Retired And in the Market

I am retired, living off my savings, and I am very scared. I can’t afford to stay out of the market, but it feels like a fool’s journey. If the market drops, as it must and will, I will be in real trouble.

I am not alone. Keeping money in cash and in online savings accounts will not work for me without also being heavily in the market, given the very low interest I can earn. I really have no choice.

Like most others in a similar situation, I have been lucky. As soon as Trump became President, I was certain the market would drop. But did nothing at that time. I was lucky I stayed in the market.

But now, I can’t see any more room on the upside and can see very significant potential for a crash. But, I can’t get out.

Nor, it seems can most others. In fact, there was a NYT’s article on May 3, entitled Political Turmoil is High, but Wall Street’s Fear Gauge is Very Low that makes painfully obvious that facts on the ground couldn’t be more perfectly set up for a major and precipitous drop in the market. Yet, as the article also points out, most people are not acting accordingly – not getting out when all the signs (especially the VIX) are screaming to do so. In fact, the VIX index which measures investor expectations of market moves dipped recently below 10, the first such time in a decade. Its historical average is 20 or so, suggesting that people just can’t pull the trigger and get out – even when all lights are flashing.

I am not sure exactly what all this means. It makes me feel somewhat better that others are as hesitant as I to cash out even though the precipitous rise since Trump became president absolutely cannot continue much longer. But, it also makes me feel like a total fool that I cannot separate myself from the crowd – that all the flashing red lights do not make me smart enough to get out before it is too late. And it makes me feel even more stupid that I depend on the resources I have invested in the market, and I still am having trouble getting out before the whole thing goes up in smoke.

This is the true definition of a fool.