Fear wins again!
The last while has been pretty brutal for me too. In fact, I just sold my all-stock index funds and will put the proceeds into (probably) a short-term treasuries. Here's my thinking:
- At this point in my life (I'm 69) it's more important to not lose a lot of money rather than maximize returns. My answer to the question "how much is enough" is "I have enough, I won't need the anxiety".
- I have enough to see me through the rest of my and my wife's lives, pay for any long-term care and our funerals, and still have enough left over for our daughter to inherit, who doesn't need it anyway.
- A short-term treasury fund is still liquid, if/when I think things are more stabile, I can change my mind. NOTE: it'll probably be at least 6 months before I would consider changing, more likely a year or two. Or maybe forever.
- Something like Vanguard's "you're already retired" funds (VTINX for instance) are built around the assumption that these are normal times. IMO, these are NOT normal times so this option has more exposure to trade wars than I want to deal with for the next while.
- The trade wars are worrying. China can go mano-a-mano with the US and politicians there have the advantage of being able to weather more popular discontent than politicians in the US, the world economy be damned. If no compromise is reached, it could get ugly.
- Assuming that the trade war, particularly with China goes to the mat, the effects on the world economy will be "interesting". As in "may your life be long and interesting". A world-wide recession is certainly possible in that case.
- Assuming the trade wars just evaporate I doubt that things can go back to status quo ante bellum. One response of other countries to recent events could be to opt to become less reliant on the US. Whether that will happen or not is anybody's guess, but it seems more likely that it did a year ago. I'm not wise enough to predict what effect that will have on the US stock market, nor non-US stocks so I'll wait on the sidelines.
- I do have some sympathy with reshoring manufacturing, but that doesn't happen overnight. It takes what, 3-5 years to, say, build a factory? If that's the way things go, sitting on the sidelines has some attraction. It's taken us 30+ years to outsource manufacturing, getting it back won't happen in 6 months.
- I suppose the short-form is that I just see more potential downsides than upsides in in the limits of my crystal ball's vision, so it's more comfortable for me to sit on the sidelines.
- I am keeping my individual biotech stocks just to see if they can recover, eventually... Hey! They were up yesterday, I'm sure that will continue! (yeah, right). Here's where I was at least prudent enough to only invest as much as I could afford to lose in individual stock picks...
- All this IMHO of course. I could be totally wrong, witness me getting out of IMMU because I feared litigation would take forever to resolve, only to have it all resolved with startling speed. The net result was that after the dust settled, I had 2/3 of the shares I'd sold.
Anyway, we'll see how it all works out. In any case I won't miss any meals. |
