Out of the market before the crash

[snopes]

Comment: I have frequently heard a story about a stock broker who got out
of the market just before the 87 crash because of a tip given him by a
layman. He reasoned that if so many non-brokers were in the market, it
was unstable and therefore time to get out.

I have heard the tip attributed to a taxi driver and a shoe-shiner. Have
you ever heard this tale, and does it have any basis in fact?

[Flyer22]

I've read similar stories. It might have made some sense, because even as recently as '87, relatively few people not in the financial sector were actively involved in the stock market. Now it's become commonplace for people to buy stocks--you can hear callers with stock tips on nearly any financially-oriented talk show.

[Floater]

It is common knowledge that taxi drivers and shoe shiners are, like comrade Kim Jong-Il, experts on everything, so I wouldn't be surprised if the story is true.

[Lancastrian]

Who knew the Helpful Terrorist (tm) had an older brother!

[Tarquin Farquart]

This had to be a taxi driver. I can just imagine it happening.

I got out of the stock market (partially) just before that crash. The reason was I wanted to keep my retirement fund at the 50:50 level between stocks and annuities. By the end of that run up, I was almost 75% in stocks, so I moved a chunk of my investments from stocks to annuities so that I was back to a 50:50 mix. Then the crash happened and all of a sudden, I was 75% in annuities. So I started moving more of my monthly investments into stocks and recently I am finally back to a 50:50 mix.

Note, my retirement is mostly in TIAA/CREF, and their rules are that you can move from stocks to annuities, but not the other way, so I just started investing most of my money into stocks to bring that one back up.

Yes, I am very conservative in my investments.

[Majorsam]

This is a small variation on a common story that is attributed to Joseph Kennedy, father of John F. Kennedy & sometime ambassador to Britain. You can see an example of the story here.

Quote from above website:

Joseph Kennedy, John F. Kennedy’s father, sold before the 1929 stock market crash and kept millions in profit. Kennedy decided to sell because he overheard shoeshine boys and other novices speculating on stocks.

It seems to me to have a lot of the hallmarks of an urban legend, mainly that I found a couple of variations on it in a quick scan of the net. In one, Kennedy pulled out a mere two weeks before the crash, yet other more reliable sources say he pulled out in 1928, well before the plunge. There are also variations that said he had his shoeshine boy offer him advice.

I think the reason the story endures is -true or false - there is some sense in it. My own story is a year before the tech bubble burst a good friend of mine needed a date for a lavish .Com company party. They rented the whole of the SF Museum of Modern Art for a night and gave out free booze and had a free oyster bar amongst other things. I was rather amazed, but as I talked to the workers there they kept talking about future profits. The company was a year old, and didn't have a single client, and hadn't made a dime in profit. I was so disturbed I changed my investment habits away from stocks & into real estate.

[Stan The Man]

Originally Posted by Doug4.7

I got out of the stock market (partially) just before that crash. The reason was I wanted to keep my retirement fund at the 50:50 level between stocks and annuities. By the end of that run up, I was almost 75% in stocks, so I moved a chunk of my investments from stocks to annuities so that I was back to a 50:50 mix. Then the crash happened and all of a sudden, I was 75% in annuities. So I started moving more of my monthly investments into stocks and recently I am finally back to a 50:50 mix.

Note, my retirement is mostly in TIAA/CREF, and their rules are that you can move from stocks to annuities, but not the other way, so I just started investing most of my money into stocks to bring that one back up.

Yes, I am very conservative in my investments.

I am not a financial advisor and I did not stay at a Holiday Inn Select last night, but most advisors would say you are way too conservative in your investments at your age.

Originally Posted by Stan The Man

I am not a financial advisor and I did not stay at a Holiday Inn Select last night, but most advisors would say you are way too conservative in your investments at your age.

Yes, I understand. I am being very conservative. However, I do NOT like watching stocks go up and down and so if I did invest less conservatively, I might not be around to enjoy the results as I might die of an ulcer. As it is, I wince every time I hear about the market going down.

I let my wife's TIAA/CREF account be the "radical" one. She is about 75% in stocks.

The idea being if the stock market does not do well over the years, we'll live conservatively on my retirement. If the market does well, we'll live la vida loco on her retirement....

It's the same reason why I won't look into a second house on the Gulf. It could make me a lot of money in rentals, but every hurricane season I would get another ulcer worrying about those damn hurricanes.