Is it time to liquidate your investments?

[GFC]

I got a text this afternoon from a person who I feel is a fairly knowledgeable investor. He's made quite a pile of money by being prudent, investing wisely and paying close attention to what's going on in the world.

His text said that he's thinking seriously about liquidating his entire portfolio within the next month.

I'd be lying if I said that thought hadn't crossed my mind. I'm still fully invested but giving some thought to pulling the plug. I know all the tales about "you don't actually have losses until you liquidate" but given what's going on in the world, what are your thoughts? Is it time to pull the plug, go to all cash and sit on the sideliines?

What say you?Is

 

[Lou_tribal]

I got a text this afternoon from a person who I feel is a fairly knowledgeable investor. He's made quite a pile of money by being prudent, investing wisely and paying close attention to what's going on in the world.

His text said that he's thinking seriously about liquidating his entire portfolio within the next month.

I'd be lying if I said that thought hadn't crossed my mind. I'm still fully invested but giving some thought to pulling the plug. I know all the tales about "you don't actually have losses until you liquidate" but given what's going on in the world, what are your thoughts? Is it time to pull the plug, go to all cash and sit on the sideliines?

What say you?Is

If everything is going so bad that we will never recover, even going all cash will not help as your cash will not worth much anymore.

L

 

[Andy G]

Liquid my investments?- Covid beat me to it.

Still, when my time is finally up, I doubt that will be upper most in my mind.

 

[menzies]

Jesu Christo.

Good to see there are still some that we can make money off.

 

[Ken E.]

Only sell at this point if you want lock-in your losses. IMO.

 

[READY]

If anyone has a reasonably diversified portfolio and a longer term horizon then my vote would be stay the course. It should not be down more than 10-20% at this point. If you expect to need to spend the bulk of your portfolio in the next year or two (cannot think of a reason for this but...) then perhaps take the loss vs risk of further declines. I wish I knew which direction the market will take as we move to the next stage of this pandemic but I think there are good reasons to believe it might have a higher risk of more declines vs. Significant gains. But I am still planning to keep a portion of my retirement funds in a diversified stock/mutual fund portfolio. In fact I am dollar cost averaging some cash as a hedge in case it moves up. I don't think things are going to collapse and as stated if so holding cash in that case might not be of much value.

 

[GoneFarrell]

Cash could become the new TP!

 

[BandB]

Much depends on your investments. We have treasuries and municipal bonds and frankly neither the Federal government or the states and cities look very safe. Their value doesn't matter much to us as long as they're still paying as required. Having investments in the US Treasury or in the State of Florida doesn't sound all that good today, certainly a bit of a leap of faith.

As to equities, looking at stocks and mutual funds we're down 7.5% for the year. Not horrible. Nasdaq is down 4%, S&P 500 12%, Dow down 17%, Russell 2000 down 26%. Those numbers aren't bad enough to make me liquidate.

We never invested in cruise lines or airlines, but have a lot in airlines indirectly through investments like Berkshire Hathaway. Diversification is key although previously selling some weak stocks has helped. However, Amazon, Costco, Apple, Proctor and Gamble, Johnson and Johnson, Kroger, Logitech, Shopify, and Microsoft offset companies like VF, GM, 3M, Pfizer, Lowes, Home Depot, Bank of America, Travelers, Walgreens, and Disney. I don't even know whether to worry more about the ones doing poorly or the ones doing well.

If I was in my 60's or 70's I'd likely liquidate. I don't see the market performing well enough in the next three to five years to justify holding. We're younger so holding.

The other consideration is the tax consequences. Even with the market down, most have long term gains. However, I don't think the tax rate on capital gains will ever be lower and I don't think it will stay as low as it is. Historically it's lower than normal. We are considering liquidating just to pay the taxes under the current rates. If we suffer business losses this year, then that would make even more sense. This is a project we intend to evaluate next week and later in the year when we know more. One thing I would encourage people to do is liquidate any you can at 0% tax rates and consider any at 15%.

Then, what do you safely do with the money if you liquidate.

Today our worst investment is our businesses, mostly retail and manufacturing, which sells to retail. But then the last 6 years that's been our best investment and those are investments we won't consider selling.

This is something where the right answer is different for each person, but anyone should be asking and answering the question of themselves.

 

[MurrayM]

Steady Eddie low risk/low return guaranteed principal strategy.

Don't make enough to risk losing it right before retirement.

Never trusted the stock market...potential house of cards...mainly driven by greed or fear.

Heard a financial talking head on TV describing the stock market as not being the economy, rather, it's a place where people place bets on what's going to happen in the future, and hopefully, they can afford to be wrong.

 

[BandB]

Steady Eddie low risk/low return guaranteed principal strategy.

Don't make enough to risk losing it right before retirement.

Never trusted the stock market...potential house of cards...mainly driven by greed or fear.

Heard a financial talking head on TV describing the stock market as not being the economy, rather, it's a place where people place bets on what's going to happen in the future, and hopefully, they can afford to be wrong.

The stock market is much like a bookie. People bet on both sides and the house/bookie/brokerage/exchange is the only one guaranteed to make money. It's all play money. I find the valuing of companies based on mood of market rather than tangible results most difficult to accept. Yes, it's a place to invest and we do. Now, we don't invest in the real speculative stocks. No investment in Tesla, none in small pharmaceuticals banking on one future product, none in internet companies that have never made a dollar profit. I would not have invested in Microsoft when they started or Apple. I didn't invest in Amazon for a while. So, I've never been the one to invest $100 and get $10,000 back. Shopify is our only high flyer investment like that. The company's stock is worth $75 billion and they've never had a profit. We bought some on a whim as a customer in 2017, just a little for $61 a share. Today it's $643 a share and that is sheer insanity. It is not worth it. It's the only investment we've made like that and likely will never make another. To me, it's stock is worth perhaps $25 per share.

I understand investing in quality companies, those you know deliver a needed product, but even there it's not a sure thing. I thought GE was as safe as they come. We sold our GE stock a couple of years ago deciding we were wrong.

 

[Bacchus]

IMO it's not for everyone and like others said no one right answer for everyone.
To me short term plays are much more speculative than longer term. Just take a look at a short term plot of any stock or market vs a longer term plot.
In these times best to take advantage of any after tax acct losses by harvesting the loss and reinvesting later or in a similar holding. I was able to do that in 2001 and 2008 and enjoyed the tax benefit for several years.
Hind sight for many but when markets are up instead of being greedy that's the time to stash some cash for times like these. One must have the discipline to go counter to the herd. Easier said than done.
Portfolio theory is valuable and the only way to manage holdings. The speculative gambles should only be for a very small % of holdings reserved strictly for playing with and thought of as "entertainment" justvas one would entering a casino.
I have friends that will not put $0.01 in any stock, bond or mutual fund and only will hold in Fed guaranteed accts. Not for me but OK for them.

 

[FF]

"If everything is going so bad that we will never recover, even going all cash will not help as your cash will not worth much anymore."

Depends , It can go either way.

The gov spends and prays for inflation to destroy the massive debts they created .


Folks know how to handle inflation and the govs usually stay in power if the inflation only requires one currency recall, $1,000 old dollars is one new dollar.

Its when the million dollar bills wont buy a tank of gas it becomes difficult. The ez way out for the gov is cancel all cash , any and all "money" will be on your cell phone.

The big fear for gov is DEFLATION , actual money becoming more valuable , gas at 50cents or 10 cents and folks with there assets under the bed.
This destroys the velocity of money as folks wait for prices to continue down before making purchases.

The taxes and interest required to float the remaining debt and obligations becomes too much of a burden on citizens and the revolution is ON!


Cash not credit become King again.

 

[O C Diver]

If you invest for the long term across the sectors and limit your exposure in any one stock, you can do well. You need to follow what's happening in the world, country, market, and stocks you're invested in, or pay a company to do it for you. The time to liquidate was back in late January; the time to reinvest was around March 23rd.

Always keep enough in money market to survive atleast a year. I keep much more as buying opportunities like March 23rd are thankfully few and far between.

Ted

 

[Mark P]

Investing is very much like cruising. If you started a long time ago, went steady, and slow, watched the weather, you should fine if you have to drop anchor for awhile.

 

[Woodland Hills]

We cashed out 6 weeks ago, now we just own dollar bills in FDIC insured accounts in several national banks to stay under insurance limits. We took a small hit from our peak, but under 5%. Now we are going to sit and wait to see what happens, we are both 67 and in good health and debt free. No mortgage or boat loan, no car loans, just a couple of storage rooms and our slip fees (under 1k/mo).

Honestly I think the liquidate train has left the station. As previous poster said, you will just lock in your losses.

 

[caltexflanc]

Depends on your investment horizon. We didn't sell any stocks in the first two decades of this century unless it was to move that money into a better position (usually an index fund). My broker used to say "there are a lot of day traders, you, on the other hand, are a decade trader." There are stocks we've owned for 40 years.

This past year I became the trustee for a couple of trusts, among the beneficiaries are the now-adult children of my late brother. At some point I am obliged to make a complete distribution, but I have a lot of leeway. Last week I decided it was time to start that. The trust that owns stocks had a fairly diverse portfolio, under the care of a good broker. Fortunately, the major holding is Amazon, so overall it has done well so far this year. I have liquidated everything but the AMZN and will slowly start unwinding that. The outlook is just too blurry. I have advised my niece and nephew in particular (they are investment neophytes) to take the money and put it in an S&P 500 index fund and ignore it for the next 20 or 30 years.

Our investment horizon is now somewhat shorter, so we're taking our cut in cash to fund some projects and make some donations that we very much want to do. It allows us to leave our core portfolio alone for the next 15 or 20 years.

 

[sunchaser]

A looming disaster awaits for a variety of public pension funds for millions of current and retired workers. With state and local tax receipts plummeting and many pension funds on the edge before the pandemic the plight for many is quickly deepening.

Already states are begging Wahington for bailouts with bankruptcies the possible only alternative. Stay at home orders with an assured across the board private sector downturn has resulted in the perfect economic storm.

Ouch

 

[O C Diver]

A looming disaster awaits for a variety of public pension funds for millions of current and retired workers. With state and local tax receipts plummeting and many pension funds on the edge before the pandemic the plight for many is quickly deepening.

Already states are begging Wahington for bailouts with bankruptcies the possible only alternative. Stay at home orders with an assured across the board private sector downturn has resulted in the perfect economic storm.

Ouch

Lots of politicians giving away golden pensions to government employees in exchange for votes. The politicians hoping to be out of office when the bubble burst.

Are the public pension funds guaranteed to some level by the federal government if states declare bankruptcy?

Ted

 

[Rebel112r]

Liquidated all but 1 holding out of 10 mid-Jan till the end of Feb. Sent the Feds their share the end of March. I think it is time to cautiously begin to buy back. I have started to re-enter the markets, hoping to be on the train before it leaves the station, hopefully not backing out. Only a small timer in the markets, but have been dabbling since the early 70’s

 

[MYTraveler]

Unfortunately, most of my investments are not liquid (commercial real estate, primarily industrial), but I would be afraid to hold cash long term. Nasty inflation is almost inevitable and assets with intrinsic value acquired at or below replacement cost seem to me to be the best long term hold. (And given the price performance of ProLogis stock, the market seems to agree.) I did liquidate my 401(k) equities when the dow was still above 27000, and bought back 35% between 19000 and 21000. A few friends had been shifting out of equities and into "quality" long term debt. It may work out, if the issuers can continue to pay, but the liquidation value has fallen precipitously -- they are not liquidating.

 

[Bacchus]

Liquidated all but 1 holding out of 10 mid-Jan till the end of Feb. Sent the Feds their share the end of March. I think it is time to cautiously begin to buy back. I have started to re-enter the markets, hoping to be on the train before it leaves the station, hopefully not backing out. Only a small timer in the markets, but have been dabbling since the early 70’s

IMO timing getting out is frequently easier than when to get back in... and timing is everything.

 

[caltexflanc]

IMO timing getting out is frequently easier than when to get back in... and timing is everything.

Take a look at a chart of the S&P 500 over a decade or two or three. Timing doesn't mean much in the long haul. Look up Warren Buffet's bet with some hedge fund guys as well back, in 2007.

Another Buffet favorite of mine was when someone asked him when was the best time to sell the stock of a good company. His reply was "Never".

I always get a kick out of internet postings describing perfect timed trades a few months after the fact.

 

[MYTraveler]

IMO timing getting out is frequently easier than when to get back in... and timing is everything.

My approach has worked well through the last several recessions for the index funds (I won't buy managed funds) in my 401k, and for individual stocks I own outside of it. First, I abandon any hope of buying at the bottom or selling at the top. Instead, when a significant change occurs (massive Wuhan virus deaths in Italy, a pro-business president after 8 years of the opposite, the housing bubble bursting in 2007 - long before Lehman failed), I buy or sell accordingly. Not nearly as profitable as hitting the tops and bottoms, but much more profitable than staying in (or out, which I would not consider) at all times.

 

[O C Diver]

I always get a kick out of internet postings describing perfect timed trades a few months after the fact.

It's less about timing and more about using limit orders. Figure out at what price the stock is a really good buy. On some I'll have 2 or 3 limit orders at different prices. Sometimes mine hit sometimes they're near misses. The orders are free, you just need to have the cash in the account incase they hit. If multiple orders hit, you can always sell the high cost shares when the stock goes back above the strike price and after 30 days. The hard part is being patient.

Ted

 

[BandB]

Take a look at a chart of the S&P 500 over a decade or two or three. Timing doesn't mean much in the long haul. Look up Warren Buffet's bet with some hedge fund guys as well back, in 2007.

Another Buffet favorite of mine was when someone asked him when was the best time to sell the stock of a good company. His reply was "Never".

I always get a kick out of internet postings describing perfect timed trades a few months after the fact.

My thoughts are consistent with Buffett's in general. A lot of attention on Berkshire's upcoming meeting. Now, BH has lost 13% the last 12 months but it's very much a buy and hold type entity. The belief is that even with all they have to invest, they're remaining cautious at this point.

As far as short term strategies, I'm not willing to work hard enough to learn and do short term trading. That's not an area I'm expert in. I understand buying and holding a good company. i don't understand buying futures or options and selling next week or filling the sell order or holding for only three days. And, like gambling, there are winners and losers in that. I always figured I'm an amateur in a world of professionals, I'm the loser. Vegas poker players would call me a fish.

My wife and I play a little poker. Game with winners and losers and guarantee to the house. We never play at a table that is majority professionals. We will play with one or two pros at a table full of amateurs. Inebriated amateurs are even better. Then those who are willing to lose big money just to say they played with famous pros.

 

[menzies]

You know I've never seen posts on any forums from those who have lost their shirts and what they did to cause it.

Strange.

 

[O C Diver]

You know I've never seen posts on any forums from those who have lost their shirts and what they did to cause it.

Strange.

Why?

You don't see most of the people on this forum owning up to bad decisions or how they sunk their boat.

Ted

 

[BandB]

You know I've never seen posts on any forums from those who have lost their shirts and what they did to cause it.

Strange.

Wifey B: Oh, I lose my shirt easily, but in the way you're talking about we've sure lost a lot the last couple of months. How? Investing in retail and in manufacturing and selling in retail.

No regrets though. We'll pick up the pieces as the crisis passes and build back to where we were. Not going to let it beat us down but going to come out aggressively.

 

[BandB]

Why?

You don't see most of the people on this forum owning up to bad decisions or how they sunk their boat.

Ted

Wifey B: Haven't sunk a boat yet.

How about ordering a new build right before Covid 19 hit hard? Does that count? Ordering from an Italian builder, even worse.

 

[BandB]

Wifey B: Oh, I lose my shirt easily, but in the way you're talking about we've sure lost a lot the last couple of months. How? Investing in retail and in manufacturing and selling in retail.

No regrets though. We'll pick up the pieces as the crisis passes and build back to where we were. Not going to let it beat us down but going to come out aggressively.

Yes, you want a picture of investing in retail one year ago.

Macy's $24.50 Now $5.02
JC Penney $1.36 Now $0.24
Gap $26.03 Now $6.90
Sears $0.69 Now $0.14
L Brands $25.90 Now $10.31
Ascena $23.20 (Hit $29.20 after) Now $1.13

Fortunately our stores haven't lost that much value, at least not in our minds. So, glad we invested in ours and not in theirs and glad we're not public and don't have to make SEC disclosures of how bad things are.