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Old 22.06.2016, 17:27
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BREXIT and should I exit the market temporarily

I have been considering selling my etfs (all US and Rest of World) and going into cash for the upcoming BREXIT vote. I hold these across several accounts from brokerage to IRAs and 529 plans (college funds). Selling and going into cash in IRAs and in 529 does not lead to capital gains as long as I don't withdraw the money.

However, as an American, I will be hit with capital gains for the brokerage account. I will always be hit with capital gains in brokerage, no matter when I sell, so the timing of this is more to do with current income and what rate will be applied to capital gains.

So the options, BREXIT happens and there is a substantial dip in the market (5% or more? Who knows.) BREXIT doesn't happen and the stocks may increase for a couple of days but will likely come back quickly to where they are today. So with my assumptions, all the risk is holding and not selling. (***I know these are all assumptions***).

I also understand that market timing is near impossible and then the question will be when to re-enter the market. That is a whole other ball of wax. People often freeze waiting for it go lower and lower and never thinking the we've hit the floor. In the mean time, you are on the sideline during the rally.

I'm kicking this around, what do other's think. I'll probably let my Bogglehead leanings win and do nothing and stay the course. But it is an interesting debate (to me)
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Old 22.06.2016, 19:06
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Re: BREXIT and should I exit the market temporarily

Yes. No. Wait. What?
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Old 22.06.2016, 19:26
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Re: BREXIT and should I exit the market temporarily

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Yes. No. Wait. What?
That's pretty much me, which means I won't do anything. Since I won't be touching most of the stocks for 20 years, it probably means very little one way or the other.
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Old 22.06.2016, 20:28
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Re: BREXIT and should I exit the market temporarily

It seems to me if you rock the boat it costs you money. Sit tight. Hang on to your life jacket & don't lean over to watch the dolphins.
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Old 22.06.2016, 21:12
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Re: BREXIT and should I exit the market temporarily

Definitely. Yes you should. And never venture into the market again.
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Old 23.06.2016, 09:24
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Re: BREXIT and should I exit the market temporarily

It might be cheaper and easier using futures to hedge:
Say, you have 100k worth in an ETF mimicking the SP500, then you short roughly for 100k using S&P500 futures. That way the (somewhat temporary) gains in one vehicle are offset by the losses in the other, similar to holding cash but usually less expensive than an outright sell, and no CG tax on the ETFs as you don't them. However, there will be taxable short term gains if you manate to sell the futures at a gain.

However: Aren't you a bit late to the party?
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Old 23.06.2016, 10:50
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Re: BREXIT and should I exit the market temporarily

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That's pretty much me, which means I won't do anything. Since I won't be touching most of the stocks for 20 years, it probably means very little one way or the other.
You answered your own question
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Old 23.06.2016, 12:10
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Re: BREXIT and should I exit the market temporarily

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You answered your own question

Indeed - why do people post questions when it's clear they have made their mind up anyhow
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Old 23.06.2016, 12:12
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Re: BREXIT and should I exit the market temporarily

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.....However: Aren't you a bit late to the party?
Yes, a moment of insecurity. Sometimes I need to see it written out and have others remind me to stay the course. I'll do what I always do....nothing.
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Old 23.06.2016, 12:14
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Re: BREXIT and should I exit the market temporarily

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Indeed - why do people post questions when it's clear they have made their mind up anyhow
Be nice. I didn't have my mind made up when I wrote the post. As a matter of fact, I was much closer to liquidating. It was a temporary moment of panic. That's all. Others helped see the silliness of my idea.
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Old 23.06.2016, 13:43
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Re: BREXIT and should I exit the market temporarily

Trying to beat the market by timing almost never works. People loose far more money by holding cash then being invested. Small investors do exactly that & highly underperform the poor performance of the funds they previously held.

The markets really don't think profits will be very different either way, remember the stock market is geared about 15 times so a fall of 15% equals a 1% fall in profits. Holding good companies is key.
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