Like Lehman Bros. and Merrill Lynch?
Actually, I agree with your sentiment, with the caveat to diversify. My wife wisely shifted her 401k to cash prior to the 777 point drop, though her allocations still invest mostly in equity funds. Wish I had done the same. Protect what you have and buy on the cheap. Don’t bother trying to time the bottom, just realize that there are buying opportunities now.
I overheard in one of my classes that a friend of theirs (a friend of a friend, see) decided to buy a metric shit ton of stock as the market was unraveling. Great time to buy! Except, he bought Wachovia. And then the next day, Wachovia no longer existed. Good bye, 40k!
Not really. In the case of Wachovia you get a good number of shares in the bank that bought them.
Wachovia’s being fought over by Wells Fargo and Citi, so who knows how long that will take to sort out.
I heard an analyst say you only get hurt on a roller coaster if you jump off. If you don’t need your money right now, let it ride. My son opened up an IRA last month with $1000 and has lost $100. I told my husband, who was feeling bad about it, that our son hasn’t lost the money, his IRA has just gone down in value. It will go back up, and since he doesn’t need it for another 40 years (at least) he has plenty of time to build it back up again and contribute regularly when he gets out of school and is working in his career field.
The stock market seems to be the only place where people are afraid of a bargain.
I’m not an analyst, but what that chart tells me is that a serious hard-core drop in the market can take 10-25 years to make up (see 1929, 1938) and can remain stagnant for up to 20 years (see 1960-1980). Sure, if you’re young and investing for 35 years from now, you’ll be fine, but there’s nothing in that chart that says people retiring in the next ten years aren’t going to starve.
That’s what my dad has always told me, more or less. “You haven’t lost any money on stock until you sell it.”
Of course, when a company disintegrates, it’s a different story…
So don’t buy individual stocks. Buy mutual funds.
What Giraffe said. That had zero to do with the bailout, which was days ago, and in any case, the DJ fell 500 points Tuesday, which puts it lower than where it was when it lost 800 on Monday. The big concern now is that bailing out US companies isn’t going to be enough because of the bank failures and other problems in Europe over the weekend. For today, the interest rate cuts have helped - the indexes have wavered a couple of times so far - but this problem looks much larger than the bailout now. The clear indication Monday, not that there hadn’t been any before, was that this is a worldwide problem.
That generally isn’t true in my experience. Right now a lot of people aren’t sure anything IS a bargain because they’re concerned everything will go much lower. Which would make them non-bargains at least over the short term.
Yeah, tell me about it. I’ve been consistently buying on the dips over the last year or two (I was in at 13K, 12.7K, 12.3K, 11.5K, and 10.5K) but it just keeps dipping lower and lower. Now that it’s hovering at 9.5K, one part of me just wants to put in a big sum of even more money to help make up for the losses (on the assumption the Dow does recover), but after seemingly losing money to my logic over and over again, it’s really hard to keep faith. In the end, I just decided to dollar cost average automatically by setting up an account to buy in a little bit every two weeks, and just not worry about it.
It seems the same forces that were at work in the housing crisis are at work here: people assume on some level that the current trend (whether upwards or downwards) will go on forever and ever. How is that at all rational?
It isn’t. But I don’t think anybody’s assuming this trend will go on forever. The issue is that it’s very hard to predict where it actually ends, and if you make a prediction that’s wrong you can lose a lot of money. I’ve seen people calling a bottom on the credit crisis and the housing market on and off for probably a year. Nobody wants to be the idiot who says this is the bottom and then get burned when it gets worse. In the short term a lot of people have lost faith that better days are right around the corner. They’re accepting they may have to wait a while.
Okay, but here’s where I’m confused: how long do people usually keep their money in the stock market? Are ALL these people who’re selling right now in the market for such a short time that there’s absolutely no hope they’ll make any of their money back (or at least reduce their losses) by the time they need it?
Everyone has different time horizons. Individual investors like myself can’t shake the market (well, maybe Warren Buffet can). You need giant hedge funds and mutual funds just to make individual stocks move around.
People like myself have at least a 10 year horizon for investments. I plan on buying another house in 10 years, so I’m going to use the money for that, even though I’m down 21% for the year :smack: However, now’s a great time to buy.
Huzzah for God’s greatest gift to Man, the no-load index fund.
I would like to announce that I have just purchased a bucketload of VFINX (Vanguard S&P 500 Index) shares at the moderately low price of $91. It’s been hovering between $110 and $125 or so over the past year. The last time it was this cheap was back in 2003.
True, it’s possible that the market could take further dumps and the S&P500 could go down even more. That’s OK with me, though. I’ve got many decades until retirement, and my savings are a no-go zone until then.
Wanna know why the market is still shaking like a dog shitting razor blades? It’s not the mortgage defaults. It’s a different bomb, one that is only beginning to explode.
WARNING - Do not follow this linkie if you really need to sleep tonight.
Told you so.
I dumped everything that had the word “financials” or “securities” in the prospectus. Now I’m mostly in cash or low load funds that buy the market or a market segment. I’m still bleeding like a stuck pig, but at least I actually own a peice of something real instead of a busted Ponzi scheme.
I’m thinking I’ll sit on the pathetic few clams I have left for at least another month or two. Meanwhile I scour the numbers on some prospects looking at the fundamentals.
Oh yeah, since nobody else has said it ilately:
Learn it, love it, live it.
Hmmm, that wasn’t a real good entry point for the Fool. Sorry 'bout that. Try these instead:
A prediction I posted in another thread. I don’t know anything about the author, but it’s cheery, ain’t it?
…would you believe 9,000?
…8,000?
I personally think that somewhere near 7,000 will be the bottom. We’ve been in moderate conservative mode with our accounts, mostly in tax-free municipals, and right now my portfolio has only taken slightly less than a 5% hit since the beginning of the year. I give credit to my sceerdy-kat wife.