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Old 04-20-2008, 06:35 AM   #1
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Don't recover yet!

We rearranged our budget this year to put as much cash as possible in the market during the downturn. I also rolled 200k out of employer's 401k to my Fidelity IRA last week which I plan to put 3/4 in Index funds and the rest in individual stocks.

I feel trapped on the sidelines because I hesitate to plug this money into a market at 3-month highs.

I really don't care to DCA this money back into the market, because I want to believe we haven't seen the last of the fear-selling. I was really hoping the doom-and-gloomers were contagious and we would see a Dow in the 11k range through the Fall.

If the Dow stays >12,500 and growing, I will cut back our monthly investments and we will resume some "real-estate enhancement" projects that we postponed for this buying opportunity.

Do you think the big sale is over?
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Old 04-20-2008, 07:34 AM   #2
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There is no way to know what the market will do and whether the big sale is over. Certainly a month ago was a reasonable time to buy in hindsight (but not even in hindsight since you could easily see the Dow dropped 293 points in one day which is a big buy signal on that day). But even now, I would not cut back on monthly investments.

Just don't forget that the market will have to sit around it's all-time market highs for awhile before it eventually goes even higher. So pick an asset allocation and implement it. As part of your asset allocation (AA), you will have a little bit of cash. You can use that bit of cash to buy on dips if you like because your AA will be specified in ranges (i.e. stocks 70% to 80%, ....).
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Old 04-20-2008, 07:54 AM   #3
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Quote:
Originally Posted by Gazingus View Post
I feel trapped on the sidelines because I hesitate to plug this money into a market at 3-month highs...

I really don't care to DCA this money back into the market, because I want to believe we haven't seen the last of the fear-selling...

Do you think the big sale is over?
Gazingus, your angst and your question is the other side of the equation for those who attempt to time the market. Simply put, once you are out, how do you know when to get back in? I gave up attempting to time my investments when I discovered how tough it was to sleep when I worried about having to be right twice - when to get out and when to get back in.

It is almost impossible to know where and when we've reached the bottom. I certainly have no clue (see my sig), so I can't give you any advice on when to reinvest. But once you do, I'd recommend you find an asset allocation you are comfortable with, stick with it and don't worry about trying to time the market.
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Old 04-20-2008, 08:06 AM   #4
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I think you have some time.
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Old 04-20-2008, 08:19 AM   #5
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Listened to a little Brinker yesterday (yeah, yeah, financial porn) ... he's projecting new all time market highs in 2009.

Another bull vote.

Quote:

having to be right twice - when to get out and when to get back in.
Had the same discussion with my BIL. He pulled out of the market near the peak and was patting himself on the back until I said " now the hard part, when to get back in."
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Old 04-20-2008, 08:37 AM   #6
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don't worry about trying to time the market.

Well, that may be easy for you to say, but it's been a problem for us since we retired 21 years ago, and built a place in the Sierras.

The nearest market to us is about 2 miles away, and has changed hands 6 times since we've been here. Down for a few months, and then new hours with new owner.

Easier for us to drive the l6 miles to a place down the hill that's open 24 hours a day, and "go crazy" while we're there.

I'm done with market timing.
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Old 04-20-2008, 08:38 AM   #7
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I feel trapped on the sidelines because I hesitate to plug this money into a market at 3-month highs.
If you want to feel better about the charts---stop looking at the 3 month chart and check out the one year version. It will make you feel like you are getting a much better bargain.
Now if you want to be a filthy, rotten, market timer you may want to wait for the next dip. The market could run a bit more here, but it is going to get overbought fast---besides, we still have not proven we can punch out of this range.....................Sooo, I think I'll take a shower now, all this talk of market timing has made me feel dirty---really dirty
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Old 04-20-2008, 08:51 AM   #8
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Well, my asset allocation has kept my total investment pile fairly stable. During the current "crisis" I have done what I do best; nothing. I predict that my pile will be higher, come year's end. I don't need no stinkin' timing.
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Old 04-20-2008, 09:36 AM   #9
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Had the same discussion with my BIL. He pulled out of the market near the peak and was patting himself on the back until I said " now the hard part, when to get back in."
Mine did the same thing. He pulled out as the market plunged late in 2007. I don't know what his asset allocation was but I suspect it was mostly individual stocks. I think I'd be slightly ahead if I had dumped my mutual funds at the same time but not by more than a few percent.

That is always the question if you get out. "When do you get back in?" He's still predicting the end of the financial system as we know it but he also lives in California.

I'm down almost nothing since the beginning of 2008 (<2%) so it would be hard to justify getting out if I had. Of course, selling at the absolute market top and buying at the absolute market bottom sounds so wonderful. I should just do that all the time.
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Old 04-20-2008, 11:28 AM   #10
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We rearranged our budget this year to put as much cash as possible in the market during the downturn.
My wife and I are doing the same, taking advantage of the sale...

But we don't really try to time the market though. We invest the money using value cost averaging. On the 12th and 25th of each month, our money gets invested based on which asset class has the best relative value at the time, as per my homemade spreadsheet. That spreadsheet tells me what to buy and how much of it to buy. I completely removed emotions and decision making out of the process. The last injection of new money was actually on the 14th (since the 12th was a saturday), which happened right before last week's big run up, so that was a lucky break.
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Old 04-20-2008, 11:41 AM   #11
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I was really hoping the doom-and-gloomers were contagious and we would see a Dow in the 11k range through the Fall.
Do you think the big sale is over?
Oh, I suspect that you still have time for at least another couple rounds of bargain shopping. Frankly the last six months have been nothing like the real market swings we've seen in 2000-2003, Oct 1987, or 1966-82. So if this little airpocket is causing you heartburn then you have a lot of pain ahead of you in the coming decades.

I say that there will be more buying opportunities because we're usually early to the party. We started rebalancing in Feb and we've been fully invested since March. Most of the dividends are being reinvested, too, so for our sake I hope the next year or two really suck.

The real problem isn't the market-- it's your attempt to time it. You'd probably do better in the long term to pick an asset allocation, plunk the money into it, and walk away for a while. The more you educate yourself on the subject, the less you'll be subject to investor-psychology emotions. Eventually you'll realize that you're either the next Lou Simpson... or Homer Simpson.

But you don't have to take our word on it when you can analyze your own performance data. An alternate approach would be to put aside 10% of your portfolio for your "brilliant investor" career. Then you can feel that you're dealing with market volatility in an appropriate manner (whatever you determine that may be) without potentially crippling your long-term returns. After a few years you can see which has done better-- hands-off or hands-on-- and decide how you're going to handle the coming decades.
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Old 04-20-2008, 12:31 PM   #12
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Well, that may be easy for you to say, but it's been a problem for us since we retired 21 years ago, and built a place in the Sierras.

The nearest market to us is about 2 miles away, and has changed hands 6 times since we've been here. Down for a few months, and then new hours with new owner.

Easier for us to drive the l6 miles to a place down the hill that's open 24 hours a day, and "go crazy" while we're there.

I'm done with market timing.
BIG golf clap for you, sir!
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Old 04-20-2008, 03:01 PM   #13
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BIG golf clap for you, sir!

Thanks for giving me the clap, CFB.
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Old 04-20-2008, 04:01 PM   #14
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Old 04-20-2008, 04:06 PM   #15
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You said you rolled out of a 401k last week, but how was the money invested? If it was in stocks, plugging back into equities is really just a sideways move.
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Old 04-20-2008, 04:11 PM   #16
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I feel trapped on the sidelines because I hesitate to plug this money into a market at 3-month highs.
All I will say is this:

(1) My crystal ball is broken; I can't help here. I gave up trying to predict the near-term future of the market long ago. And the funny thing is, my performance relative to the market has consistently been MUCH better since then.

(2) I'm sure that some people didn't buy into the market in January 2003 because they were afraid of buying into a recently bad market "at 3-month highs." They would have left something like a 70% gain in the next four years on the table if they let their fears guide their actions. Granted, this market since October is nothing compared to the overall 2000-2002 losses, but who knows (other than in hindsight) how long a crappy market will last?

IMO, if you're afraid but you KNOW you want this money in the market long-term, at a minimum I'd DCA if I were afraid to go all-in.
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Old 04-20-2008, 04:49 PM   #17
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Market timing doesn't work unless you are just plain lucky.

I lost a job in February 1982. I almost lost our house which I had stupidly put all of our cash into the downpayment to avoid the 14% interest rate. There was no emergency fund to carry us past 3 months. Luckily, the house sold before foreclosure and I got a pile of cash at closing.

I got a new job and put only 10% down on a new house. The rest went into Fidelity Magellan in late July 1982. Now that was perfect market timing.

That whole experience was probably the best thing that could have happened to me. I had my "Scarlett O'Hara" moment. After almost losing the house I vowed to never be poor again.
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Old 04-20-2008, 07:03 PM   #18
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Wash your mouth out! I'm ready to go up up and awayyyyyyyyyyy..........
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Old 04-20-2008, 07:06 PM   #19
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Leave it to Jarhead* and CFB to link market timing with a STD...
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Old 04-20-2008, 07:42 PM   #20
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