Subject: Re: S&P Valuation...
where $100 of sold S&P 500 would result in $75 net, would you start seriously considering a sale to free up some cash and hunker down for the inevitable reversion?

Thoughts?


This discussion always comes up when a 5%-10% correction occurs. People get faked out and miss out on the following rise up. Pull up a 5 year or 10 year chart on SPY (logarithmic scale) and eyeball all the dips and ensuing rise.
Drawdowns shake out the weak hands.

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

That $100 of SPY might well be $125 or $150 before the reversion comes.

Sure, one of these days it will keep going down. Eventually that will happen.

If you really want to bail out without getting itchy every time it hits a bump, look at something like the 200 day moving average.
One of the benefits of using a mechanical indicator is that it removes your emotions from the decision.


where $100 of sold S&P 500 would result in $75 net after taxes.

It might help if you thought of that $100 belonging $75 to you and $25 to the government. That $25 was never yours, it was just you holding it on behalf of the government.