Down goes the Dow

MonkeyMan wrote:

Flagpole wrote:

What did I do as the stock market dropped like a stone? In invested more. I continued investing as always so that when the market dropped below 7,000, I was a buyer. I was a buyer at 6500 and 6700 and 7000 and 8000 and 9000 and all the way up to now. I have made HUGE gains from those buys.

Do you believe this to be generally true? In other words, are there any "game changing" events that may cause large market losses where you wouldn't want to keep buying? I believe the next debt ceiling debacle is coming up in mid-October and if the government defaults this time (they came very close in 2011), you may get your wish for a 7,000 Dow.

Other than the things I already mentioned (within 10 years of retirement or in retirement), there would have to be a MAJOR issue with banks or the safety of the world or something like that before I would not continue buying on the way down. Even if today all the pundits agreed (and they don't by the way) that the market was going to tank and that it would take "years to recover"...well, I've got years...I'm retiring in just a shade under 13 more years. The 2008 year was my worst year by far since I started investing in 1989, and I had fully recovered by 2011....3 years. Big deal. Studies show that those who try to time the market (and the problem is you have to get out and then back in at the right time and be making sure your money is still invested in some way so as not to miss any gains) don't do as well as those who just stay the course. For me, investing is a numbers game. I go with what has been shown to work the best.

Stocks are UP 73% of calendar years. That's good enough for me. When you keep your money in the market, you continue to get dividends. That should not be overlooked, because when the market turns northward again (and it will), BIG gains are the result.

Oh, there's one more way I wouldn't buy on the way down...supposing I suddenly had enough to retire on...if the Dow spiked up to 22,000 or so, I would be able to consider...so I might be done with buying at that point and then just be drawing.

Enjoy the ride down, boys.

I know that Flagpole views a 50% loss in the value of his equity holdings as a good thing but I am sure at least some of you are a little too smart for that.

I sure as hell saw the last one coming and got out early and saved myself several hundred thousand. It didn't take a genius to see that one coming. Unless you listen to experts and think that staying in is always the smart thing....while those same experts continuously speculate and move in and out of the market.

Lemmings. The lot of you. You all probably even believe Syris used chemical weapons on their people on 8/21/13 and have even forgotten Israel began selling this claim many months ago

Flagpole 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

High was 15,658.

The closing high may have been 15,658; it was over 15,700 at one point in June in the early afternoon

"I would LOVE to see the market drop to 7000 again, but I seriously doubt that it will."

Flagpole. You are an incredible fool.

Klondike5 wrote:

Flagpole.

Enjoy the ride down.

Don't say you weren't warned.

Oh wait, you think losing lots of money in a meltdown is a good thing. I forgot.

You know, I've had LOTS of people tell me things like that here. One guy had sold all his stuff and was waiting for the Dow to get below 5300 or some such low number before buying back in. I guess he never bought back in. Others said the Dow would drop to 1700 and then even ZERO!

When I began investing, the Dow was at 2700, so any temporary drop to 7000 or so (and it WOULD be temporary) is no big deal to me. When it swings north again (and it WILL), my shares will just swell up like the cankles on a fat chick.

Buying and selling your stuff (I'm talking your main portfolio which should be made up of stocks and SOME bonds if over 35 in mutual funds) should not be done based on the market...it should ONLY be done based on your age and closeness to retirement.

The plan for everyone should be:

1) Get out of debt and stay there. Seriously. Some of you think that a 2.9% car loan is not a big deal, but it really is. You want your investment dollars to do the most they can, and there's a HUGE difference between just a one percent change in return, but then so many of you will borrow money to buy cars, carry a credit card balance, etc...paying all that extra just helps attack your investment returns. Best to suck it up, get as frugal as possible and pay that debt off, and THEN concentrate on big investing.

2) Invest 15% or more into mutual funds or index funds. Add some bonds if you wish.

3) Keep emergency fund of 3-6 months of expenses at all times and increase to larger if times are uncertain.

4) Plan to retire with NO debt including a paid-for house.

5) Once you are completely out of debt including a paid-for house, and if working you still are contributing at least 15% to retirement accounts, THEN if you like, go do some extra investing in individual stocks. You should always own no fewer than 5 stocks, and you should never be no more than about 20% in any one sector of the market. There are different guidelines to follow with regard to individual stocks, because this is above and beyond what is necessary (this is money you can afford to lose), so if you want to try to chase tops and bottoms, have at it. Not the best strategy, and not one I would use, but this is all Mad Money, so go for it if you wish.

Klondike5 wrote:

I sure as hell saw the last one coming

Wait, I thought you "felt" it.

Unreal.

You have lots of equity holdings while the Dow is at 15,500, it drops to 7,000 as you suggest, and you lose well over 1/2 the value of those holdings.....and you say you hope it does.

You really are deluded

You lose nothing until you sell.

Klondike, you make me lol!

Investor wrote:

You lose nothing until you sell.

Really?

So when your 401(k) equity holdings drop from $1 million to $450,000, in your mind you have lost nothing?

Boy do they have you guys turned upside down.

Klondike5 wrote:

Unreal.

You have lots of equity holdings while the Dow is at 15,500, it drops to 7,000 as you suggest, and you lose well over 1/2 the value of those holdings.....and you say you hope it does.

You really are deluded

Like a superball, the further and faster the market drops, the higher the bounce. Since I won't sell, I won't lose anything, just like I didn't lose anything during the 2008 drop. All that drop did was give me a HUGE buying opportunity and turn the 5-year period of 2009-2013 into the best 5-year period I've ever had (assuming that 2013 ends up about where it is now at least). I'll gladly watch the VALUE of my stocks drop if it means another extended period of amazing gains (and it will mean that).

If I were about to retire and had all my stuff in stocks with no other sources of income, I'd be concerned, but I'm not about to retire, and if I were, I would have other sources of income to tide me over until the stocks were up again and I could draw from them again.

I'll take tried and true over your "feelings" any day. You may get lucky with some selling and then buying later, but if you make out, it's really just luck. I know that people like you like to say things like, "even if I miss it by 50% I still make out". The problem is that MANY people sell when they think the market will tank and then the market doesn't, or they buy back in too early or too late or don't do anything with the money they took out so that they aren't invested in anything for 5 years. It's all bad, brother.

I hope it works out for you, but you don't have to hang your hopes on timing the market...in my case, I will be ok no matter if the market drops or continues to climb. 13 years out from retirement, I could not care less what the market does over even a 5-6 year span, because it ALWAYS comes back, and the overall percentage return is ALWAYS up...to the tune of ~11% annually over time. That's something to bank on (well, to be conservative, don't BANK on an 11% return, but you can count on 7-8%). I've always set my floor at 7%, and over time I've always beaten that...I'm right on ~11% annually, and that's enough to make anyone VERY comfortable in retirement.

klondike,

please. No one thinks losing money is a good thing, to be desired. it is simply something that must be endured.

here is your investing strategy: Sell when you have a hunch the market will tank

here is fp's strategy: buy, hold and add at lower prices.

fp believes that a buy, hold and add strategy will create better long term returns than the hunch strategy, because hunches are frequently wrong. however, you believe you in your hunches because one of them was right.

You tell me: which is the better long term strategy - relying on your hunches or relying on the long term climb of the stock market?

I would not bet a dollar on your hunches, but I would bet on the long term climb of the markets.

The Dow is not dropping below 13000. You can take that to the bank.

Flagpole wrote:

[quote]Klondike5 wrote:

Unreal.

You have lots of equity holdings while the Dow is at 15,500, it drops to 7,000 as you suggest, and you lose well over 1/2 the value of those holdings.....and you say you hope it does.

You really are deluded

Like a superball, the further and faster the market drops, the higher the bounce.

Wow. You really are nuts. Like when the market collapsed in 1929 -- fastest recorded time -- and it bounced back so high and so fast it only took the Dow until the mid 1950s to return to its height in 1929 -- unadjusted for inflation.

You have drunk deeply of the investment companies Kool-Aid.

For me, if I think a meltdown is coming -- I get the hell out. Maybe I will be wrong, but I am 2 for 2 so far (got out late in 1999 and missed the 2000-2002 crash and again early in 2008).

[quote]agip wrote:

klondike,

please. No one thinks losing money is a good thing, to be desired. it is simply something that must be endured.

here is your investing strategy: Sell when you have a hunch the market will tank

You really think it required a hunch to see what was going on in 2008? Call it what you will, it saved me several hundred thousand.

A long term strategy of always being in the market is good for those people who want you in the market so they can bleed you with fees.

Those same experts who tell us not to time the market buy and sell constantly in an attempt to time the market.

I honestly don't know how so many people fall for such transparent and self serving propaganda

Well, if it goes to 13,100, I will be glad as hell I got out at 15,000

8/10.

Klondike5 wrote:

Investor wrote:

You lose nothing until you sell.

Really?

So when your 401(k) equity holdings drop from $1 million to $450,000, in your mind you have lost nothing?

Boy do they have you guys turned upside down.

You either don't have the stomach for investing or the right mindset or both.

You have to consider how that money got to $1 million. MOST investors don't put in a million dollars. They get to a million dollars over time through regular steady investing.

You keep mentioning a 50% loss last time, and technically that's correct, but what happened is that the market spiked up in 2007 until October, so if you take that big spike point and count from there, then yes, there was a greater than 50% loss. To look at such extremes to determine how you're doing is not accurate. I always look at calendar years, and for me in 2007 I was up a TON heading into October before the bottom fell out, leaving me with an about 8% gain for 2007. Then in 2008, I lost 39%. In 2009, I GAINED 34.7%, so when looking at those three years, only 2008 as a calendar year was bad, but if I go from October 2007 to beginning of March 2009 then it's an over 50% loss. Who cares? I didn't sell, bought a LOT of stocks at rock bottom prices, got dividends the whole time, and I'm way better off today than I was in October 2007...and THAT was the worst financial meltdown since the Great Depression. If THAT'S the doom and gloom, then man, I could not care less.

Klondike5 wrote:

[quote]agip wrote:

klondike,

please. No one thinks losing money is a good thing, to be desired. it is simply something that must be endured.

here is your investing strategy: Sell when you have a hunch the market will tank

You really think it required a hunch to see what was going on in 2008? Call it what you will, it saved me several hundred thousand.

A long term strategy of always being in the market is good for those people who want you in the market so they can bleed you with fees.

Those same experts who tell us not to time the market buy and sell constantly in an attempt to time the market.

I honestly don't know how so many people fall for such transparent and self serving propaganda

___

well I'll agree with your condemnation of wall street. Few there are doing the smart thing and advising clients to buy ETFs for .04% and holding them. You can't call 4 cents on each $100 invested bleeding you with fees.

we'll see if this hunch of yours is good. I'll bump this thread on the last day of each month and we'll see how you do.