First thanks for responding to a serious question with a serious answer. The thing that comes to mind first is that we are playing a different game than you. We dont have access to VC investments and the like so we do what we can as retail investors.
I take a call like you made in June seriously. It was like running into a room screaming fire. Im confused now by your comment that you always thought the real market disaster was going to occur after the vaccine was widely available. It was well accepted that was at least 1 year away. Then following up with if it doesnt come by end of next year it may not come at all. Thats a pretty different position then “Sell” and kinda incongruent to me
As a retail investor and someone deeply involved in RE, Ive seen how powerful the passage of time can be. In 07/08 most around here were saying we would never see bubble prices again in our lifetime locally. It was nearly unanimous that the coast was not immune and the infamous “Bugs Butterfly” call that eventually all areas would get decimated equally. I think I may have been the only one here to reject that call with the exception of Docteur. Things that seemed obvious to a lot of very bright people were proven very wrong.
Through my life Ive learned that not only is the passage of time of great value but that timing is the key to above market returns be it stocks or homes. Sometimes you get lucky and sometimes you get it right intentionally.
That brings us back to today. So yes valuations are high but selling early one can miss out on the bulk of the gains. Had I sold in early June I would have foregone nearly 70% of my YTD gains. Many of these gains have been locked in as they are in my momentum trading funds now sitting in cash again but ready for next opportunity
I think those marginal buyer/sellers you reference have a bigger impact on flavor of the day stocks than tried and true long term value/total return stocks. I dont think those marginal buyers have as much impact as you do. When prices drop strong hands come in just like they did when real estate plummeted with the bubble burst. Remember those blue chip homes along the coast? The ones so many were salivating they would pick up on the cheap? Most were not highly leveraged and few got liquidated as they were in strong hands to begin with.
In another year or two its hard to predict what the next macro trend could be and how our lives could be altered good or bad. Until then I’ll stick with what has served me well.
I beleive retail investors can manage risk by staying mostly away from the silliness. Thats why I dont beleive in a sell all risk assets call except in obvious extreme cases like Spring of 07. Back then I went all cash/fixed income with my non-RE assets. I stayed that way a couple years and started getting back in the markets late 2009 slowly and went all in during late 2010/early 2011 when I could see early signs the worst was behind us.
I dont hold much in the way of flavor of the day stocks. Most of my money (70%) is in hard assets (real estate) or old school blue chip dividend/value stocks. As long as they keep paying dividends at scale I dont care if prices drop as I reinvest at lower prices. Someday I’ll start taking the dividends as income but the stocks will mostly go to the kids someday. This is the formula I used managing my mother’s estate (i.e. parent gets the stable income off total return investments made for the kids).
The remaining is 20% in growth tech that I let run and 10% I actively trade based upon momentum. This 10% is in cash now waiting for the next correction or overshoot I can play.
As an insider you play your game and it works for you. Just the same some of us plays ours as retail investors and maybe its not quite the game you may have thought.
