Klondike5 wrote:
Question for Klondike wrote:Mr Klondike:
Perhaps you stated and I missed it in this thread, but in your previous timing of the market, exactly WHEN did you get back in? And, how will you decide when to get back in going forward?
I got in when the Dow crested 9,000 (it bottomed at 6,800). I just felt it was safe at that point.
So I took the ride down from 14,000 whatever to high 12,000s and missed the ride up from 6,800 to 9,000. But I did avoid the crash from the high 12,000s to 6,800 and watched some people I knew lose as much as $1 million. I felt bad for them (these are not multi millionaires but upper middle class people who have been saving for retirement for decades) but was very glad I was out. That's for sure.
This is really bad thinking on your part. You watched people you knew lose as much as $1 million? Did they sell at the bottom? I'm not going to get into specifics, but in October 2007, I had a very big portfolio that ended up going down by a little MORE than 50%, but just 3 short years later (36 months), all of my value had come back and then some. IF they didn't sell, and IF they relied on other sources of income and cash reserves (as they SHOULD have), then even if they were retired, they could have easily ridden out that storm, not losing anything.
So, you got out at high 12,000s, so about June 2008, and you stayed out until the market had dropped and then rebounded to 9,000, so until about May 2009. So, for ease of figuring, you were out for a year. During that time that you were out, the Dow averaged about 9,000. Did you invest that money that you took out of the market during that time? Did you invest any of your INCOME during that time? Statistically, you didn't, because that's what people do when they leave the market...they either hold the money in some low-interest MMA account or they keep it in cash, thus LOSING value as inflation eats away at it.
When you take money out, you miss out on dividends that are paid during that time, so even if the Dow drops a certain percentage, your value might now due to dividends that you receive...then, once the Dow goes up again, it doesn't even need to get to where it was for your value to have been returned.
When you add in a year's worth of investing that you likely didn't do, then that's just bad too. At best I see a wash here. When you add in risk of trying to time the market, it's just not worth it. You see that you got out at 12,800 or so and back in at 9,000 after it dropped all the way to 6,800 and you think that's good. It's not. I bought at 6500. I bought at 6600. I bought at 6700, and all the way up to the 9,000 that you missed out on. That period of time has MORE than taken care of the drop that occurred, and I didn't have to worry about getting back in at the right time or miss is so badly like you did.
Investing is just piece of your financial house...get and stay debt free, pay off house early and BEFORE retiring, put in 15% of your income into a good mix of growth and value (income) mutual funds, making sure that 25% are international, and then if the market tanks a TON, and you have extra, put more money in then. This is not timing the market...this is taking advantage of a buying opportunity...you can buy a lot more shares when the prices have dropped.