Sally Vix wrote:
Sally Vix wrote:
days like today are why it is so hard to beat the market by trading.
Market down for around five weeks, plenty of bad news...then a massive rally on a hint of trade talks.
What do you do? Buy back in thinking this was just another 8% meaningless drawdown so buy the dip? In theory, in a trading range market you buy the dip and sell the peak and make money that way.
Or do you take advantage of a monster rally like this to sell, thinking that the underlying news remains bad so keep selling?
So hard to do. Impossible, really.
I'm about as light in stocks as I've ever been - around 60%. But that understates my risk because I have another 5% or so in short term high yield bonds.
There is no choice in what to do. If you have money on the side buy into the market! The market WILL rebound. It always does. In 2 months it will be up to previous highs. The market ALWAYS rebounds. Sometimes it may take a while but it always rebounds. 10% annually or 11% with dividends reinvested. Like clockwork. For the last 130 years.
The problem with that theory is that it is not clockwork - a new high could come tomorrow or 20 years from now. I'm nearing retirement...a 50% drawdown would be a life altering event for me. We've had two of those in the last 20 years.
If there were no choice in what to do...everyone, from 10 year olds to 95 year olds would be 100% in stocks.
Yes, you are right. You are close to retirement. My advice was for those not nearing retirement. I still feel the market will be up to earlier highs in 3 months or less. Of course I may be wrong but there is so much money on the sidelines and no other investment alternative even close to matching what the market has done historically. Again, you nearing retirement would be wise to change up your portfolio.