# To invest or to wait out???



## miass (Oct 30, 2013)

Hello. I typically re-balance and add to my RRSP in November, my birthday month. I stick to my allocation strategy of CAN – 25%, US – 25%, INT – 25%, Fixed – 25%. And have been pretty disciplined about it. However, currently, both CAD and US stock markets are at their highs. Should I go ahead and re-balance/invest (apprx 30K sitting in cash now)? Or should I instead wait and see awhile, as it feels like another correction might be coming? Appreciate the advice!


----------



## daddybigbucks (Jan 30, 2011)

I asked the exact same question to my magic 8 ball and it said "better not tell you now"
Not sure what that means, but patience is a virtue.


----------



## jcgd (Oct 30, 2011)

If this is what you've done for years, with similar amounts of money then yes, I would continue like normal this year. If this $30k is an abnormally large amount of money and you would normally invest less each year then I would invest what you normally would and come up with a plan to invest the remainder.


----------



## brad (May 22, 2009)

Generally the best time to invest is always "now." Some people will advise you to break up a sum like your $30K and invest it in smaller chunks over time to take advantage of dollar cost averaging. But studies show that you're better off investing the lump sum up front. See https://pressroom.vanguard.com/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf for example. 

The other point is along the lines of what daddybigbucks says up above, which is "nobody can predict the future." Everyone's saying that because markets are at all-time highs, they have nowhere to go from here but down. They could be wrong, and if they're wrong you'll be kicking yourself for not having gotten in earlier. And if you're investing for retirement, it doesn't matter if you buy now and your investment loses value next year. What matters is the value of your shares when you reach retirement.


----------



## My Own Advisor (Sep 24, 2012)

I'm with the other commenters...invest some now. Stick to your plan.


----------



## WillyA (Apr 14, 2011)

As much as I agree with the other posters, there are some stocks and some sectors I would want to touch right now i.e netflix, google and so on. I would do lump some buys in maybe 2 or 3 stages over 2 or 3 months about 10k each


----------



## jcgd (Oct 30, 2011)

The OP said they typically invest in November and have set allocations they've always used. Why would anyone suggest they change their strategy now? That is exactly what is preached as what not to do. They say that behaviour is the problem with a mechanical strategy and this is a textbook example. The OP should do what they have always done, and follow their predetermined plan.


----------



## arrow1963 (Nov 22, 2011)

OP,

I endorse the consensus message. Stick to your long term plan.

Out of curiosity, what has your 25/25/25/25 allocation 'drifted' to over the course of the year? 

You may find that you're not adding any money to the 'high' parts of your portfolio at all. In that case, this discussion is especially fruitless.


----------



## miass (Oct 30, 2013)

Thank you all for your responses. I’ve got a 25+ horizon before retirement, so I will go ahead and stick to my “Invest in November” strategy.


----------



## MoreMiles (Apr 20, 2011)

WillyA said:


> As much as I agree with the other posters, there are some stocks and some sectors I would want to touch right now i.e netflix, google and so on. I would do lump some buys in maybe 2 or 3 stages over 2 or 3 months about 10k each


I know we are supposed to look forward and not backward.

But these stocks were half price or less just a year-or-two ago, are you not worried? I learned my lesson from Apple.


----------



## swoop_ds (Mar 2, 2010)

arrow1963 said:


> OP,
> 
> I endorse the consensus message. Stick to your long term plan.
> 
> ...


I agree with this. I would stick to what you usually do. It will serve you well.


----------



## Video_Frank (Aug 2, 2013)

Stick with your asset allocation as per your investment statement. Your bond percentage should be low so add to it. I'm an indexer, not a picker, so there's no way I'd buy netflix or google.

I add new money in January. I'll be buying mostly XBB and ZRE along with a small amount to XIC. I only rebalance using new funds, not by selling sectors that are overperforming (VTI and VXUS).


----------



## Toronto.gal (Jan 8, 2010)

brad said:


> 1. Generally the best time to invest is always "now." Some people will advise you to break up a sum like your $30K and invest it in smaller chunks over time to take advantage of dollar cost averaging. But studies show that you're better off investing the lump sum up front.
> 
> 2. if you're investing for retirement, it doesn't matter if you buy now and your investment loses value next year. What matters is the value of your shares when you reach retirement.


*1.* I have read some of those studies, but I don't agree that lump-sum investing is the right strategy for everybody; certainly not for the risk-averse, who would likely not sleep well at night with the higher exposure to downside risks. I know that you will say that it does not matter in the long-term, but how many people invest with the idea that [severe] short-term declines won't bother them, even if investing for retirement? 

*2.* I also 1/2 disagree with that comment, because it's not just the price that matters, but also the size of the portfolio.


----------



## Video_Frank (Aug 2, 2013)

That's why you need an investment policy statement - it forces you to act rationally, not emotionally. If you have a statement in your IPS along the lines of "I will invest new funds in November of each year, adding new money to bring my funds into balance, regardless of market conditions" then you remove your emotions from investing. If you can't do it then you should hire a fee-only financial advisor to act on your wishes and (in essence) protect you from yourself.


----------



## miass (Oct 30, 2013)

Thank you all for your responses. I’ve got a 25+ year horizon before retirement, so I will go ahead and stick with my “Invest in November” strategy.


----------



## Pluto (Sep 12, 2013)

I vote for putting the cash in as usual, but don't spend it on stocks yet. Always buy on a dip. Never buy immediately after a run up in price. Look at the S&P 500. It has had a run up since November 2012. At least wait until it pulls back to the 50 day ma, is my view.


----------



## donald (Apr 18, 2011)

Problem with buying on ''dips'' is:this is harder in reality.If the portf is small i would vote to just mechanically add,the next dip like nov(when the world was ending and obama was 4 more years)it wasn't a comfy place to buy(not sure what is harder,buying high,or buying low in hindsight),are you sure in real-time you could identify the ''dip'' and over ride your emotions(esp specific ind. stocks and not funds).
Dips also only last so long(run up happens in days in most cases and you miss it)
If portf is small,i'm not even sure it would be worth the effort.vote buy.


----------



## Oldroe (Sep 18, 2009)

My wife's pension is based on Div. so number of share are important. I buy on dips and it's starting to feel like one.


----------



## gibor365 (Apr 1, 2011)

Toronto.gal said:


> *1.* I have read some of those studies, but I don't agree that lump-sum investing is the right strategy for everybody; certainly not for the risk-averse, who would likely not sleep well at night with the higher exposure to downside risks. I know that you will say that it does not matter in the long-term, but how many people invest with the idea that [severe] short-term declines won't bother them, even if investing for retirement?
> 
> *2.* I also 1/2 disagree with that comment, because it's not just the price that matters, but also the size of the portfolio.


It depends  I cannot say which trategy is better. For some of my equities that I bought "lump sum" - I wish I'd invest in "chunks" ... for others that I bought just 1st chunk - I wish I'd invest limp sum... others were just right...
The problem with "chunk" investing that your your equity can just "fly" higher ang higher and will become too expensive to add more, for example several month ago I bought a little bit LMT, thinking to average down if stock goes down, but it never did... now I'mm in 55% gain and sorry that didn't buy more initially.
Other thing about averaging down - Psychological (at least for myself), not ease to add new $$ for stock that "falling" down, and when to average down, on 2% dip, 5%, 10%?


----------



## Pluto (Sep 12, 2013)

donald said:


> Problem with buying on ''dips'' is:this is harder in reality.If the portf is small i would vote to just mechanically add,the next dip like nov(when the world was ending and obama was 4 more years)it wasn't a comfy place to buy(not sure what is harder,buying high,or buying low in hindsight),are you sure in real-time you could identify the ''dip'' and over ride your emotions(esp specific ind. stocks and not funds).
> Dips also only last so long(run up happens in days in most cases and you miss it)
> If portf is small,i'm not even sure it would be worth the effort.vote buy.


1. Yes, I am sure I can identify a dip. But maybe, your question is, am I sure I have identified the exact bottom? If so, the answer is no. No one can be sure of what the absolute bottom is. Incidentally, by "dip" I do not mean a crash (20% + sudden drop in prices), or a 20% correction. I simply mean buy on the usual pullback in price. Prices usually go in waves, not straight line. figure out the range of the wave. Calculate the median of the range, and try to buy at or below the median. 
2. Why wasn't Nov a comfy place to buy? You are letting yourself be ruled by fear of lower prices. When you buy stock you are buying a piece of a company. If you have confidence in the company, you should be delighted at the lower price offerings. If you don't have confidence in the company, you shouldn't buy it at any price. The time to have some fear is right after a run up in prices, like now. 

For example, the TSX is way above its 50 day ma. Same for the S&P%500. It was only back in August the S&P dipped below the 50 day ma. Taht was an OK buy point. What's the matter with waiting a bit until they are at, near, or a bit below the 50 day MA? You could bag an extra few % capital gain. 

Anytime now, there will be a dip due to profit taking, and that's a better time to buy than now. It's not difficult if you are confident in what you are buying.


----------



## Janus (Oct 23, 2013)

Oldroe said:


> My wife's pension is based on Div. so number of share are important. I buy on dips and it's starting to feel like one.


I don't think that actually matters. What's the difference between 10 shares at $5/share in dividends vs. 50 shares at $1/share in dividends?


----------



## blin10 (Jun 27, 2011)

yes, but let's say SPX goes up another 15% from now into new years (anything can happen).... and only then profit taking will start which will, let's say, drop it back 10%? that will be a dip, but in reference to right now, prices will still be higher even after a future dip... also, your confidence in what you are buying does not automatically mean it will be easy to make money, since a ton of people were confident about gold a year ago (how it's a hedge vs dollar printing) and we all know what happened there... some can be super confident about some start up company and loose a ton of money... confidence can also play against you, you can hold stuff for years being confident vs. realizing you were wrong while moving money somewhere else 



Pluto said:


> *Anytime now, there will be a dip due to profit taking, and that's a better time to buy than now.* It's not difficult if you are confident in what you are buying.


----------



## donald (Apr 18, 2011)

I guess it makes a big difference if we are talking about funds that are low volatility or ind stocks(goog ect is mentioned in the this thread for example)with ind stocks(esp growth stocks)you have 2 risks happening(the economy at large and the specific company)
All i am saying is if it was that easy this game would be simple,which i think everyone can agree it is not.
How can you tell in real-time that a 5 % correction is not going to turn into a 15%?,while it is happening?
You buy on a 4% ''dip'' and mths later that dip you thought you bought has you 15% in the red.
I agree confidence has a lot to do with it but-Sometimes when you hear the footsteps of a sea of red days after days(with a nice wknd or 2 in the mix for you to mule it over)You might really desire to take the small loss and go comfortably(emotionally)back to cash.
We are talking about deploying lump sum here right?


----------



## donald (Apr 18, 2011)

If i had 30k i would not look for glory,i would do tranches,at least you retain some control.That is what i would do if i was the op.why the rush anyhow if you got 25 yrs,if you are plunging you are focusing on short-term anyhow and if it goes against you your going to tell yourself it doesn't matter if after fact your wrong,but why do any of that to begin with.


----------



## praire_guy (Sep 8, 2011)

Keep doing what you have been doing. 
You have a built in buy low, sell high mechanism every November. 
This will work, but you have to stick to it. 
Everything works, but nothing works forever. 
As others have said, no one can predict what the markets will do.


----------



## MoreMiles (Apr 20, 2011)

blin10 said:


> yes, but let's say SPX goes up another 15% from now into new years (anything can happen).... and only then profit taking will start which will, let's say, drop it back 10%? that will be a dip, but in reference to right now, prices will still be higher even after a future dip... also, your confidence in what you are buying does not automatically mean it will be easy to make money, since a ton of people were confident about gold a year ago (how it's a hedge vs dollar printing) and we all know what happened there... some can be super confident about some start up company and loose a ton of money... confidence can also play against you, you can hold stuff for years being confident vs. realizing you were wrong while moving money somewhere else


+1
Look at this thread from over 2 years ago! Everyone was already waiting for a correction there! People were afraid to jump in because the markets were green green and green. You know what happened 2 years later. :hopelessness:
http://canadianmoneyforum.com/showthread.php/7391-So-afraid-to-buy!?highlight=sell

Is this a deja vu?


----------



## Oldroe (Sep 18, 2009)

Janus I think you should brush up on your math try compounding and run it out 10 -20 years.


----------



## Janus (Oct 23, 2013)

Oldroe said:


> Janus I think you should brush up on your math try compounding and run it out 10 -20 years.


Wait - what's compounding?

You're reinvesting the same dollar amount either way.


----------



## uptoolate (Oct 9, 2011)

miass said:


> Hello. I typically re-balance and add to my RRSP in November, my birthday month. I stick to my allocation strategy of CAN – 25%, US – 25%, INT – 25%, Fixed – 25%. And have been pretty disciplined about it. However, currently, both CAD and US stock markets are at their highs. Should I go ahead and re-balance/invest (apprx 30K sitting in cash now)? Or should I instead wait and see awhile, as it feels like another correction might be coming? Appreciate the advice!


Someone much wiser than me advocates 'staying the course'. If you have a plan stick with it. The market is definitely going to dip, and it's definitely going to go up. When each is going to happen is anyone's idea and there will be no shortage of opinions. Early this year I had a decision to make re: lump sum or DCA a fair size USD amount. At the time I thought that the US markets were probably overvalued but my plan says lump sum and I did. So far, 25% return YTD. This is not skill it is just following the plan and things break as they do. I have a long time horizon and by following the plan I now am lucky enough to have a head start on the next dip. It could have gone the other way - and it has in the past - but the markets generally move up and planning and patience are usually rewarded.


----------



## MoreMiles (Apr 20, 2011)

http://www.cnbc.com/id/101157290

25% only eh? And everyone says you should have 60-70% Hmmm..... maybe they know something we don't.


----------



## Oldroe (Sep 18, 2009)

The worst crap advise every given is you can't time the market.

Then the same story will go on to quote 50 day,200 day, P/E ect. all these calculation are to indicate your stocks value to the market. Yes folks these calculation are to help you TIME THE MARKET.

It is true you can't get it right every time but you dam sure better get it right some of the time.

Doesn't feel like a correction any time soon for me.


----------



## My Own Advisor (Sep 24, 2012)

"It is true you can't get it right every time but you dam sure better get it right some of the time."

Agreed Oldroe.

So I come to this, I've managed to save up about $3,000 in my RRSP over the last few months, and wondering if I should pull the trigger on something.
With equity markets on a run this year, I feel stuck. 

Where would you invest $3,000 now? Would you even make a purchase at all?


----------



## gibor365 (Apr 1, 2011)

My Own Advisor;205455
So I come to this said:


> Have similar dillema ?! Still have some cash available and still didn't contribute into RRSPs this year.... for part of new TFSA contribution thinking to open TFSA saving in PT for 3%


----------



## My Own Advisor (Sep 24, 2012)

@gibor, 

Interesting play. I don't want to take $$ out of RRSP, so I need to save for TFSA separately. I dunno. I did some rebalancing earlier this year, so maybe I will wait and see. I know $3,000 isn't much, but it would be nice to see money working somewhere.


----------

