# When should we move our stock portfolio into recession mode? **URL:** \ **Category:** Great Debates\ **Created:** [February 26, 2020, 7:24pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572 "2020-02-26T19:24:58Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [February 29, 2020, 9:50am UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/41 "2020-02-29T09:50:02Z")
> [@](#): > > Psychology and emotional thinking are clearly powerful when one recognizes it’s suboptimal but still is governed by them. The most opportune time is now btw. Note that thinking that now is an especially opportune time to buy is itself … _Market timing!_ > [@Voyager](#): > > … are you familiar with the psychological factors, such as loss avoidance, that tend to cause us to make bad decisions? Everyone is subject to these to some extent, if you are to a greater extent (as I am) it might pay to get someone to manage it for you. Not because they are guaranteed to give you good returns, just that it makes it less likely for you to screw up. Yes. I read somewhere that if a mutual fund makes 10%, its typical customer will get only 8% — _because the customer has attempted to time his buys and sells of the fund!_ HOLD is a better strategy than BUY or SELL for amateur investors simply because _it means fewer decisions_. _All trades by an investing amateur are, on balance, **odds-on to be wrong!!** _ That’s why I own JNJ instead of the better-returning [LatestWhatever.com](http://LatestWhatever.com). _I can keep my eyes closed!_ Once every few years I check if the local 7-Eleven is still selling Tylenol. (And my coronary stent — manufactured by a JNJ subsidiary — does still seem to be working.) ---
**Author:** ![Lance\_Turbo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lance_turbo/32/6156_2.png) [@Lance\_Turbo](https://boards.straightdope.com/u/Lance_Turbo)\ **Post date:** [February 29, 2020, 4:35pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/42 "2020-02-29T16:35:36Z")
> [@Chad\_Sudan](#): > > So far, I have missed out on all the gains the market made in 2018 and 2019. What gains? The first day of trading in 2018 (Jan 2) the DJIA opened at 24,809.35. It dipped below that a couple times yesterday although it did close higher. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [February 29, 2020, 5:07pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/43 "2020-02-29T17:07:20Z")
Meanwhile the SPDR S&P 500 ETF Trust went from 281.90 at the beginning of 2018 to 321.73 at the beginning of 2020 (and now is at 296.24). Personally, I don’t invest in the Dow. ---
**Author:** ![Lance\_Turbo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lance_turbo/32/6156_2.png) [@Lance\_Turbo](https://boards.straightdope.com/u/Lance_Turbo)\ **Post date:** [February 29, 2020, 5:20pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/44 "2020-02-29T17:20:01Z")
> [@Dewey\_Finn](#): > > Meanwhile the SPDR S&P 500 ETF Trust went from 281.90 at the beginning of 2018 to 321.73 at the beginning of 2020 (and now is at 296.24). > > Personally, I don’t invest in the Dow. It hit a low 285.54 yesterday. That’s +1.3% from the start of 2018. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [February 29, 2020, 5:35pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/45 "2020-02-29T17:35:59Z")
> [@septimus](#): > > Note that thinking that now is an especially opportune time to buy is itself … _Market timing!_ Nope. Not at all. Not how the phrase market timing is commonly understood. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [February 29, 2020, 5:56pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/46 "2020-02-29T17:56:03Z")
Yes. Yes at all. “Commonly understood” by whom exactly? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [February 29, 2020, 6:58pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/47 "2020-02-29T18:58:36Z")
> [@septimus](#): > > Yes. I read somewhere that if a mutual fund makes 10%, its typical customer will get only 8% — _because the customer has attempted to time his buys and sells of the fund!_ HOLD is a better strategy than BUY or SELL for amateur investors simply because _it means fewer decisions_. _All trades by an investing amateur are, on balance, **odds-on to be wrong!!** _ > > That’s why I own JNJ instead of the better-returning [LatestWhatever.com](http://LatestWhatever.com). _I can keep my eyes closed!_ Once every few years I check if the local 7-Eleven is still selling Tylenol. (And my coronary stent — manufactured by a JNJ subsidiary — does still seem to be working.) No single stock is safe. When I was a kid Bell Bonds were listed right under government bonds in the NY Times since they were the most stable investment around. No longer. Index funds are good choices, for those with limited amounts of money, but when you have a lot you should diversify further into bonds and perhaps some foreign markets. I know someone who worked at IBM. He had most of his 401K in IBM stock, which used to be safe. He got laid off at the same time IBM stock tanked, so he was doubly screwed. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [February 29, 2020, 7:27pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/48 "2020-02-29T19:27:14Z")
> [@Voyager](#): > > (snip)Index funds are good choices, for those with limited amounts of money, but when you have a lot you should diversify further into bonds and perhaps some foreign markets.(snip) This is the complete opposite of rational investing. Your first investments should be in cash, almost zero reward but in FDIC insured safety. As you acquire more assets you can face more risk and can branch out into bonds, ideally bond funds. Low volatility but low reward. As you acquire even more assets you can start moving money into stock funds. If you have only a limited amount of money you don’t belong in the stock market. Never put money that you can’t afford to lose in equities. That’s probably why you’re so determined to time the market, you’ve got more in there than you can afford to lose. Any money you expect to spend in the next decade should be in either cash or bonds. When you have ten years worth of spending in those vehicles it’s time for index funds. ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [February 29, 2020, 7:28pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/49 "2020-02-29T19:28:22Z")
> [@septimus](#): > > Yes. Yes at all. “Commonly understood” by whom exactly? There are hundreds of books available at Amazon you can buy cheaply. Tell you what, find one proper source that defines market timing as you did. In the real world, unlike message boards words have somewhat consistent meanings. Here is one cite on market timing. > **[Market timing](https://en.wikipedia.org/wiki/Market_timing)** > > Market timing is the strategy of making buying or selling decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis. This is an investment strategy based on the outlook for an aggregate market rather than for a particular financial asset. > The efficient-market hypothesis is an assumption that asset prices reflect all available infor... My recommendation no one, aside from you considers to be market timing. As it’s not contingent upon anything other than you having money you can afford to invest. It doesn’t care what the market is doing. Thus it’s not trying to time anything. Anyways, Humpty Dumptyism while fun in the Pit and among the ATMB rulers is actually harmful when applied to real life investing. Would you seriously advise anyone in your family or friends that time in the market or buy and hold is identical to market timing? That’s real advice you’d give? ---
**Author:** ![octopus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/octopus/32/3716_2.png) [@octopus](https://boards.straightdope.com/u/octopus)\ **Post date:** [February 29, 2020, 7:30pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/50 "2020-02-29T19:30:52Z")
> [@Bill\_Door](#): > > This is the complete opposite of rational investing. Your first investments should be in cash, almost zero reward but in FDIC insured safety. As you acquire more assets you can face more risk and can branch out into bonds, ideally bond funds. Low volatility but low reward. As you acquire even more assets you can start moving money into stock funds. > > If you have only a limited amount of money you don’t belong in the stock market. Never put money that you can’t afford to lose in equities. That’s probably why you’re so determined to time the market, you’ve got more in there than you can afford to lose. Any money you expect to spend in the next decade should be in either cash or bonds. When you have ten years worth of spending in those vehicles it’s time for index funds. Inflation eats cash value. And you’d recommend 10 years of savings!! Before investing in a 401k, 403b, or equivalent? Why? ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [February 29, 2020, 7:43pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/51 "2020-02-29T19:43:23Z")
Re: market timing If the advice is, consistently, to buy today instead of tomorrow, then I agree that is not market timing. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [February 29, 2020, 7:48pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/52 "2020-02-29T19:48:53Z")
> [@octopus](#): > > Inflation eats cash value. And you’d recommend 10 years of savings!! Before investing in a 401k, 403b, or equivalent? Why? That’s now how I read initially it. The money I intend to spend in the next decade is being earned today and over the next decade. The money I’m putting into my 401k is money I intent to spend in 30 years. If I were retiring tomorrow, a lot more of it would be in cash and bonds than is reflected by my current allocation. But that last sentence is damning: > [@](#): > > When you have ten years worth of spending in those vehicles it’s time for index funds. Goes to show the value of free advice on message boards. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [February 29, 2020, 8:36pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/53 "2020-02-29T20:36:00Z")
> [@octopus](#): > > … Anyways, Humpty Dumptyism while fun in the Pit and among the ATMB rulers is actually harmful when applied to real life investing… What are we arguing about? Although wagers are no longer allowed here at SMDB, suppose hypothetically we were to fashion a bet on “who is right” here. I challenge you to construct and present **a very carefully written unambiguous sentence** which you think embodies a truth that discriminates between your view and mine; i.e. a sentence to which you would answer True and I would answer False (or vice versa). Note that I offered no opinion on whether Buy, Hold or Sell is the proper policy right now; my comment was about the meaning of “Market Timing” and how views on that timing might be applied right now. Maybe we’re in agreement, and are just in a semantic trap. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [February 29, 2020, 8:43pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/54 "2020-02-29T20:43:36Z")
> [@Voyager](#): > > No single stock is safe… > I know someone who worked at IBM. He had most of his 401K in IBM stock, which used to be safe. He got laid off at the same time IBM stock tanked, so he was doubly screwed. Who in the thread was recommending NOT to diversify? It certainly wasn’t anyone laying out a “safer” policy. And the principles of diversification mean that if your career success is dependent on the success of Industry X or Company X, them your stock portfolio should focus on Industries Y and Z for some Y≠X and Z≠X. This is in Chapter 1, I think. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [February 29, 2020, 10:39pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/55 "2020-02-29T22:39:50Z")
> [@octopus](#): > > Inflation eats cash value. And you’d recommend 10 years of savings!! Before investing in a 401k, 403b, or equivalent? Why? No, cash and bonds go in a 401k, and I’d recommend money that you don’t need for ten years, not ten years worth of savings go into stocks. If you’re steadily employed and have six months worth of spending (not income, but spending) in an emergency fund then start your investments. There are three kinds of money, short term, that you need in the next two years, medium term that you need in years three through ten, and long term that you don’t need for a decade. If you make more than you spend and are confident enough in your income you don’t need any more than the emergency fund to go 100% in a stock index fund. If you have to worry about periods of unemployment and having to tap your savings to make your monthly nut you need to have enough capital so you can weather a long recession without having to sell in a downturn. Hell, I’ve been through six recessions in the last 50 years and I never had to worry about having to sell my stocks for a pittance because I always waited it out. ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [February 29, 2020, 10:46pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/56 "2020-02-29T22:46:41Z")
I would say the chances of a recession are pretty high. We’re barely weeks into an outbreak that has barely made landfall in most major economies outside the United States, and we’ve already seen some pretty wild stock market rides. What the bears are predicting is industrial supply chain disruption. What they’re also going to start confronting as well is the reality that people are going to hunker down inside their homes to try and wait this disease out. And that means a major loss of consumption. So until health agencies can develop better testing and some vaccines, they’re going to struggle to gain the confidence of ordinary people, which means that a recession is inevitable - and I think we’ve not seen the worst of the corrections. What is less certain - and in my mind more ominous thanks to some of the idiots at the controls - is how governments are going to react, and what the consequences of _that_ will be. When the president of the United States claims that a global pandemic is a Democrat hoax, a conspiracy by his political opponents to bring him down, I think you already have your answer. Politicizing the response was a disaster for China, and it will be a disaster for the United States if this disease doesn’t somehow slow down on its own. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [February 29, 2020, 11:27pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/57 "2020-02-29T23:27:52Z")
stupid double post ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [February 29, 2020, 11:33pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/58 "2020-02-29T23:33:34Z")
I moved my IRA into cash last November. I missed a little on the upside, but saved a bundle in the coronavirus selloff. Nobody can time the market perfectly, but I had a feeling something like this was coming. Too much irrational exuberance. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [February 29, 2020, 11:50pm UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/59 "2020-02-29T23:50:33Z")
> [@Ruken](#): > > That’s now how I read initially it. The money I intend to spend in the next decade is being earned today and over the next decade. The money I’m putting into my 401k is money I intent to spend in 30 years. If I were retiring tomorrow, a lot more of it would be in cash and bonds than is reflected by my current allocation. > > But that last sentence is damning: > Goes to show the value of free advice on message boards. > [@Bill Door](#): > > Any money you expect to spend in the next decade should be in either cash or bonds. When you have ten years worth of spending in those vehicles it’s time for index funds. And I stand by that. Goes to show the value of reading the entire post. If you don’t expect to spend anything from those investments of course it can immediately go into stocks. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 9, 2020, 3:23am UTC](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572/60 "2020-03-09T03:23:18Z")
Dow futures implied open Monday down 1300 points. Oil plunged 30% to $30 a barrel. This looks like free fall people. > **[Oil plunges 24% for worst day since 1991, hits multi-year low after OPEC deal...](https://www.cnbc.com/2020/03/08/oil-plummets-30percent-as-opec-deal-failure-sparks-price-war-fears.html)** > > Oil prices plunged after OPEC's failure to strike a deal with its allies regarding production cuts caused Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, leading to fears of an all-out price war. [Previous page](https://boards.straightdope.com/t/when-should-we-move-our-stock-portfolio-into-recession-mode/848572.md?page=2)