[fhdkweig]

I moved 80% of my money out of Vanguard's Target Date Retirement funds and into a money market on June 1st. In the 1.5 months since, the remaining Target Date Retirement fund has fluctuated up and down by about 0.1%. It has basically plateaued. I don't think I am losing out on potential short term gains. I like the idea that I have cash available to buy in on the day of the crash.

[le-mark]

Good luck dude! This kind of move can pay off big or not, clearly. I’ve personally talked to fable about this a lot, suggest everyone does.

There are a lot of failure modes. The dot-com bubble looked obvious in 1997; it popped in 2000. Anyone shorting in '97-'98 was carried out on a stretcher before being vindicated. In fact 2000-2002 fell in three brutal legs over two years, and anyone who leveraged up after the first 25% leg was destroyed by the next two.

[wil421]

My boss has already done this several times over the past couple years because of some impeding market crash. Then he goes back and buys a week or so later.

[chasd00]

> I moved 80% of my money out of Vanguard's Target Date Retirement funds

which target date fund exactly? You can increase risk/reward buy choosing a target date fund far in the future or you can reduce risk/reward by choosing a target date fund closer to the present. The point of those funds is to gradually reduce your risk as you get closer to your planned retirement date. I moved my 401k into a target date fund about +10 years from my planned retirement (I'm 50). So a little bit on the risk++ side but not much.

[fhdkweig]

2045. When they hit their target date, they are still exposed about 50% to stocks, which is more than I want right now.

https://workplace.vanguard.com/investments/product-details/f...

You want to search for the chart at "Allocation to underlying funds (actual)"

[robocat]

> day of the crash

It took 17 months for the 2008 crash to reach bottom.

For the dotcom, the market peaked in 2000 and reached bottom in 2002.

Timing the bottom is hard - plus emotionally nobody is keen to invest so you'd need to be contrarian too.

[matwood]

What percentage drop do you need to consider it a 'crash' and to buy back in? Is it a drop from when you sold or the peak? What if the peak is another 20% higher and the crash is 10%? While you're sitting in cash, you're also losing to inflation each day.

I generally consider timing the market such as this to be a fools errand, but if you're going to do it you need to have a plan beforehand and follow it. A target date fund does exactly this with allocations.

[BeetleB]

Honest question: Do you expect the AI crash to have a bigger impact on the economy than a global pandemic that shut everything down did?

[fhdkweig]

I don't know, but they aren't really in the same category either. The pandemic didn't shut down everything. It didn't really shut down much, people worked from home and got deliveries instead of doing things in person. There were sectors that were hit bad, but certainly not everything.

The AI crash is about stock market indicator ratios matching those that preceded other major crashes. That's what got me spooked. I don't want to be heavily invested in those companies when/if something bad happens.

[BeetleB]

My point is that whether there will be a crash or not is incredibly hard to predict. COVID did not come with a stock market crash, but it affected employment much more than a possible AI crash will.

> The AI crash is about stock market indicator ratios matching those that preceded other major crashes.

The way to put faith in such indicators is not (only) by looking at prior crashes, but by forward testing them. Over the last decade, it's been common for me to hear a sentiment like yours: "Indicator X has always resulted in a serious downturn in the past, and we're in X territory now" - and no crash ensued. Over and over again.

Find me an indicator that someone back tested, and then also actually predicted a real crash (with zero false positives). The cost of even a single false positive can be huge. Ask the guys who pulled out (or sold their houses) when COVID struck.

Don't become the person who predicts 7 of the last 2 recessions.

[overfeed]

> My point is that whether there will be a crash or not is incredibly hard to predict. COVID did not come with a stock market crash

As someone who had early PUTs against the obvious industries (travel, hospitality) - what I didn't foresee was the insane amounts of government liquidity poured into the markets.

[BeetleB]

> As someone who had early PUTs against the obvious industries (travel, hospitality) - what I didn't foresee was the insane amounts of government liquidity poured into the markets.

They did it in 2008 as well. Although the amount in COVID seems insanely high, back in 2008, $700B was insanely high. People couldn't believe the government would spend that much to keep the economy going.

The real question is:

What else are you not foreseeing?

[jghn]

what if you buy on the day of the crash only to discover that was day one of a year long crash?

[fhdkweig]

I feel that even if that happens, at least I wasn't fully exposed to the first drop.

[mancerayder]

Then he's beating those who held right before crash number 1, right?

[jghn]

Depends on what he left on the table sitting on cash in the run up first