I have never thought about all-out selling during this. In fact I'm buying more with each dip. I feel that securities are a bargain right now. With select selling I'll also be taking advantage of tax loss harvesting for years to come.
I've made that mistake before.
If you have a healthy emergency fund in cash to cover your liabilities for 6 months (or even 1 year to be more conservative in this environment), what is the problem in throwing every bit of cash that comes your way (paycheck savings, ...) and you won't need for a few years, at the stock market as it goes down? Over decades the stock market has had an IRR or 8%+, and that IRR includes crashes like these.
No it doesn’t.
This is what I mean and what I do, by always allocating the same amount of savings per year, in good or bad times [1]. You can see how in 2008 such portfolio had a drawdown of more than -50%. Despite that, it performed well above the 8% IRR I mentioned.
Another interesting data point, by investing lump sums of money at the very peak of every market cycle, immediately followed by a massive crash [2]. I believe the IRR in this case is still above 7%, which is absolutely phenomenal considering the horrible investing timing.
If you don't agree, please tell me exactly why I am wrong and why you are right, so I might learn something. I come to HN to read HN-quality comments, not Reddit-quality content. Thank you.
[1] https://www.portfoliovisualizer.com/backtest-asset-class-all...
[2] https://awealthofcommonsense.com/2014/02/worlds-worst-market...
I don’t know any other investment which is completely passive that will statistically allow me to grow my capital over the long term. So yes, I will rely on 100 years of data I have, and to prevent Nikkei I try to diversify using a healthy international allocation. If you have a different investing vehicle to suggest, please let me know.
Land, seeds, livestock and ammo. If you're worried that the market might collapse so hard that it won't recover in your lifetime, then trading money for lasting goods while money still has value is the best course of action.
Personally, I'm not convinced it's going to get that bad, but I have friends who have gone down that route. They all prefer their new lives to their old ones.
When you sell a stock for less than you bought it (like if you sell something right now that you bought less than 3 years ago) you can subtract that from your capital gains taxes. This works even when you turn around an immediately buy something similar (but not the same, you'll have to wait a month to buy the same thing back).
There is a limit to the amount of tax losses you can claim for a given year, but you can claim the rest of your losses in the years to come.
I'm not sure if you'll actually come out ahead, since everything you buy today will have a lower cost basis and thus will increase your capital gains taxes in the future.
For now, wait and see if I just invoked Cunningham's Law. :)