DOW up nearly 300 points today -- hope you all bought more funds or stocks in the last week -- I DID.

I bought into the bear market bounce yesterday, and added today. It will be a short-lived trade however.

The volatility is astounding, to me at least.

I t h i n k we will see quite a rally into April or so(DOW 13,500). Then enter a very dark bear market for 3-5 years. The Fed is backing itself into a VERY tight range.

Watch for the "US dollar carry trade" in a couple years.

Sarcasm aside I wouldn't get out the pom poms and start doing cartwheels just yet

As a usual bull, I don't think we are out of it quite yet. I expect the market to head towards 11,000-11,200 over the next 4 months or so. After that, it will be flat for 2-4 years before the next big run up. I'm going to treat it as a big capital accumulation time.

i believe in election year cycles. the politicians are going to throw money at this market and stimulus in many ways to buy votes. the 4th year of an election cycle on average is positive (in the 10% range) for the stock market. but, watch out for the first 2 years of the next presidency. someone has to pay the bills for the stimulus we are going to see thrown at the voter, and legislation will tighten and taxes will be raised while spending will be cut. i am a long term investor, but i think 2009-2010 will be very tough markets.

I love the dialog (especially football) between Flagpole and Sagarin, but now I'm starting to wonder if they are actually the same person having a dialogue with themselves.

really? wrote:

I don't think we are out of it quite yet. I expect the market to head towards 11,000-11,200 over the next 4 months or so. After that, it will be flat for 2-4 years before the next big run up. I'm going to treat it as a big capital accumulation time.

That would be just fine with me. Accumulation time is always good. If I were going to retire in 5 years I might think differently, but I'm not so I don't.

I just started this thread for fun. I'm neither elated nor depressed depending on the market. Not at what it does TODAY anyway. I'm glad that all the money I put in the market when the DOW was at 5,000 or so has gone way up, but other than looking 10+ years ago to today, I don't care one way or the other. It's easy not to get depressed about the markets when you just put money in like clockwork no matter what, make small changes about once a year, buy big blocks when the market appears down and just hold it all for the long haul.

Bottom feeders. It is not over.

Oh goodie, the market is up. Now I can buy more expensive shares. /sarcasm

Why do long term investors get excited when the market goes up? You should hope the stock market stays low while earnings continue to grow if you are a long term investor and while you continue to put money into the market. When you get closer to retirement, you should hope the market corrects itself and valuations return to historic averages.

Let's see how this Friday pans out...

...and peeps is strangely silent. Hope he's enjoying his canned food.

oh goodie wrote:

Oh goodie, the market is up. Now I can buy more expensive shares. /sarcasm

Why do long term investors get excited when the market goes up? You should hope the stock market stays low while earnings continue to grow if you are a long term investor and while you continue to put money into the market. When you get closer to retirement, you should hope the market corrects itself and valuations return to historic averages.

Umm...read my other post in this thread.

BUT, investors wouldn't want the market to ONLY make a big jump at the end either. You don't want all the money you put in for 30 years to be flat and then get a 43% jump at the end. That's not good enough. You want steady annual gains so that it is compounded. You also want the dividends from such steady continual growth.

Math time:

Scenario 1 -- you invest $8000 a year for 34 years at flat growth. You'll have $272,000. Now, let's say that over the last year it goes up 100%. You'll end up with $576,000. Not bad, but it took that HUGE run up at the end (and likely you would have been more heavy in bonds then and not seen the 100%).

Scenario 2 -- you invest $8,000 a year for 35 years and get 9% annual return (which is below the average of the history of the market) -- that's $2.05 million dollars.

lol

I'm surprised nobody else has responded to Flagpole's "Math Time", so I will.

In your scenario 1, you have a 100% increase over 35 years, whereas in scenario 2, you have a 1943% increase over the same time. So it's no surprise that scenario 2 nets more final value.

Consider scenario 3, where you invest $8000 a year for 34 years of flat growth, leaving $272,000. Now let's say that over the last year it goes up 1943% ... you'll end up with over $5.7 million dollars by my math.

It seems to me that scenarios 2 & 3 are more comparable. Since scenario 3 is clearly preferable, I'd tend to agree with the original poster that it's preferable for the long-term investor to invest while the stock market is undervalued, and then be able to cash out when returned where it should be.

Overall though I do agree with Flagpole's message; it's not worth worrying about day-to-day for long-term investors ... just keep putting money away and over the long term you'll be in good shape.

What? Where are you getting 1943% increase?

In your scenario 2, you're working with a 9% annual return over 35 years. That means $1 today will grow to (1.09)^35 or $20.41 in 35 years, which is an increase of $19.41, or 1941% (OK, sorry for the typo, I guess it's not 1943%).

In scenario 1, the initial $1 invested has only grown to $2 (a 100% increase).

As I said, I don't think it's a fair to compare ending balances based on such drastically different overall growth over the 35 year period.

I do think we're in agreement on the bigger picture, though, just quibbling with the example you selected ...

OldXCguy wrote:

...and peeps is strangely silent. Hope he's enjoying his canned food.

His shift at 7-11 is Wednesday through Sunday.

Flagpole,

You offer good basic advice. If more people would do the basics that you recommend, most would be better off in the long run.

Howerver, it is is a particularly odd thing to me that it seems like you don't the understand the underlying reasons that make your advice good advice. When you try to explain, you only get it half right.

My intent is not to demean you. For someone who spends a lot of time posting about personal finance, I would think you would get beyond the Ramsey's of the world and basic rules of thumb.

oh goodie wrote:

Flagpole,

You offer good basic advice. If more people would do the basics that you recommend, most would be better off in the long run.

Howerver, it is is a particularly odd thing to me that it seems like you don't the understand the underlying reasons that make your advice good advice. When you try to explain, you only get it half right.

My intent is not to demean you. For someone who spends a lot of time posting about personal finance, I would think you would get beyond the Ramsey's of the world and basic rules of thumb.

Ok brother, what did I get HALF right? I'd sure like to know. Dude, I have spreadsheets that I created that do just about any kind of calculation I could ever want to determine how my money is working for me. You have to give me specifics brother if you're going to claim I only get it half right. Put up or shut up.