Stock Market-When will it peak?

I am enjoying the rise but how much higher can it go? Sooner or later I would think the market would correct itself. I'm thinking it's time to quit while I am ahead.

Late 2018 sucked, or corrected, I see no reason why DOW 40K won't happen. With the gains we just enjoyed in 2019 even a 20% correction will still have us ahead.

It really is something to marvel at. Every day seems to add just a bit more.

I just put on some protection this morning. It reminds me of 1997-98. Getting scary. On the other hand....the trend is your friend

4 more years

Instead of selling, why not consider placing conditional or bracket orders that will sell automatically at a predetermined price or percentage stop loss orders that allows your investments to grow but protects you on the down side.

That could be a good alternative but I don't like setting stops that can be seen. If the stops are held on your broker's server that's one thing. But if they are live on the exchange or specialist's server or order book...........no thanks !

I have been putting trailing stops on some of my positions. I look at it as a way to protect most of my earnings, but I really don't know what the drawbacks to doing so are.
As was said in a post above, I'm getting a little nervous. I started with a fairly small amount in Scottrade and the amount in our accounts has grown gigantically(at least to me). I got in back in Feb of 2009 when everything was near the bottom so it was, in a large part, lucky timing.
The money I have somebody else managing has done much less than half as well.

If we decide to cut way back, where is there to put the money? Our best cds are paying 3 and 3.5% and we can't find anything like that now.
What to do?

To me it depends on your age if you have 10 years where you don't need it let it ride it will be ok. If your at the end of your horizon well pigs get fat and hogs will get slaughtered.

I have been thinking about the same issue - how do I get more defensive in preparation for the inevitable downturn (my crystal ball's broken so I don't know when it will happen). Since my biggest account is taxable, and is full of capital gains (thanks President Trump), I would lose 15% off the top to taxes if I sold to reallocate. I don't think the correction will be 10%, and certainly not 15-20% so I am content to ride out the gains and accept the correction.

I am getting more defensive in our IRAs since I can exchange in them without taxes.

Gryhkl:

Are you using STOPS or STOP LIMIT orders ? The downside of the stop limit is that the market could gap down considerably at the open and be below your limit. In that instance you won't get out. With a stop, your order becomes a market order if the stop is breached.

As far as where to put funds that you generate from sales, you might consider preferred stock. They pay pretty well as far as distributions and are pretty darn low Beta.....not volatile at all. At least it's a place to hide if things get crazy

Are you in mutuals or individual stocks ?

When the fed tries to normalize interest rates and tries to sell off their bonds again.

Thats a million dollar question. Stock market is a lot like a heart monitor....up and down is perfectly normal and healthy....

I think the Fed is going to have a very very difficult time doing that....ever again. They are running out of options

Almost exclusively mutual funds. I occasionally invest in individual stocks after significant research but after comparing my winners and losers over about 10 years of investing, I was significantly lagging S&P returns. I decided to let the experts pick my stocks and spread the risk. Plus I travel a lot with the military and don't always have access to the internet, I've seen guys lose a lot of money when the market went crazy and they couldn't respond.

I would still have the capital gains issues if I redeemed growth stocks for something more defensive like consumer staples.

True story on the capital gains........but it isn't always 'bad' to pay taxes. At least you have something to pay taxes ON.

A lot depends on your age too.

FWIW most mutual fund managers under-perform the benchmark too. Don't feel bad.

Your mutual fund family MAY offer a fund that will increase in value as the market drops. Maybe something based on VIX or SPY.

Nothing stopping you from buying some puts on SPY or calls on VIX if you have a brokerage account. It may be best though, to sit on your hands. Most things are an overreaction to some hokey headline.

True that - I feel like a fool complaining about making too much money in the markets and worrying about taxes. I'm only 52 and invested pretty aggressively and I don't panic about market corrections, time is on my side. I'll definitely research the VIX/SPY options, great suggestion.

Are you saying we are not in a free market environment?

The stock market will never "peak", it may correct but once it starts to go back up it will go through that peak.

That is until the Fed. runs out of options lol.

At my age pf 72 we are quite a bit higher in percentage of our investments in securities than into more fixed investments. We have established some guidelines as to when we should move assets into more secure investments. We are comfortable for ourselves now we need to determine how much we may want to pass on or to buy into other assets for the next generations.
Another issue that arises during these times of rapid growth is about 13 years ago when I retired the first time we started to shift funds based on a predetermined balance or percent of our investments in safer versus riskier investments. When the market rises as fast as this has since 2009 one needs to either change the percentage or shift investments frequently. Some places have an automatic re-balancing program, but we chose not to do that.
Yes it is fun while it lasts. We put a designated amount away for our 3 granddaughters for college and those funds are in more growth oriented investments and they have really grown since 2009. Two are 13 and one i 9 so they have benefited from the last 10 years of growth.

Bryce

As long as the concrete plants and stone yards are busy let it ride.

Not at all. I am saying that the fed and other central banks have run out of tools.

Normally during a recession the fed would drop rates to increase liquidity and try to drive up asset prices.

We are still almost at zero. There is not much left to reduce. They have already said they won't go negative even though other central banks have done so

They have essentially run out of flexibility.

I did the same for my granddaughters. 14.15 & 7. . My motivation was to help with college costs if they choose that, but also to introduce them at an early age, to the wonders of the market.

Sometime during Don jr's presidency. Twelve years from now.

One of the larger concerns I have is that most securities are quite over priced or valued. The average is getting close to 20 to 1 on earnings so there is a strong opportunity for correction even in a bull market. If and when we have an overall economic correction we don't know how large of a correction could be at hand. China's growth rate now of say 4-7% has caused a very serious slowdown when compared to 10 % plus. We are now edging down into the lower 2s or maybe upper 1 percentage points with goals of 3% or more. When will performing at roughly 60% of expectations cause a correction?

Bryce

What was it 2018 when the fed killed the market by raising interest rates? If they raise them again, the market will drop again. Just like the triple rate cut gets you 20% market gains pattern.

Why would we need rate cuts in a booming economy?

Because it is not booming. It is anemic.

Its all Trumps fault ..

Good luck trying to time any market.

I never try to time a market, I work on trying to time what is the best for our families position. One also needs to access how much risk one is willing to take and also what level of decline will one accept or at what point will one be able to live as planned.

Bryce

If trump loses stock market will crash

That is part of the financial planning we have done. My thoughts are that it will, but will rebound and it is best to be out while high to have more to put in when it starts back up. Currently looking at the tax implications of moving some longer held assets. With a max capital gain of 15% and here in WI a 60% exclusion of the 7% one needs to weigh the tax issue with the estimated potential loss. Probably never will be lower rates then we have now.

Bryce

Day before Dems take back control

We're good till the commies win again!

Someone always has to go political.

The market is up now, but will eventually go down. I stay away from stocks, after my investments in tech stocks went to zero in 2002 (I think it was). Yes, stocks can lose all their worth.

I now invest only in mutual funds, and don't look at my statements when the market drops. This strategy has worked well for me since then.

Jim

Hate to tell you this James but your mutual fund is invested in stocks. Don't get mad at me, I'm just yanking your chain lol.



Can't be everyone says it's booming(it is). But wait, we've cut rates to recession levels and started QE 4 although they say claim it's not(Wink, wink)

I am about 90% in good quality dividend paying stocks , etf's, reits. Holding about 10% cash. I look for steady dividend paying securities. Even if the market fluctuates , you will still get your income. Day to day noise is a buying opportunity, Then you put your cash to work. Keep a bit of dry powder. Have found the old sell in May and go away, sometimes works out. Good Luck old243

If someone here could tell when the market will peak, they don’t need to be skinning hides for extra money.

No one knows when the next correction will come, but plenty will claim that they predicted it after it comes. My father gave me a few investment rules to go by and one was that you never lose money when you take a profit. However, I really regret selling my Apple, my Amazon and my Navidia stock years ago. If you are going to need the money in less than ten years you should go to low risk investments. Until interest rates go back up I think the big investors will stick with stocks. They have to get a minimum return and they can't get it with bonds now. The Baby boomers are playing catchup because they didn't save enough for retirement.The two questions I worry about are when will climate change impact the economy and when will artificial intelligence eliminate tons of jobs. Long term we should probably all buy land in Canada cause climate change is going to push people from Florida and the East Coast up there in droves.

Exactly

I agree.

Donna and I did the same for all of our 11 grandchildren. There are no incentives for kids today to enjoy the vast array of gifts they get from every angle 12 months a year for very long... so mimi and papa opened custodial accounts with TDA that all can access at age 21. Not prior per our instructions. Statements get mailed to their moms and dads (our kids) and thus the 2-12 years olds now own pieces of companies. We went with an S&P fund so it'll just track with the markets, and we inject funds for b/day and Christmas gifts all together in one sum, once per year. We started it two years ago and it's been fun!

Mark

That's exactly what I do too Mark. No presents throughout the year. Just deposits into the brokerage accounts.

I made it age 25 before they can access it. That way college decisions should have been made and completed before they have access to the money. Their mom is the custodian but I have the trading permissions on the accounts

We are taking a serious look at funds or stocks that pay high dividends. We started taking more ownership in those about 13 years ago and now with the new tax bill and capital gains at 15% and dividends treated as ordinary income which for us some or all could be 22% and was 25% and our state with a 60% exclusion it takes some of the value out of dividends and allows more looking into more growth and gain. 10k of dividends could be taxed at 29% where 10k of capital gain would be 18.5% or less.

Bryce

Might be worth a look at MLP's Bryce. You can avoid the tax issue pretty much all together. Passes on to heirs with stepped up basis and none of the previous distributions taxable to heirs.

A little more cumbersome at tax time but nothing TurboTax can't handle

We give money to the 527 plans each year and every summer we take our four grandkids on a two week educational trip to see this beautiful country.

Yes I am very aware of the stepped up basis issue, but that does not change the dividend tax rate issue at all unless we change the vehicles. We are re-characterizing a specific amount of our deferred accounts each year and putting in Roths. We look at our potential taxes due and have been paying quarterly to help cover shifts we make. Again with potentially the lowest tax rates in my lifetime we are choosing to pay up front. Our heirs if there are funds left will be in higher brackets than we are currently.

Bryce

So you are talking about income taken out of a Roth or traditional RA ? I thought you were taking about a fully taxable account.

I know you are very conversant with tax issues ... Where I was going with my comment was that under the structure on an MLP the income received is a DISTRIBUTION..not a DIVIDEND and is therefore not taxed the way a dividend is. Reported on a K1 rather than 1099 DIV.

I agree we are likely to never see rates this low again

Impeachment can and will tank the market due to high sell off

No. The market knows that impeachment is a non-issue.

It might tank for some other reason, but not that