When – and HOW – to Get Back In

So.

Here I am, in the final month of the first quarter of 2024, wondering what to do with my (“un-invested”) retirement savings.

(In a nutshell: believing the markets to be over-valued in 2020, I got out and went to cash… )

The S&P 500 and NASDAQ are at all-time highs, recession is (supposedly) nowhere in sight and all the talk of the chattering financial class is that maybe, just maybe, the Soft Landing is in sight (or perhaps, already here!).

Yet, the (leadership) breadth of the S&P 500 has never been narrower (it’s all about, not the Magnificent Seven, but, now, the Fabulous Five).

The fundamentals of equities, even taken in aggregate, are elevated and decidedly non-positive.

Yes, these ‘to-the-moon’ companies do have cash flow, and some have profits, but some indicators, like Price/Earnings and Price/Sales on some of the biggest are just plain nutty.

And what about the “Lag Effect” of the fastest/largest interest rate hiking cycle in history?

Where is the economic slow-down that everyone expected as a result of a 525+ basis point hike to the Overnight Rate (in less than two years!)? (And a $1.4T (and counting) Fed Balance Sheet reduction… ?)

Well, it would appear that continued – one could argue still significant – fiscal stimulus (aka government spending) is feeding the economy with money/liquidity (forestalling any significant economic slow-down, perhaps delaying it (semi)permanently).

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So, what’s a nearly 54-year-old, who went to cash in 2020, to do now?

I’ve researched “Lump Sum vs. Dollar-Cost-Average” reinvestment (a lot!) and over longer time horizons (20-30 years) Lump Sum is the better option.

But what about My-Time-Horizon? What about an almost-54-year-old who wants to be “work-optional” at (or before… ) age 67? A mere 13 years from now?

This question is no easy one. (And the answer even more elusive.)

I’m writing this post as a way to organize my thoughts, to (try and) explain my best course of action to the reader as much myself.

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I have been working on getting invested.

But it’s been hard. Doubt and second-guessing, and triple-guessing, is rife.

I’ve formulated various asset allocations and even made some investments.

But I pull back – hesitate, wonder, doubt – and continue to tweak percentages, and particular sectors and funds.

And what of the idea that I can just sit back and get 5% in cash?

I like that idea, to a point, but a voice in the back-of-my-head keeps reminding me:

“Well, okay, but when do you get back in? How long do you wait? What if the pull-back isn’t for years, and/or it’s minor? You will lose out on real capital appreciation.”

I find that voice, those ideas, those truths, compelling as well.

(Deep-down, though, I know, to achieve my goals, I need to be invested (intelligently) in equities.)

I know that my decision to “get out” in 2020 was sound, but “staying out” is making less and less sense (even though I was able to earn ~5.25% last year… ).

What if I choose solid long-term investment types, with reasonable fundamentals, invest in them over the next few months to 50%-of-Plan and begin full re-investment this Summer, or Fall?

Yeah, that’s sounding more and more like my best path forward.

By the way, here is my (?latest?) Asset Allocation: