Down goes the Dow

I am with you on using etfs or building your own little mutual fund by buying dozens of stocks as cheaply as possible.

But I disagree that you should just stay in the market no matter what is happening. You have a brain -- use it. The speculators/big players drive the market -- over time I think you can get a feel for what they are up to.

Klondike5 wrote:

I am with you on using etfs or building your own little mutual fund by buying dozens of stocks as cheaply as possible.

But I disagree that you should just stay in the market no matter what is happening. You have a brain -- use it. The speculators/big players drive the market -- over time I think you can get a feel for what they are up to.

I don't believe in hunches. I do believe in systems. I think a viable strategy is to simply sell stock indexes when they fall below the 200 day moving average and buy them back when they rise back above.

This has a certain failure rate and is surprisingly hard to execute in real life, but it would both get you out and back in again based on rules, not hunches. It would have neatly dodged the 2000 and 2008 crashes, but had some false sells over the past few years.

By my favorite global benchmark, the Vanguard Total World Index, we are just 2% above the 200 day, so we are close there.

But in the US we are 8.7% above the 200 day - based on the Value Line arithmetic, my favorite US only benchmark.

So I would not be selling here.

Flagpole wrote:

Bigfoot Investments wrote:

This ^ is the right answer.

Big of you to say, brother. Accurate too.

And again -

I am not your brother. But I am indeed accurate.

[quote]agip wrote:

[quote]Klondike5 wrote:

I don't believe in hunches.

When we all saw the Dow vibrating like crazy in 2008 and trending downward did it really require a "hunch" something was wrong? I don't think so. Common sense

dude, you're using hindsight. Nothing was clear in 2008. when things are clear it is too late.

and now? with quiet volatility, low interest rates, reasonable valuations and steady slow growth...your hunch is based on what? What is so clear right now?

Investor wrote:

You lose nothing until you sell.

This ^ is false.

[quote]agip wrote:

dude, you're using hindsight. Nothing was clear in 2008. when things are clear it is too late.

Really? So when I got out when the Dow had fallen from the mid 14,000s to the high 12,000s in 2008 I was using hindsight? Ditto in late 1999 when I am pretty sure anyone could see the market was way overheated.

There are such things as knowledge and common sense.

Was I 100% certain I was making the right move in 1999 and 2008? No. But it surely seemed the prudent thing to do and as it turned out, it saved me a ton of dough.

Will my move I made in June of this year in getting out of the market prove to be the right one? Who knows. But, obviously, I am betting it is. And you are betting the other way

Klondike5 wrote:

[quote]agip wrote:

dude, you're using hindsight. Nothing was clear in 2008. when things are clear it is too late.

Really? So when I got out when the Dow had fallen from the mid 14,000s to the high 12,000s in 2008 I was using hindsight? Ditto in late 1999 when I am pretty sure anyone could see the market was way overheated.

There are such things as knowledge and common sense.

Was I 100% certain I was making the right move in 1999 and 2008? No. But it surely seemed the prudent thing to do and as it turned out, it saved me a ton of dough.

Will my move I made in June of this year in getting out of the market prove to be the right one? Who knows. But, obviously, I am betting it is. And you are betting the other way

If you are bright enough to see the future direction of the market so clearly I would think that you would be bright enough to see the future direction of this thread very clearly. We all know that you will convince nobody of anything here. What then is your objective?

Bigfoot Investments wrote:

We all know that you will convince nobody of anything here. What then is your objective?

I agree. You can't fix stupid. Groupthink is powerful. Always be in the market, always be buying, ignore what is happening in the market. Good thinking.

Investor wrote:

You lose nothing until you sell.

Klondike5 wrote:

Really?

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

That is correct. Gains and losses are not realized until investments are sold. That's Investing 101.

Investor wrote:

Investor wrote:

You lose nothing until you sell.

Klondike5 wrote:

Really?

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

That is correct. Gains and losses are not realized until investments are sold. That's Investing 101.

You see what I am dealing with?

Investor wrote:

Investor wrote:

You lose nothing until you sell.

Klondike5 wrote:

Really?

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

That is correct. Gains and losses are not realized until investments are sold. That's Investing 101.

That is false.

The fact that a gain or loss is 'realized' is relevant for purposes of calculating tax liabilities. It is not in any way relevant to whether or not you have actually made or lost money.

Investing 101

You have some cash and you invest it in stocks, bonds, or whatever. To get cash back, you sell that investment. Compare the before investment cash to after investment cash and adjust for inflation to determine gains or losses.

Investor wrote:

Investing 101

You have some cash and you invest it in stocks, bonds, or whatever. To get cash back, you sell that investment. Compare the before investment cash to after investment cash and adjust for inflation to determine gains or losses.

$450,000 in stocks is worth, guess what? $450,000.

Whether you convert it to cash, a house or cocaine is irrelevant. It is still worth $450,000. And if you used to have $1,000,000 in stocks but those same stocks are worth $450,000 today then you have lost...let's see if you can guess...$550,000.

$450,000 in stock is only worth $450,000 if you sell it. Otherwise it's just stock.

People like you always have to add that "adjusted for inflation" thing in there. BS is what that is, and just an excuse to not invest. If you AREN'T invested in the stock market, THAT'S when you're really behind the inflation 8 ball. With dividends, for the period you mention, an investor still garnered ~5.5% return, and that's the WORST such period of time you can find that is that long.

The stock market today is VERY different from 1929-1955 too, so apples to oranges.

Bigfoot Investments wrote:

Flagpole wrote:

Big of you to say, brother. Accurate too.

And again -

I am not your brother. But I am indeed accurate.

We're all brother, my brother!

agip wrote:

dude, you're using hindsight. Nothing was clear in 2008. when things are clear it is too late.

and now? with quiet volatility, low interest rates, reasonable valuations and steady slow growth...your hunch is based on what? What is so clear right now?

Yeah, this is right. The thing is, there were SOME Doom and Gloom screamers as early as 2005 on the whole housing crisis...should we have gotten out in 2005? Hindsight tells us no. Would have been prudent to wait until October 2007.

I'd like to know what is SO clear to him too. You and I are not saying we know for sure that there won't be a big drop...we're just saying it's ridiculous for anyone to bet with real money that we will have one when the BEST way to ride out a big downturn is to simply continue to buy (at then discounted prices) and reap the rewards on the way back up.

I look forward agip to you bumping this thread over the next few months.

Flagpole wrote:

Bigfoot Investments wrote:

And again -

I am not your brother. But I am indeed accurate.

We're all brother, my brother!

As in much of life, it takes two yeses but only one no.

And no, I am not your brother.