Strategy for stock market correction

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kcowan
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Re: Strategy for stock market correction

Post by kcowan »

AltaRed wrote: 06 Jun 2017 14:06* By more certain, I mean a situation where there is an equity market swoon about the time the testator dies. An executor/administrator has capital preservation resonsibilities so normally would unlikely allow a large equity allocation to continue post-death...pending distribution. A conversion of equity to FI during a market swoon would thus obviously impact/deny the ability of the estate to recover its equity market losses. Obviously if the executor(s) and beneficiaries are the same, then it is a much easier choice to decide how to handle the estate's capital while the estate is being settled, but most estates are not that simple, i.e. more beneficiaries involved and/or are at arm's length.
It applies to me in spades. My executor is my son and he understands equity trading so a market swoon would benefit the heirs through lower taxes. Can he distribute shares? I see no reason why not?
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AltaRed
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Re: Strategy for stock market correction

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kcowan wrote: 07 Jun 2017 09:08 It applies to me in spades. My executor is my son and he understands equity trading so a market swoon would benefit the heirs through lower taxes. Can he distribute shares? I see no reason why not?
No reason why not, but it is trickier to manage distributions 'fairly and equally' when market prices change every day. Transfer out in kind would have to be dated and priced accordingly, i.e. all gains/losses since date of death would have to be accounted for in the T3 testamentary trust return. Easier to do if each of the assets are split equally, but if heir A gets stock X and heir B gets stock Y, that would be trickier. I suspect some members here have gone through that as Executors themselves... or DavidR can pop in and provide his professional guidance.

P.S. When we settled our mother's estate, my bro and I monetized all of our mother's holdings before distribution. Just was a lot simpler that way and avoided any argument about who got what and when and what the price movements were preceeding distribution.
Last edited by AltaRed on 07 Jun 2017 17:36, edited 1 time in total.
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kcowan
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Re: Strategy for stock market correction

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I asked RBCDI to distribute RRSP shares to me from deceased Bro's account . I even offered to send them a check for the income tax owing first. They refused. TDDI agreed because my accounts were with them. He had holdings with both.
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SoninlawofGus
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Re: Strategy for stock market correction

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couponstrip wrote: 06 Jun 2017 17:41 In fact, as the market was roaring back from the lows in March '09, most here were predicting new lows in the not too distant future. There was an entire thread called "the great false rally of 2009" or something like that*. Then through April, the market was going up 2% day after day after day and most here were still decrying equity.
Good stuff. European and emerging markets stocks took a major hit not long ago for various crises and end-of-the worldish scenarios. Those markets are well ahead of the S&P and the TSX in Canadian dollars YTD.
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AltaRed
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Re: Strategy for stock market correction

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I just don't like the motion sickness that comes with EM albeit EAFE is not a lot different. http://www.stingyinvestor.com/cgi-bin/P ... eturns.cgi
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Dudsy
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Re: Strategy for stock market correction

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Thegipper wrote: 05 Jun 2017 15:01 We are in our early 70's. We have combined pensions of 70k including CPP and OAS. We have 900k in registered and TFSAs . Our ratio has reached 60% stocks and the balance is fixed income. Capital preservation is an important thing so I have decided to reduce my stock holdings to 30% over the coarse of the next three months. I intend to make incremental reductions every two weeks until I reach that level by August 15. The proceeds will be parked in Vanguard ST bond ETFS. After a great 8 year run with stocks I believe this is a good strategy to deal with greed. If there was a major stock market correction I would look at increasing my stocks in an incremental manner. I will be primarily focused on selling down my small caps and sticking with the larger cap stocks which pay dividends. I know market timing is mugs game. At age 71 big market downturns are not good for one's health.
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Re: Strategy for stock market correction

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Dudsy wrote: 22 Jan 2018 21:15
Thegipper wrote: 05 Jun 2017 15:01 We are in our early 70's. We have combined pensions of 70k including CPP and OAS. We have 900k in registered and TFSAs . Our ratio has reached 60% stocks and the balance is fixed income. Capital preservation is an important thing so I have decided to reduce my stock holdings to 30% over the coarse of the next three months. I intend to make incremental reductions every two weeks until I reach that level by August 15. The proceeds will be parked in Vanguard ST bond ETFS. After a great 8 year run with stocks I believe this is a good strategy to deal with greed. If there was a major stock market correction I would look at increasing my stocks in an incremental manner. I will be primarily focused on selling down my small caps and sticking with the larger cap stocks which pay dividends. I know market timing is mugs game. At age 71 big market downturns are not good for one's health.
Have you stuck with the plan?
no. The reaction I received from posters convinced me to stick with my existing holdings. Good thing as I would have missed out on a lot of the US bull market.
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big easy
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Re: Strategy for stock market correction

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I think Howard Marks and others are advocating a reduction to equities in preparation for a correction/crash. I have engaged in such market timing over the years but have only reduced equities by 5 to 10%. I'm inevitably too early or outright wrong but it is hard not to fiddle and I tell myself I'm not doing myself too much harm. I actually increased my equity exposure to 55% from 50% a year or two ago after getting impatient with bonds. In the 2009 meltdown I did re-balance back into equities (again too early as I recall) but I'm older now and don't have many years left in the work force. I don't think I'll be buying stocks in the next crash/correction but I won't be selling either.
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