Is it time to liquidate investments?

Gofirstclass

Well-Known Member
Apr 20, 2010
11,670
Tri Cities, WA
Boat Info
Boatless in WA
Engines
No motor
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?
 
I pulled the plug at the current bottom. I had to. I needed to have cash to survive if my business collapsed due to closures and such. I know the market has been up, but look at the facts. 26 million filed for unemployment the last five weeks. Food pantry lines are the soup kitchen lines of the 1930s. Airlines, hotels, restaurants, and non-essential retail have all been essentially shut down. Meat packing plants are being forced to close. Oil has collapsed. US is printing money. Countries around the globe are worse off. State Governors are hesitant to open up. People are scared chitless and even if allowed won’t be going full Monty for a while. Earnings are going to suffer. Some stocks will be going to zero. This is going to leave a mark.
 
I pulled the plug at the current bottom. I had to. I needed to have cash to survive if my business collapsed due to closures and such. I know the market has been up, but look at the facts. 26 million filed for unemployment the last five weeks. Food pantry lines are the soup kitchen lines of the 1930s. Airlines, hotels, restaurants, and non-essential retail have all been essentially shut down. Meat packing plants are being forced to close. Oil has collapsed. US is printing money. Countries around the globe are worse off. State Governors are hesitant to open up. People are scared chitless and even if allowed won’t be going full Monty for a while. Earnings are going to suffer. Some stocks will be going to zero. This is going to leave a mark.

There is another way to look at this. You could see this as a “buy” opportunity in general (for those who don’t need cash to sustain right now).

The worst is past us. The economy will come back, it always does. There are values in certain sectors.

Oil will level back. Consumption will increase this summer. Travel and leisure will slowly resume. Airlines will start flying again especially for business travelers.

And there should be an election in November and historically it provides a bounce.

We could come out of this.
 
One of my friends decided to move out of the market, but I’m not sure what to do. I’ve been trying to ignore the market swings but that solves nothing either. However, one thing I’m concerned about is the potential negative interest rates in the future.
 
So how did you guys end up in all cash in February? Did you just have this 6th sense that the market was going Tango Uniform? Unless you have to have the cash, I think a wholesale move to cash is not a good idea - for the most part any sales right now are just realizing losses. For me this is when you stick to the plan. Maybe make some adjustments, but no wholesale moves. I have started keeping a little more cash around - not selling investments for it, but building cash reserves with what I would normally invest.
 
There is a cost to selling and buying .
In 08 I took a deep breath and bought with every dime I had that wasn’t invested. Figured it didn’t matter as I was down bad. With the current turmoil it hasn’t ever went down enough
To show a loss. Close but no cigar. I’ll stick, sky is not falling yet. When I let go of some the DOW needs to be 30,000.
 
Its only a loss if you sell it for less than you paid. I sold some 6 year old positions and made 184%. Paid the taxes and moved on. Paid off my mortgage since the Trump tax cut did away with itemizing for me. No advantages for paying interest. I'm 59 and debt free retirement is a must in this day and age for me. If your younger stay in. 5 years or less start to reduce risk on your investments.
 
I was fortunate enough to move 50% of holdings into real estate last year, I bought a house, the rest is going to ride it out, as losses only occur when you SELL. I've got 5 years until retiring, so I'll wait.
 
There is another way to look at this. You could see this as a “buy” opportunity in general (for those who don’t need cash to sustain right now).

The worst is past us. The economy will come back, it always does. There are values in certain sectors.

Oil will level back. Consumption will increase this summer. Travel and leisure will slowly resume. Airlines will start flying again especially for business travelers.

And there should be an election in November and historically it provides a bounce.

We could come out of this.

unfortunately just look at the reopening controversies. We won’t be reopening anytime soon. The cure is worse than the disease
 
Some potential problems with cashing out.
1. You will likely get hit with Capitol gains and add to your tax burden next year.
2. Nobody can say for sure what will happen with inflation when this is all over. Personally, I fear that it will be significantly higher than in recent years. Cash doesn’t usually do well when inflation is high.
3. Trying to time the market is treading in treacherous waters. Statistically, average people get crushed trying to do it.

I’ve been investing for about 40 years. I’m an investor, not a trader.
I’m probably a bit more aggressive than most people my age because I have a pension, social security and no debt.
Made it through Black Monday in 1987, Tech bubble burst 20 years ago, and the 2008 financial crisis by hanging in.
By staying in and riding it out, I was always lucky enough to come out better on the other end.
I had some cash sitting on the sidelines from some fat trimming I did at the beginning of the year. This is normal for me to do. It amounted to about 8% of what I normally have invested.
I was waiting for a good opportunity to buy some high priced stuff I wanted to buy.
I pounced in the second week of March and picked up some good stocks at a nice discount. Some of them dropped a bit more afterwards, but all are up pretty nicely from where I bought them.
As it stands right now, today, my total equity investments are down 12% for the year. At the lows, I was down close to 30%.
All things considered, that’s not too shabby.
I’m fortunate in that my income has not been impacted by this and as I’m turning 66 in June, I won’t be impacted by RMD’s from my retirement accounts under the new rules for several more years.
So from where I sit, it’s easy for me to say to hold tight and ride it out.
I’ve been around long enough to know that one size doesn’t fit all, so if you need to pull out some cash to survive, then do it.
But if you must do it, explore all other options before you do it because odds are it will cost you more in the long run than you think.
 
Last edited:
I'm not an investment advisor but day trade in the market. One option (no pun intended) is to hedge buy selling calls or buying puts to protect against potential losses if your account allows that.

I'm about 9% cash since the end of January. I'm still looking for a re-entry point but won't go in too deep until I see a higher month break, meaning April has to break Mays highs (we may have done that but haven't looked that far out yet) or May break Aprils highs. I'm a short term trader rarely ever holding overnight but for my IRA I do want some longer term stuff.

I'm not 100% convinced we have found the bottom. One of 3 things will happen...1) we go up from here 2) we go down from here 3) we consolidate for awhile. I also look for FTFC (full timeframe continuity). When I see the monthly, weekly, and daily all up at the same time I will feel more comfortable. Many traders watch the 200SMA (simple moving average). Many will jump back in when we break back above that. I don't use it anymore so couldn't tell you where we are in relation to it. As with all indicators any SMA is a lagging indicator so I went away from those and follow price action and candlesticks but mny still use the lagging indicators.
 
I jumped completely out of the market in '08 at the perfect (mostly luck and a gut feeling). In 2009 I bought back most of the same equities I sold in '08 at a significant discount. Late last year I converted 25% of my portfolio to cash. I just don't feel compelled to get all the way out of the market like I did in 2008. We have enough cash to survive if everything blows up. And if I don't need it I will put it back into the market when there is more certainty. Fortunately my wife and I are in "essential" industries and still fully employed. And Taylor Made is still pimping me around on my windshield, so I can't go boating, which means no gas expense.
 
FullSizeRender.jpg
We have not changed a thing other than rebalancing to 40% equities and 60% fixed income. Been doing that gradually with dividend income as opposed to selling equities. Also recently purchased positions of ETF growth stocks and equal number of positions of value stocks of American companies. We got them at bargain prices. We are fully diversified owning companies from US, Asia and Europe. Year to date we are down 9.8% and down 2.8% from a year ago. So far portfolio income has held up after taking a brief hit in early March. As someone mentioned earlier, we are investors as opposed to market timers or day traders. Have seen this chaos before and no longer lose sleep over it. The market will be back. We just don't know when and so I am afraid to guess. Best strategy is to be properly diversified and keep a balance of stocks and fixed income instruments that gives you peace of mind.
 
Last edited:
We're retired, debt free, and I collect S.S. and she has a small pension. The rest of our income is from our investments that are in a well diversified portfolio with plenty of cash reserves. We are in the conservation and stay ahead of inflation category.
Going to cash would mean having to get back in later and
timing the market is something I'm not interested in trying to do, I'm to busy enjoying retirement to worry about it and not smart enough to pull it off anyway. Besides, if we really need to be in all cash, then it probably won't be worth much anyway. Maybe we could use it as a substitute for toilet paper.
 

Forum statistics

Threads
112,950
Messages
1,422,862
Members
60,932
Latest member
juliediane
Back
Top