When do you “time the market?”

So I am not a big fan of market timing – where you try to predict where the market is going to go, and make investment decisions based on that. I am more of a “buy and hold” kinda guy, who determines his allocation of investments, and then sticks with hit, rebalancing as needed. This held me “in good stead” during the 2008 and 2020 “crashes” where I just left the money in place, and waited (in some cases over a year) for it to build back up.

In March 2020, the market dropped down, and from that low of March 17th, it has doubled since then. I didn’t lose any money, because I never sold. I’ve also talked to you about my concern of the market, especially the S&P 500, being overpriced when compared to historical P/E ratios and other metrics. I recently adjusted my allocation, due to these concerns. Still, the majority of my investment career, since the dot.com crash, has been focused on long term investing.

But what happens when you have events in your life that demand a short term view on your investments? Due to Covid, my company has instituted a vaccine mandate (before the government even mandated it) – everyone has to be vaccinated by Oct 1st. While I am not an anti-vaxer (I got the Shingles vaccine this year in March, and just got my tetanus booster) I do have concerns with the Pfizer, Moderna and J&J vaccines, based on my analysis.

I’m looking at taking the Novavax vaccine once it becomes available in the US (4th Qtr?). However, that doesn’t look like it will be done in time for my company mandate, so it appears that I may be let go in early 4th Qtr 2021. Since I am FI, it doesn’t really get me too anxious.

However, I do have a significant portion of investments in a company 401K and Deferred account. The 401K I can let sit (or just transfer over to my IRAs) and that would still match my “buy and hold’ methodology. Even if it dropped right before I left, by transferring it to my IRA and letting it sit there for a couple of years, it would move back up.

However, the Deferred money would be paid out immediately upon termination of employment. The assets would be sold, and it would be a taxable event. Since I am looking at using this money for the first couple of years of retirement, I am concerned about it dropping suddenly, right as I planned to use it.

Several issues have me concerned right now:

  • We are heading into October, and October is typically not a good month for the market (see crashes in 1929, 1987, etc.)
  • There is a lot of negative news coming out of China right now (Evergrande, bank issues, etc.) that might cause the market to hiccup
  • Supply chain issues continue to affect companies and their Black Friday sales
  • Covid continues to be a net drain on the world, with its impact still to be figured out

So in this case, I have chosen to “time the market” with this deferred account. My typical allocation was 25% S&P500, 25% International, 25% Bonds, 25% Small Cap. I’ve now gone to 100% cash with it, and I’ll probably stick with that till November, or until I get let go by my company.

We will see how that works out!

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Mr. 39 Months

2 thoughts on “When do you “time the market?””

    1. Yep. My bet is that it is the wrong move (holding this much in cash) but I just can’t “sleep at night” with that account still in the market.

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