Advice from a Stupid Senior

Many seniors today are facing a real quandary. I am one of them. The stock market and many IRAs are enjoying significant upside momentum, and while I know this cannot and will not continue forever, I just can’t pull the trigger and get out now.

When one is over 65, no longer working, and living on retirement income, a stock market rally brings two very different reactions. One, if you have some or all of your money invested in the market, is of joy and relief – more income and net worth than you had planned for. Another – quite the opposite - is to be terrified that a fast rising market portends a major and brutal drop and a consequent loss of gains and even the asset base.

Many seniors today have some money in IRAs and some cash position. In most such cases, retirement monies are more likely than not to be largely in stocks and stock funds. And, if they have been riding the dramatic rise in the market since the November election, as I have, they are more flush than they ever imagined and – at the same time - more panicked that they could loose it all were there to be a significant drop, as many now project.

They have reason – a lot of reason – to be concerned. Bull Markets never go on forever. Getting out before they turn down, and usually turn down dramatically, makes a lot of sense. But, it is also human to want to stay in just a little longer and to see one’s retirement monies grow just a bit more. It’s always the lure of more, and not wanting to feel like a fool getting out too soon.

So what is a senior to do? One thing is certain. Like all markets in the past, this one will drop and drop big at some time. And, in a Trump World, it is even more likely that things will go very wrong very quickly. Conventional wisdom would say that those depending on retirement monies would be crazy to try to time the market. When this one crashes, it will happen in milliseconds, and there will be no time to get out.

So, unless you have sufficient funds outside the markets in cash and short-term bonds, you are playing with fire to wait. You have made a lot more than you ever thought possible. Now is the time to get out. But, I bet, as always happens, the vast majority of us will stay in until it is too late. That’s just human nature.

So my advice -- don’t try to time the market. Take profits now, pay capital gains and get some sleep. Good advice, but I may not take it.