Timing the Market

Spivo46

I know this is not something generally recommended, however, given the talk of market crashes and market corrections would it not make sense to lower the investment risk for the short term? I am due to fully retire in 6 months. I currently have a diverse pension portfolio, 57% of which is in stocks. I do have a 2 year cash buffer.  - thoughts please?

jim8888

Sounds to me like you're already quite prepared to weather the coming storm - providing it comes. I've got most of my pension in equities - probably over 80% - and I'm currently sticking to my "Do Nothing" strategy on the basis that this saw me through the dot.com crash, 9/11, the 2008 meltdown, Covid. Saying that, it's quite difficult to ignore all the negative talk about bubbles bursting and the end being nigh, even when you've seen it all before.

Ibrahim5

I think the market may go up or down.

dunstonh

 however, given the talk of market crashes and market corrections would it not make sense to lower the investment risk for the short term?

There has been talk of market crashes for the last 4 years.   Just think about what would have been missed if you acted upon those.

Corrections are irrelevant as they are just noise.

 I am due to fully retire in 6 months. I currently have a diverse pension portfolio, 57% of which is in stocks. I do have a 2 year cash buffer.  - thoughts please?

Without knowing how your planning and objectives are, its impossible to say.  However, your cash float seems a bit low unless you are buying an annuity or have a scheme pension.  If you are using drawdown, then you would expect a larger cash float.

BlackKnightMonty

jim8888 said:

Sounds to me like you're already quite prepared to weather the coming storm - providing it comes. I've got most of my pension in equities - probably over 80% - and I'm currently sticking to my "Do Nothing" strategy on the basis that this saw me through the dot.com crash, 9/11, the 2008 meltdown, Covid. Saying that, it's quite difficult to ignore all the negative talk about bubbles bursting and the end being nigh, even when you've seen it all before.

Not tempted to switch to cash and buy back into the market after a crash.

The Berkshire Hathaway approach.

Aylesbury_Duck

Without knowing your age, size of pension pot, expected lifespan or desired retirement income, it's impossible to give a sensible opinion, but I have two questions:

1. Do you have enough now, at today's values, to see you through retirement until death in a manner you would be comfortable with?  If so, then de-risking completely would be an option.  Why take any risk in those circumstances?  Anything more than you have would just be unnecessarily greedy.

If not, then....

2. What would you do if markets dropped 30% in the next six months and took five years to recover to today's levels?

dunstonh

BlackKnightMonty said:

jim8888 said:

Sounds to me like you're already quite prepared to weather the coming storm - providing it comes. I've got most of my pension in equities - probably over 80% - and I'm currently sticking to my "Do Nothing" strategy on the basis that this saw me through the dot.com crash, 9/11, the 2008 meltdown, Covid. Saying that, it's quite difficult to ignore all the negative talk about bubbles bursting and the end being nigh, even when you've seen it all before.

Not tempted to switch to cash and buy back into the market after a crash.

The Berkshire Hathaway approach.

That is not the Berkshire Hathaway approach.

BlackKnightMonty

dunstonh said:

BlackKnightMonty said:

jim8888 said:

Sounds to me like you're already quite prepared to weather the coming storm - providing it comes. I've got most of my pension in equities - probably over 80% - and I'm currently sticking to my "Do Nothing" strategy on the basis that this saw me through the dot.com crash, 9/11, the 2008 meltdown, Covid. Saying that, it's quite difficult to ignore all the negative talk about bubbles bursting and the end being nigh, even when you've seen it all before.

Not tempted to switch to cash and buy back into the market after a crash.

The Berkshire Hathaway approach.

That is not the Berkshire Hathaway approach.

It is at the moment.

Qyburn

I'm thinking along the lines of riding out a 50% drop with four following years to recover. That would need a cash buffer of 1.5 years.  

cfw1994

Spivo46 said:

I know this is not something generally recommended, however, given the talk of market crashes and market corrections would it not make sense to lower the investment risk for the short term? I am due to fully retire in 6 months. I currently have a diverse pension portfolio, 57% of which is in stocks. I do have a 2 year cash buffer.  - thoughts please?

Your cash buffer covers you for a reasonable time.  

Do you have a “documented” plan on how you would use it?

We decided if markets dropped 20%, we would pause the pension drawdown and use cash.  Did it for 18 months early in my retirement 🤷‍♂️

One thought I have is that you could take recent gains to cash with it your funds.  So if this year has risen 15%, move 15% to a “money market fund” or similar 🤷‍♂️

NOT something I have done, but with all the talk of potential crashes (which will always happen!), it might mitigate or give you a comfort feeling.
You could potentially then move them back in if markets do fall.  

Of course, markets could continue to rise, & potential future gains be lost.  That’s the challenge of “market timing” 😉

fizio

I'm taking the opportunity to re-balance (rather than time the market). I have had a decent decade as my portfolio(DC+isa/etc)has been 50% S&P, 30% USA, 15% rest-of-the-world, 3% UK and 2% EM. I am ok with risk due to having a decent DB but now that I have retired, I plan to change the mix and have 10-20% bonds and some more UK. Hence, I am taking profits from some S&P to re-balance - not necessarily in one go but over next 6-12 months.