious metals investments. I wanted to keep some precious metal holdings, but in retrospect, selling off all of the precious metals might have been a better idea. Everything has been hammered recently, so no matter what I liquidate, I will be forced to do it at a loss compared to where we were a couple of weeks ago.
A few weeks ago when the Dow was at 11,000, I was considering selling off my funds and converting them to cash then and there, but I didn’t take action. As you know, complacency and inaction can feed off of each other, and then you are left with situations like this! As my good friend Mich said, it’s better to sell at a profit than to continue chasing the bubble and end up with a loss!
How about you? How is the recent market turmoil affecting you, and how are you capitalizing on it? I imagine that it’s a good opportunity to buy if you have cash on the side.
Hey Kevin,
If you can’t decide on which investment to sell, consider liquidating 50/50. That may be a solution for now so you can take care of your short term goal.
Selling into strength is really hard, but I have been doing a little myself lately.
Take Care, Mike
.-= Mike´s last blog ..5 Steps To Achieve Financial Independence – Step 4, Become An Expert In Something You Love Doing =-.
I created a mini vision board in my bathroom that my wife is sure to take down if we end up with guests this week. It says, “Dow 6000”
Kevin, I can’t tell you how badly I would love to see a serious, serious crash.
Every year for the past decade, I’ve prayed for lower stock prices, and sometimes, I get teased with short periods of decent prices. I love selling off bonds to buy cheap cheap stocks. When we get great market dumps, I feel like skipping everywhere, but I have to be sensitive. For retirees, it’s not so cool. For everyone else….they just don’t get it. Forcing this on people is is like trying to convert a Christian to the Islamic faith—-or a Buddhist to agnosticim….so I don’t bother.
Whatever you choose to do today, I think you can take some of the weight off your shoulders. There’s little you could do today that’s going to affect your bottom line 25 years from now. So go with your gut, relax, and see where the wind blows your decision. If all else fails, sit tightly and do nothing.
Studies have shown that the less active we are as investors (as an aggregate) the more money we make, overall.
.-= Andrew Hallam´s last blog ..Dancing with the Devil =-.
Guys, have you seen the markets today? It’s a veritable bloodbath! Andrew, I know you’re hopping with joy, but I really hate to sell at a “perceived” loss! 😉
If only it wasn’t for that downpayment… I have some cash which I’ve been accumulating since Jan, but it’s not quite enough. I did not take action when Dow was at 11,000, and that was one big mistake which I am now paying for. 🙂
I wonder what is the best way to proceed to contain this damage.
Hey Kevin,
I’d think long term. Try not making your decisions based on “where things were”. Perhaps you can try using a system of turning off the stock market and trying to figure things out based on intrinsic value. You have to be comfortable with figuring out what a good price to buy is, and then hold on to quality and don’t sell. Doing otherwise sucks you into the casino, where the house will win, and you’ll be sad. At least that’s my 2 cents. I can’t value commodities myself, so I don’t buy them. I think it’s best to operate within your circle of competence, as Buffett suggests. Oh, and don’t listen to market or economic news. Think for yourself and I think you’ll do really well.
.-= Andrew Hallam´s last blog ..Dancing with the Devil =-.
Andrew, what I’d really like to do is to start buying, with the cash that I have sitting around. Problem is, that cash cannot be touched. I wouldn’t even be thinking about it at all if not for the need for cash; in fact, I might be jumping for joy as well 😉
Time to start looking into a line of credit…
There’s little you could do today that’s going to affect your bottom line 25 years from now. So go with your gut, relax, and see where the wind blows your decision.”
Andrew brings up a really good point. I mean you really won’t be kicking yourself if you sell one or the other asset class. One of the things you may want to consider is to building an “non-emergency fund” emergency fund. HA? LOL…Or creating a more liquid account for things like a down payment on a home, car repairs/maintenance, etc.
It seems there is always some life event that has a way of popping up when we least expect it. If you haven’t checked into them yet, check out rewards checking accounts. They are paying between 2.5% – 4% interest currently. I like having these types of accounts when markets are as volatile as they are.
Mike
.-= Mike´s last blog ..5 Steps To Achieve Financial Independence, Step 5 Accelerate Income Build Personal Equity/Wealth =-.
Hey Mike,
I’m actually considering the “non-emergency fund” line of credit 😉 I DO have cash on the side, but it’s not enough for all of the downpayment. I only started accumulating money in earnest a bit more than one year ago, when I got hired as a permanent employee. Before that I was getting paid peanuts, relatively speaking.
I know you guys are right; it doesn’t really matter that much either way. I am just beating myself up because I know it was higher 3 weeks ago and I could have sold then instead of waiting. Call it… cognitive dissonance? In any case, at least I sold that small portion of PMs at the high!
I just see a downpayment as a waste of money. I could be doing so much better things with that cash… there were some good opportunities so far this week! Oh well, it’s never predictable. I have one friend that thinks it’s going to go down 30% (Andrew will love that), which means these days will seem like relative highs. It’s part of what makes it fun!
Hey Kevin,
I just sold a big chunk of XSB–short term Canadian bond fund so I can buy cheap stocks. As the markets fall, I’ll keep selling bonds and loading up on stocks. I have about 35% of my portfolio in bonds right now (a nice war chest) but if the DOW drops to 7000 points or below, I’m going to be 100% in equities. The long term risk will be so low at that point, and I look forward to the yields I’ll have on stock dividends, which, at that level, will far surpass what I was making with bonds. Cheers to a falling market. I hope it’s a good one—and a lengthy one.
.-= Andrew Hallam´s last blog ..24-05-10 – Harry Undresses the Professionals =-.
With investor worries over a slowing, aging Europe, an overheating China, and saber-rattling in Korea, you just might get your wish!