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In retirement, and really in life, I like to avoid the big mistake but with investing it is tough to do. I guess you can either buy puts to try and lessen to blow of a big 30-50% drop in the market and a very slow recovery or just reduce the % of money in equities but not much else. Right now despite what some are saying, it seems like we are dealing with significant inflation in most areas of life but with lowering interest rates which means things like treasuries, CDs and other "safe" investments are losing to inflation.

I suppose adding to gold holdings and maybe more international stocks are the best paths to go forward.


Any other ideas?

I would submit that
adding to gold holdings and maybe more international stocks are the best paths
is the opposite of avoid[ing] the big mistake.

“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

"More Money Has Been Lost Avoiding Risk Than at the Point of a Gun"


Gold? I was a gold bug several decades ago, at the time my first kid was born. My head got straightened out long before the 29 year-long recovery got, um, recovered. I'd rather do bitcoin. https://testfol.io/?s=g1Uwki6fyIm

International stocks? Have you been keeping track in the news of what's happening with the European economies?
Also:
"Google AI Overview:
While a generalized "mass migration" of investments to the US is not occurring, several trends show the US attracting a significant amount of international investment. Foreign direct investment (FDI) has seen substantial inflows"

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lessen to blow of a big 30-50% drop

Roger Nusbaum:
" ... effective is simply defined as avoiding the full brunt of a large decline. Aside from my belief in its effectiveness, the 200-day SMA is simple to explain and understand.
No one rule is always correct. they all give false signals."
"The moving average timing strategy makes the majority of its money by avoiding large, sustained market downturns. To be able to avoid those downturns, it has to accept a large number of small losses associated with switches that prove to be unnecessary. Numerically, more than 75% of all of MMA’s trades turn out to be losing trades."

Straight SMA has too many sell signals. Better is GTT timing which looks to two FRED statistics of the economy to decide when it ignore an SMA sell signal.
IMHO

Better is GTT timing which looks to two FRED statistics of the economy to decide when it ignore an SMA sell signal.

Pardon my ignorance, but what is GTT timing?

There are many, many ways to hedge. However, when you get into the various hedging options, they perform differently and work or don’t work so well depending on what thing or combination of things is going on. To use an analogy, we do not have one medicine that fixes “sick”, we have many that target sicknesses.

One thing is fairly clear. If you want to keep it simple and narrow down to just stock/index options (e.g. puts) or cash, then it’s better to simply lighten up your equity and have more cash. Puts are very expensive insurance.

The other thing that is near certain, hedging is usually just a tradeoff. Less return for less drawdown.

If you are interested in hedging possibilities in an accessible fashion Google Random Roger’s Blogspot. It is an interesting site to read. I don’t invest in most of what one can read about there, but there have been a couple of useful ideas that I would never have thought of.

Growth & Trend Timing.

https://www.philosophicaleconomics.com/2016/01/gtt...

51 page PDF

Key info is on page 46. "The above construction of GTT–using the dual signals of real retail sales growth and industrial production growth–is the preferred “recession-timing” construction shown in the beginning of the piece. As you can see, the strategy on that construction consistently outperforms everything, by a very large margin."

Do not use UNRATE (unemployment rate), since that is subject to political pressure.

“If you want to keep it simple and narrow down to just stock/index options (e.g. puts) or cash, then it’s better to simply lighten up your equity and have more cash. Puts are very expensive insurance.”

Yes, that’s my perspective as well. I’ve always been in range of 95% quality equities and have never hedged. As noted by Gemini AI:

“Based on historical data from 1926 to 2023, the S&P 500 had a positive return over 5-year rolling intervals approximately 93.62% of the time.”

Even though a S&P index does Not dominate my portfolio, I like the probabilities of U.S. equities appreciating over the moderate-long-run & we can roll with some short-term gut punches. I suspect Buffett and Munger did not personally use puts/insurance. Btw, in Vegas Blackjack, I never take insurance either. :)

WTF?!?

<< Growth & Trend Timing. >>

I note that the 20-fold 30-year return of the S&P 500 in the previous Jason Zweig thread assumes Long-term Buy & Hold.

intercst

“Based on historical data from 1926 to 2023, the S&P 500 had a positive return over 5-year rolling intervals approximately 93.62% of the time.”

Even though a S&P index does Not dominate my portfolio, I like the probabilities of U.S. equities appreciating over the moderate-long-run & we can roll with some short-term gut punches.

Ken Fisher recently had a youtube video "Is Now a Good Time to Invest in Stocks?" https://www.youtube.com/watch?v=IRAIQeunHyA

Key point that he and others have made for a long time:
"the fact is, in the long term, stocks tend to rise—and they tend to rise about two out of three time periods, regardless of what kind of time period you pick, whether it's days, quarters, years, five-year periods—they tend to rise a lot more than they fall.
So, therefore, the odds are that it's an okay time to invest."

"<< Growth & Trend Timing. >>"
I note that the 20-fold 30-year return of the S&P 500 in the previous Jason Zweig thread assumes Long-term Buy & Hold.

After studying this stuff for a long time, I have come to the conclusion that "timing" is primarily an old person's game.

Every mechanical timing scheme I've examined reduces the overall long-term gains while also reducing the volatility.
A young person who is investing for retirement that is decades away should prefer the gains, not the volatile journey.

An old person who is living off his portfolio should care much more about the volatility than the long-term gains. Few retirees even have a particularly long term. And drawdowns for living expenses in a down period of volatility can exhaust the portfolio before the end of their life.

Although, for example William Shatner who is currently 94 years old, at 65 he *did* have a long-term.

I need to sit down and look at what I have invested and what would happen if there is a 20%, 40%, 60% drop in the market. How much harm it would cause, if any.

Since the beginning of the year I went into international and also gold which both have paid off well. My domestic stocks allocation is pretty low.

To lock in some higher interest rates I got a couple of multi-year guaranteed annuities for 3 yrs and 5 yrs, both paying over 5%. This will be money I can use at that time for expenses and prior to collecting social security. I'm not much into insurance products but I've previously bought a couple and they worked out.

I'm not sure I'll be here in another 30 years. More concerned with the next 10-20 years.

Thanks
Rich

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