Is it time to liquidate investments?

[M Prod]

I don't know about liquidating right now. I have a rock star wealth manager, and he's advising to stay put for the moment. As it stands, my portfolio is down about 10% since this began. Now being in my mid-40's, I might be in a slightly different spot than some of you. If I were of retirement age, I might be looking at this differently.

I don't think the worst is past us. Not by a long shot. We have a very long road back, and the worst is yet to come IMO. While we are currently seeing a slight bounce back, I'm expecting the bottom to fall out once the full scope of the 2nd quarter financial reports come better into focus. It's going to be a blood bath. And that's barring a second wave of this virus thing.

Sorry for the doom and gloom, but that's my reality. I certainly hope I am wrong!

 

[Golfman25]

I don't know about liquidating right now. I have a rock star wealth manager, and he's advising to stay put for the moment. As it stands, my portfolio is down about 10% since this began. Now being in my mid-40's, I might be in a slightly different spot than some of you. If I were of retirement age, I might be looking at this differently.

I don't think the worst is past us. Not by a long shot. We have a very long road back, and the worst is yet to come IMO. While we are currently seeing a slight bounce back, I'm expecting the bottom to fall out once the full scope of the 2nd quarter financial reports come better into focus. It's going to be a blood bath. And that's barring a second wave of this virus thing.

Sorry for the doom and gloom, but that's my reality. I certainly hope I am wrong!

I think this has merit. The market is held up by earnings. Earnings will be in the crapper for a while. I heard today Goldman, I think, was predicting 5% gdp contraction this year.

 

[El Capitan]

This question is resolved differently for different folks. There’s no one right answer.

I’m not a trader. I invest. This downturn is temporary. Always is. I dollar cost average so I’m buying the same stuff others are dumping at bargain basement prices so my dollars buy more volume now.

What I sure as hell am gonna so is move to bullion. Right after I pickup my 9mm that is.

 

[JimT]

This pandemic has the possibility to cause a financial depression similar or worse than 1929. 60 days ago we thought it was a China problem. Now its a US and worldwide problem. There is no precedent for this in the modern era. Even if governments are overreacting and we recover in a few months I doubt there will be a V shaped recovery. It will likely be an L shaped recovery.
You can't compare this to prior recessions or the 2008 financial crisis. This is a disease crisis for which there is presently no treatment. The idea of flattening the curve does not eradicate the virus it just spreads it over a longer time frame.
Back in February I saw the market behaving irrationally. Apple had shut all of its stores in China and Foxcon closed its production facilities. Yet Apple was hitting all time highs.
Oil has never sold for negative numbers.
Retailers are dead in the water and may never come back.
Commercial real estate is going to take a huge hit. Many employers will adjust to have more people work from home as a structural change.
The current market valuations are pricing in a quick recovery this summer. There is no return on fixed income so traders are betting on the stock market as the only place to make money.
I hope I am wrong but I see a strong possibility of a market meltdown and significant social disruption. I sold at close to the height of the market. I am sitting on the sidelines watching. I am not worried about timing my reentry. I am more than happy to miss on some profits to sleep well at night knowing that my only worry is that there is still value to the full faith and credit of the US government.

 

[RBB]

I don't know about liquidating right now. I have a rock star wealth manager, and he's advising to stay put for the moment. As it stands, my portfolio is down about 10% since this began. Now being in my mid-40's, I might be in a slightly different spot than some of you. If I were of retirement age, I might be looking at this differently.

I don't think the worst is past us. Not by a long shot. We have a very long road back, and the worst is yet to come IMO. While we are currently seeing a slight bounce back, I'm expecting the bottom to fall out once the full scope of the 2nd quarter financial reports come better into focus. It's going to be a blood bath. And that's barring a second wave of this virus thing.

Sorry for the doom and gloom, but that's my reality. I certainly hope I am wrong!

Bernie was a rock star investment guy. personally I go with diversity in investments. Yep I am down and 63 years young. Haven’t had a pay check since 2012.
Know doubt people dying not a good thing. However our population is around
333,000,000 . U do the numbers on that.
Being the glass has never looked half empty to me makes me a optimist. I refuse to give in on what birthed this country and the odds wasn’t in our favor.

 

[ttmott]

The uncomfortable situation here is the federal gov injected a ton of cash into the economy with no product to back it up including disregarding the Fed which is ok as long as the gov vaporizes that cash when it returns as tax revenue over time. The issue is I doubt our elected representatives have enough sense to do this; nobody is going to purchase bonds now.
My big concern is the supply chain (small businesses) wavering on their customers and impacting production in the shareholder owned companies. I would be willing to defer dividends if they took that cash and shored up their suppliers; maybe they are already doing that.
Anyway you look at it, a cash position isn't where I'd want to be; I'll probably be looking to move more into the energy sector here in another month or so. Regardless, the direction made to me is to stay the course with little bulk movement right now and that's exactly what I doing....

 

[Woody]

Whoa, wait a minute....you guys have a boat AND money?

 

[rmlsll]

Any thoughts on moving 401k money to a roth ? Seems like a good time.

 

[JVM225]

The uncomfortable situation here is the federal gov injected a ton of cash into the economy with no product to back it up including disregarding the Fed which is ok as long as the gov vaporizes that cash when it returns as tax revenue over time. The issue is I doubt our elected representatives have enough sense to do this; nobody is going to purchase bonds now.
My big concern is the supply chain (small businesses) wavering on their customers and impacting production in the shareholder owned companies. I would be willing to defer dividends if they took that cash and shored up their suppliers; maybe they are already doing that.
Anyway you look at it, a cash position isn't where I'd want to be; I'll probably be looking to move more into the energy sector here in another month or so. Regardless, the direction made to me is to stay the course with little bulk movement right now and that's exactly what I doing....

There is a lot of cash sitting on the sidelines right now.
Interest rates are super low and likely to stay there for a long time. At some point, all that cash is going to have to come back in to the market and it will accelerate a rebound.
Most individual wealth is held by boomers in their retirement years who need income from investments. Many can’t afford to stick with cash.
My concern is that a short term false bubble will be created.
It may take a while yet to get back to the all time highs we saw earlier this year, but once that happens, I’m going to be taking a good hard look at trimming some fat and moving things around to position myself for the possibility of the next correction.
I’ll keep it in equities, but it will be a realignment.

 

[ttmott]

The uncomfortable situation here is the federal gov injected a ton of cash into the economy with no product to back it up including disregarding the Fed which is ok as long as the gov vaporizes that cash when it returns as tax revenue over time. The issue is I doubt our elected representatives have enough sense to do this; nobody is going to purchase bonds now.
My big concern is the supply chain (small businesses) wavering on their customers and impacting production in the shareholder owned companies. I would be willing to defer dividends if they took that cash and shored up their suppliers; maybe they are already doing that.
Anyway you look at it, a cash position isn't where I'd want to be; I'll probably be looking to move more into the energy sector here in another month or so. Regardless, the direction made to me is to stay the course with little bulk movement right now and that's exactly what I doing....

By the way - as an edit - it you are looking to liquidate investments now, you're a bit late....

 

[ttmott]

There is a lot of cash sitting on the sidelines right now.
Interest rates are super low and likely to stay there for a long time. At some point, all that cash is going to have to come back in to the market and it will accelerate a rebound.
Most individual wealth is held by boomers in their retirement years who need income from investments. Many can’t afford to stick with cash.
My concern is that a short term false bubble will be created.
It may take a while yet to get back to the all time highs we saw earlier this year, but once that happens, I’m going to be taking a good hard look at trimming some fat and moving things around to position myself for the possibility of the next correction.
I’ll keep it in equities, but it will be a realignment.

I agree - for me, however, it's all about dividends and not necessarily the price of stock. I have, however, completely moved away from the muni's.

 

[Gofirstclass]

Any thoughts on moving 401k money to a roth ? Seems like a good time.

I did that when I retired at the end of 2010. Bush the second had his Tax Reconciliation and Recovery Act that let an investor move his taxable investments to a Roth and spread the tax burden over 2 years.

I rolled my 401k to an IRA then immediately to a Roth. All of my investments are now tax free and no RMD's to fret over. Bush may not have been the sharpest knife in the drawer but he had some good people he listened to.

 

[Iprof]

Berkshire will be posting its 1st Quarter numbers this coming Saturday 8:00am and that is going to have an impact on what to expect. If Berkshire bought up shares in companies 3 weeks ago then it's a good indication they felt the market bottomed out but if they are still sitting on all those billions they are still waiting for it to bottom. I don't think we have seen the bottom yet. I would not doubt 17,000 by August. The next 3 weeks are going to be very nerve racking to say the least.

 

[DWABoat]

I agree - for me, however, it's all about dividends and not necessarily the price of stock. I have, however, completely moved away from the muni's.

Why did you get out of municipal bonds? Worried about bankrupt cities? Something else?
I have a significant portion in muni bonds, that’s why I’m asking.

 

[boatman37]

I think earnings is already baked in. Everyone knows earnings will be horrible year over year. Guidance might have an impact. I have seen companies post better than expected earnings but guidance was negative and the price went down. That said, I'm not convinced we have found a bottom yet but my trading style isn't about trying to guess a move. I go with what facts I have at the time.
We won't likely close this month higher than last month but a new month next week. If we break Aprils highs then I will start looking at lower time frames (weekly and daily) to look for longer term entries and will scale in and keep tight stops.

 

[ttmott]

Why did you get out of municipal bonds? Worried about bankrupt cities? Something else?
I have a significant portion in muni bonds, that’s why I’m asking.

I like municipal bonds because of the tax exempt status and inverse performance to the equity market. The more desirable muni's rounded my portfolio quite nicely as a buffer until about March this year when things started to clamp down on NY; not that I have any NYC bonds. Cumo was explicit that the Federal Gov needed to bail out New York City and mentioned it multiple times. It was then that a discussion with my investment firm alluded we should be cautious especially looking at the low yield for current bond issues. Further discussion revealed a number of the holdings were increasing in risk due to the political environment in those bond locations. We stepped away in most cases before maturity when we could simply based upon a risk assessment of the bond's stability which we assessed based upon the bond issuer's stability. No doubt the stroke of the pen at the state level (maybe even the municipal level) can redirect bond assets from their use basis or even default in "emergency" situations. This and I believe we are coming on to a bit of a bull market soon and the cash will take advantage of that situation. These have not been fleeting decisions as we have built a very stable predictable portfolio but I believe now a wise move.... Typically bonds are the place to be in a volatile equity market but seems things are quite different now. Here is an explanation better than I can articulate - https://www.blackrock.com/us/indivi...-commentary/municipal-market-update-en-us.pdf
If your bonds are older and stable with good yield you might decide differently...

 

[DWABoat]

I like municipal bonds because of the tax exempt status. The more desirable muni's rounded my portfolio quite nicely as a buffer until about March this year when things started to clamp down on NY; not that I have any NYC bonds. Cumo was explicit that the Federal Gov needed to bail out New York City and mentioned it multiple times. It was then that a discussion with my investment firm alluded we should be cautious especially looking at the low yield for current bond issues. Further discussion revealed a number of the holdings were increasing in risk due to the political environment in those bond locations. We stepped away in most cases before maturity when we could simply based upon a risk assessment of the bond's stability which we assessed based upon the bond issuer's stability. No doubt the stroke of the pen at the state level (maybe even the municipal level) can redirect bond assets from their use basis in "emergency" situations. This and I believe we are coming on to a bit of a bull market soon and the cash will take advantage of that situation. These have not been fleeting decisions as we have built a very stable predictable portfolio but I believe now a wise move.... Typically bonds are the place to be in a volatile equity market but seems things are quite different now. Here is an explanation better than I can articulate - https://www.blackrock.com/us/indivi...-commentary/municipal-market-update-en-us.pdf
If your bonds are older and stable with good yield you might decide differently...

I have a wide variety of muni’s such as airports, water districts, general obligation, etc spread over medium sized locations around the country.
All the talk about the Fed Govt not assisting states and cities suffering from lower sales and petroleum taxes has me worried about the revenue base for servicing the debt. I’m not sure what to do because most still have several years left and are paying nice rates. I have one maturing July 1 but the others are a year or more from maturing. I really like my muni’s, especially come April!

 

[ttmott]

I have a wide variety of muni’s such as airports, water districts, general obligation, etc spread over medium sized locations around the country.
All the talk about the Fed Govt not assisting states and cities suffering from lower sales and petroleum taxes has me worried about the revenue base for servicing the debt. I’m not sure what to do because most still have several years left and are paying nice rates. I have one maturing July 1 but the others are a year or more from maturing. I really like my muni’s, especially come April!

Yes, and I think the key is the ability to service the debt. No one is working, no project is meeting obligations, and municipal revenue is non existent - no real capability really exists to address the debt for some time to come; a bit too risky for me..

 

[sbw1]

Why did you get out of municipal bonds? Worried about bankrupt cities? Something else?
I have a significant portion in muni bonds, that’s why I’m asking.

I wondered as well. We own lots of munis but have never owned munis issued by Illinois, California, or New York. We focus on school systems, water systems, hospitals, and general revenue from solid states and systems that are stable and well run, all investment grade. Interestingly, my manager just purchased a small number of short term high yield bonds that history says will return double digits over 12-18 months. Little risk due to the term and small number of positions. His argument is based largely on location of the issuer. It is also important to think short term to mid term.

 

[Iprof]

It seems Berkshire Hathaway dumped all its airline stock as they feel it will be a 3 to 4 year recover for them. They also lost about 50 billion but they didn't spend any of the 137 billion they are sitting on. As Buffet said they are hunkering down as they didn't see anything worth buying.
I would take this to mean the market has not bottomed out yet. Here's a link to the quarterly report and a question and answer secession. Interesting read

https://www.cnbc.com/amp/2020/05/02/warren-buffett-berkshire-hathaway-annual-meeting-live-updates.html