We did all the cipherin and figurin and had what we needed to trade loaded and ready to go so it was a lot of work but it would be fine if the work were done for nothing and the market goes higher from here.
I am not worried about not getting the trade done Friday because our objective is to avoid the full brunt of a large decline. Theoretically, if it stayed one point below its upward sloping 200 DMA forever then there would never be a large decline to be avoided. More realistically the SPX will not open down 20% on Monday morning so we will execute our strategy if and when needed as best as we can.
10 comments:
Do you ever consider the lost dividends when you're out of the equity markets? cash has a negative real return.
Is your strategy of avoiding big down moves is purely psychological; fulfulling the need to do something.
Based on clients' reaction in late 2008 and early 2009 and the panic in comments on the blog from non-clients, no it is not simply the need to do something.
Are you saying would would want to endure a 30% decline to pick up a 3% or 4% dividend?
Yes. Yhe eight wonder of the world is compounding.
I would also avoid a capital gains tax hit too. I would rather wait out the decline than hand money over to the government.
I believe over the long run equities will increase in value due to inflation and expansion of the economy and that a 30% drop should be nothing to get excited about.
I favour buying at low prices.
so 8:38, you do what is best for you, I do what is best for me and anyone else should do what is best for them
Roger,
Thanks again for explaining your thinking and your process in a clear and open manner. It is appreciated.
You are only deferring the taxes, not avoiding them.
Cap gains taxes are ridiculously low -- unsustainably so. Anyone who complains about 15% long-term cap gains tax is clearly living in fantasy land.
Income is taxable -- it is the price you pay for living in this great country. The stupid remarks made about taxes is laughable.
Not complaining about the tax rate, just avoiding unnecessary drag on portfolio performance.
If I am stupid regarding my view on taxes, I am in good company; John Bogle among them.
Problem with getting out of equity market is that you have to know when to get back in. Research has show that after taxes, using 200 dma decreases long term performance.
I am deferring taxes in my lifetime. My heirs get a step up basis. No taxes paid at all. That is the law.
I served our country in the military, I know what the price is for living in this great country. Make sure you thank a vet sometime and try walking in their shoes. Some make more than financial sacrifices.
"research show". "John Bogle said"
Ok enough said.
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Thanks for the military service. No thanks on the "-30% because that doesn't matter" talk.
Our DG friends who hold at any cost are masters of myopic thinking.
Times change, and DG has a place in wealth management, but it is not the Supreme Being on the altar - not as our country reckons on what to tax so Sanata Claus government can dole out even more free stuff.
Accountants with tax shelters are going to assume a prominent role, as they did in the 1950s to mid80s. More so than stock pickers - and of equal or greater importance than dividend hounds, which are likely to be taxed out the ying yang.
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