Market Pummelling

[preben]

uncle; well I agree partly, but as I am close to FIRE (have initiated part-FIRE through new job) there will be less money coming in from now on, and therefore less cash to buy stocks for. Same for the guys in the 60ties/80ties you mention - are they still working (or have so fat pensions) so they can keep buying stocks at lower prices!?

I DO have an income stream of 3% in div/interest and can live for 2% so in hard times that 1% can and will be directed to new stock purchases I guess but otherwise do not see any advantage in market drops for retired or FIREd people.

Cheers!

Quote:

I'd rather buy when stocks are on sale than when they are at a premium. A downturn in the market is not a bad thing for those who have a long term view. *This applies, IMHO, to those in 50's and 60's as well as those in their 20's. *I just happen to know a few people in their 80's who think the same way-- I love optimists! That being said, I have no idea which way the market is going Monday, next week, next month; therefore, DCA.

[unclemick]

I like to shift deck chairs on the Titanic.

Since the bulk(75%) of my retirement portfolio is balanced index requiring no action, I have this side money I play with via DRIP's and quasi DCA and try to put in a little extra on perceived dips.

Right now - don't golf. fish, or even kayak - so putzing in the market is fun. If it gets boring, I'll park the the money in another balanced index - say Wellesley which is managed value so I'll feel like I 'picked' something.

Unfortunately the weather has been good - so the market may lose interest for me until October or later when our version of winter gets here.

[Delawaredave]

Hey - this is an ER forum - I thought all of you were "long term" !

Instead there's all kinds of "technical guesses" on where the market is going.

You have S&P PE ratios in the "high teens" at best. Still above average.

Gotta move towards "average" - especially with earnings peaking and interest rates going up.

So even a "rational market" would move 5% below where we are now. If you look at DCF models on market, you see same picture.

If things get "irrational", then you get a market only supporting PE's in mid-teens -- therefore possibly another 20% drop.

We're close but above "fair value". Don't buy now. And don't sell now. This is that time of the storm where you "hunker down" and wait.

But what do I know......

[lazyday]

Quote:

What I do not like about this drop is that nothing seems to counter the drops even when looking at a well diversified portfolio. Energy have done well but everything else have dropped in tandem.

This actually doesn't surprise me. Lots of us have complained that we can't find anything cheap, or even anything that is much cheaper relatively than other things. I think this is because the market is more rational than usual, as a reaction to the silliness around the turn of the century. So, lots of $ are desperately trying to find the best priced assets. Therefore, during a drop, it makes sense for things to drop about equally, unless there's a fundamental reason for one to drop more.

The markets overall may seem expensive, but there may be some rationality to that as well, since very long term money IMO should be in the market, even at today's prices. (That doesn't mean I think a crash can't happen.)

Delawaredave, I agree with you on long-termedness. So far I haven't responded to the drop myself. I might put half my cash back in the market though at some point.
Also, don't forget that most posting are probably just venting, and won't do anything nutty.

[Nords]

Quote:

... but otherwise do not see any advantage in market drops for retired or FIREd people. Cheers!

Shorting MORE stocks.

[laurence]

Yep, just venting, I'm not deviating from the game plan. I know twenty years from now when I'm 50 this will be long forgotten.

[brewer12345]

As I told my dad (again) this morning: ignore the little day to day swings. We should care if someone is offering us way more for our assets than they are worth or if someone is offering to sell us a nice asset for way less than it is worth. Otherwise, go have fun and ignore the day to day stuff.

BTW, I am waiting for some spin-offs (AmEx and Pitney Bowes) and watching DLX. Other than that, I am sitting tight.

[charlie]

There are usually 2-3 bear traps on the way down.
Keep your powder dry for now.

Cheers,

Charlile

[charlie]

Ben, I noticed that REITs and foriegn equity did not
drop as much as US equity yeaterday.
Diversification is still alive and well. *

Cheers,

Charlie *

[uncledrz]

Ben
The 50-60 year olds look at their next 25 years and have determined that a portion of their portfolio needs to be in a potentially growing asset.
The 80 year old just likes to play.
Uncledrz

[ak4195]

Bonds are nice,4-5% looks swimmingly well.

[cute fuzzy bunny]

Quote:

Well TH, you are FIRE and I'm not, so you must be doing something right, I'll give you that much! But why you gotta bring up ELN (still holding. by the way)? :P

Right place at the right time, turned chicken in 01/2000 when everyone else was brave. Thats about it...

A couple of days after you mentioned your ELN droppage I turned on Bloomberg at about 5am after a morning baby feeding and the first thing on the screen was ELN up something like 17%. I thought 'I hope Laurence bought some of those shares while they were the blue light special'. I actually thought about grabbing some but my individual stock days are over.

[MRGALT2U]

Hello! Not only are my "individual stock days" over
so are my "stock days" generally.

I was thinking the other day that I am pretty content
with where I wound up investment-wise. This is
especially interesting as I can't say I really obsessed
over it like I do over a lot of stuff. I think the idea
that it's all just a big crapshoot anyway helped to remove some angst. Whatever.............I watch the news but the ups and downs of stock prices are of little interest to me.

JG

[BUM]

Holy Crap. Wait till you hear THIS one.

My kid brother has a very, very expensive big time, big deal investment manager who in addition to commissions charges 1%/year on the portfolio, payable 1/4ly upfront . Well bro has been depositing funds routinely and got pissed that they were sitting apparantly in a non-interest bearing account. So he calls the guy and hollers at him to get the cash invested.

Next day bro is big into GMAC bonds. Says the bigshot says they're 9.something% and only 18 months duration and heck GM would have to default on their regular stock and preferred stock dividends before these bonds would be in trouble...don't worry.

Now I dont think these bonds are necessarily a bad investment. Depends on why you want them. I'd just like to see this broker's balls in a biscuit.

BUM

[RockMiner]

A few weeks ago I took my equity allocation from 50%+ down to about 35%... and yes, I'm sleeping pretty well at the moment Large cap value tilt has also helped.

IMO, there are times when being a DMT makes sense. If you buy the concept that we may be in for an extended period of a flat-ish market, then infrequently trading significant dips may offer the best chance for gains.

Sit-on-your hands investing worked well during the Bull market, but no style is best for all environments...fighting yesterdays war etc.

[brewer12345]

Quote:

Holy Crap. Wait till you hear THIS one. My kid brother has a very, very expensive big time, big deal investment manager who in addition to commissions charges 1%/year on the portfolio, payable 1/4ly upfront . Well bro has been depositing funds routinely and got pissed that they were sitting apparantly in a non-interest bearing account. So he calls the guy and hollers at him to get the cash invested. Next day bro is big into GMAC bonds. Says the bigshot says they're 9.something% and only 18 months duration and heck GM would have to default on their regular stock and preferred stock dividends before these bonds would be in trouble...don't worry. Now I dont think these bonds are necessarily a bad investment. Depends on why you want them. *I'd just like to see this broker's balls in a biscuit. BUM

Actually, I think GMAC bonds are a buy right now, especially the 2 to 3 year maturity bucket. No way they will default in that time period, and you are getting paid wildly high yields to take what appears to be a small amount of risk.

Now the broker, OTOH, probably should be taken out to the woodshed.

[laurence]

Thanks for thinking of me TH, I didn't have much more to buy with, but now I think I can break even if I sell all shares at 7 . Some one else mentioned just tucking it away and looking at it years from now. I don't need the money so I'll stand pat. You can't learn poker by watching! :P

Maybe I'll buy some GMAC bonds with that 20k...

[cute fuzzy bunny]

I believe that would provide a nice visual for the term "from the frying pan into the fire"...

[razztazz]

TH....

Quote:

Right place at the right time, turned chicken in 01/2000 when everyone else was brave. Thats about it...

I was in much the same boat. Got out in mid 2000. Just something in the air. Reminds me of what Bernard Baruch said:

When he was asked how he had been so consistantly successful in the stock market, he replied, "I always sold too soon."

[MRGALT2U]

"I always sold too soon".............I like that.

Re. the GMAC bonds.....most of you know I am loaded
already. Honestly though, if I had the cash available
to tie up, I still think it's a no-brainer. I would buy more in a heartbeat. Those yields are too good to pass up
IMHO. However, you don't need an expensive broker
to tell you that. I just told you for free

JG