Down goes the Dow

Irwin C wrote:

K5 wrote:

The scary thing is that FP probably believes he actually has beaten the Dow every year since 1989.

Seeing as how he has Fidelity and Vanguard with their hands in his pockets, the reality is that he has beaten the Dow well less than half the time. That is a fact

Assuming the odds of beating an index in any year is 50% -- actually less when invested in a managed fund -- the odds of beating the Dow 25 years in a row is (1/2)^25. or IMPOSSIBLE

INCORRECT!

CORRECT! The thing is though that he is a troll...he HAS to be.

Need some advice (from anyone but K5 as his knowledge of finance and credibility on this subject seems nonexistent). Anyway, I recently inherited a mutual fund, American Funds Builder C with a decent sum of money. I will not draw on it for probably 2 years. What should I do with it?

Sally Vixxxens wrote:

113 wrote:

This remains one of the funniest threads I've ever read. I don't know if it's funnier that you were so wrong, or that you refuse to admit to being wrong. Both are hilarious.

K5 certainly has his faults, but he did admit to panicking and getting out at the wrong time.

This is why you don't do such things. If you are invested in the stock market as you should be and you have your financial house in order as you should, then there is never a time to panic.

It's the mindset of too many investors that gets them into trouble.

For example, we've heard MANY times that people LOST over 50% when the market crashed from late 2007-early 2009. Well, while that is technically true (value perhaps lost, but no realized loss unless you sold), it is unrealistic to assume you could have cashed out when the Dow spiked to 14,100 in October 2007, and that's the point at which people are saying we all lost from. Bogus. The run up in 2007 to October was great, so all of this 'money' that people had then before the fall was newly-acquired. Big freakin' deal. For LONG TERM investors, they were still way up from when they began anyway, even after the crash. I began investing when the Dow was at 2,700.

Chasing tops and bottoms is silly and fruitless. K5 has shown that to be true in this thread.

How do you set yourself up so that you NEVER panic in the stock market?

1) Have emergency fund of 3-6 months of expenses - in retirement can have as much as 3 years of expenses in CASH.

2) Debt free but for the house OR maybe a big student loan if you are going to make big coin (doctor, lawyer, etc.). In retirement have ZERO debt including a paid-for house.

3) Invest 15% or more into diversified mutual funds within retirement plans (401k, 403b, IRAs, etc.).

4) IF you want, as you get PAST AGE 35, add some bonds to your portfolio. If you don't want to do this, then you can stay invested in stocks within mutual funds, but you should bump your cash position to 2-3 years of expenses. OR if you have a pension in addition to Social Security and you could live on that if the market crashes, then that would work too.

The reason why in retirement you CAN decide to have a big position in cash rather than bonds is that if the stock market crashes, you can use your cash to weather the storm while your stocks have a chance to rebound (because they WILL). Once they rebound, start drawing again from then and build back up your cash position (unless you're getting really old at that point and you have lots of money...then just spend it or give it to heirs before you die).

People who 'panic' in the stock market either shouldn't be in it or haven't positioned themselves properly to be in it.

Hingle McCringleberry wrote:

Need some advice (from anyone but K5 as his knowledge of finance and credibility on this subject seems nonexistent). Anyway, I recently inherited a mutual fund, American Funds Builder C with a decent sum of money. I will not draw on it for probably 2 years. What should I do with it?

Most experts will tell you not to keep inherited investments just because they are sentimental...do the research to see if keeping it there is a good idea, and if not, move that money to another investment or investments that you prefer.

If you have any debt that this sum would erase, I would do that. If not, find the investment vehicle you are most comfortable with and do that.

Also, if you have anything against some of the companies in the fund, you might want to reconsider...for example, that fund's biggest holding is Phillip Morris. Personally that doesn't bother me, but it might for some people.

Hingle McCringleberry wrote:

Need some advice (from anyone but K5 as his knowledge of finance and credibility on this subject seems nonexistent). Anyway, I recently inherited a mutual fund, American Funds Builder C with a decent sum of money. I will not draw on it for probably 2 years. What should I do with it?

you need to figure out if that is the best place for your money. The key question you need to ask is this: if you had that same amount in cash...would you put it in that fund?

if not, then sell the fund and do something better with the fund.

The only think wrong with that fund is the high expense because you have C shares- at least 1.4% and probably all in closer to 2%. But American Funds are solid - its a good company.

agip wrote:

Hingle McCringleberry wrote:

Need some advice (from anyone but K5 as his knowledge of finance and credibility on this subject seems nonexistent). Anyway, I recently inherited a mutual fund, American Funds Builder C with a decent sum of money. I will not draw on it for probably 2 years. What should I do with it?

you need to figure out if that is the best place for your money. The key question you need to ask is this: if you had that same amount in cash...would you put it in that fund?

if not, then sell the fund and do something better with the fund.

The only think wrong with that fund is the high expense because you have C shares- at least 1.4% and probably all in closer to 2%. But American Funds are solid - its a good company.

Good advice. Also, recognize that you don't have to sell or keep all of it. You might split the money among three or four funds and keep a fraction in the original fund... assuming of course that you decide you want to keep the original fund.

Klondike5 wrote:

Down to 14,850 from a peak of 15,700 I believe.

Maybe 5%

What's the bottom?

I am betting sub 13,000

Perhaps this has been asked of the original poster (Klondike5), but I have been wondering - as you wait for the Dow to dip down to 13,000, I have to ask 1) where did you put your money after getting out of the market, and 2) what are you doing with your new investment money as you wait?

Looking forward to your response. Thanks.[

another day another all time high for most major US indices.

This bull market is a steam train - just motors on through all problems.

Inquiring Minds Want to know wrote:

Klondike5 wrote:

Down to 14,850 from a peak of 15,700 I believe.

Maybe 5%

What's the bottom?

I am betting sub 13,000

Perhaps this has been asked of the original poster (Klondike5), but I have been wondering - as you wait for the Dow to dip down to 13,000, I have to ask 1) where did you put your money after getting out of the market, and 2) what are you doing with your new investment money as you wait?

Looking forward to your response. Thanks.[

Bitcoin of course. People are making a killing in it.

Flagpole wrote:

113 wrote:

Just to get this straight: you "win" the bet if the Dow goes below 15,000 at any time in the future. Wow, that is bold. You sit out 7+ months of gains (and counting) and your reward is to get back in the market near the same place you sold? I also like how you criticize the "geniuses" (your term) who held stocks during the 2008 crash while praising yourself for getting out at 12k. If you'd bought more at 12k, you'd be up 33+% on those stocks over the last five years.

This remains one of the funniest threads I've ever read. I don't know if it's funnier that you were so wrong, or that you refuse to admit to being wrong. Both are hilarious.

CORRECT! The thing is though that he is a troll...he HAS to be.

I assume K5 is up to his neck in put options given that the the Dow Jones December futures contract is 16,440.50.

agip wrote:

another day another all time high for most major US indices.

Yeah, except the Dow.

March 10, this bull market will be 5 years old. Of the last 12 bull markets, 6 lasted less than 5 years, 3 lasted 5-6 years, and only 3 lasted longer than 6 years. Here's an interesting article on bull markets.

http://www.marketwatch.com/story/what-this-stock-bull-market-needs-to-live-a-6th-year-2014-03-06

I think the Fed will stop the QE taper if a major market decline starts soon, but after the November elections, there will be less incentive to prevent a major market decline.

for realz... wrote:

agip wrote:

another day another all time high for most major US indices.

Yeah, except the Dow.

Does the Dow look a little weak to anybody else?

Interesting that it hasn't been able to exceed its December highs yet, despite many other US indices already doing so.

I think the major market players may be a bit cautious after reading this thread.

R2D3 wrote:

I think the major market players may be a bit cautious after reading this thread.

Lol, could be. The overconfidence in stocks, and complete dismissal of risk displayed in this thread would give any thinking person pause.

I just glanced at some companies. It is amazing how many are actually below their 200-day moving averages, despite most indices hitting new highs in the last week or two. Over half of what I looked at were sub-200-day including:

WMT

TGT

K

PG

T

VZ

IBM

KO

PM

F

GM

TM

COP

CVX

CSCO

TRV

i wanna be a part of this extremely large thread too!

BRK-B is pretty good too wrote:

The overconfidence in stocks, and complete dismissal of risk displayed in this thread would give any thinking person pause.

You must be new here. If you read the thread, you'll find a healthy respect for risk.

Pointing Out the Obvious wrote:

BRK-B is pretty good too wrote:

The overconfidence in stocks, and complete dismissal of risk displayed in this thread would give any thinking person pause.

You must be new here. If you read the thread, you'll find a healthy respect for risk.

Really? Where's that?