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Old 03-11-2013, 11:12 AM   #41
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I'd like to dollar-cost-average further into W and W if/when prices drop a bit. I know I'm missing out on gains in this surging market, but that's OK. I'm happy with the earnings from the funds I sold; would rather use them if/when I can be a W and W "bargain shopper."
Dollar-cost-averaging ignores valuation; the idea is that the price averages out over time, so you can start it at any time of a cycle -- up or down. If you're going to be a "bargain shopper", that's market timing.

I don't care which anyone does, but most sources differentiate them.
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Please Pardon My Naivete, But.....
Old 03-11-2013, 07:50 PM   #42
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Please Pardon My Naivete, But.....

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Dollar-cost-averaging ignores valuation; the idea is that the price averages out over time, so you can start it at any time of a cycle -- up or down. If you're going to be a "bargain shopper", that's market timing.

I don't care which anyone does, but most sources differentiate them.
Tyro, I'm not sure what you mean by differentiation; do you mean between dollar-cost-averaging and valuation?

Also, I know that market-timing is discouraged; but, due to family circumstances, there have been a couple "seasons" of life when DH and I have needed to step out of a surging market. But we've also reaped healthy gains by waiting out the troughs. (I am a bit proud of the fact that I haven't sold during a "down" market.) Have only sold during "higher" markets, a couple times when family concerns precluded leaving $ on a roller-coaster.

True, this probably kept us from meeting historical market gains. (But, when my husband did this in late '99, he locked in 15 yrs. of gains, with no exposure to the drop in '01-02.)

Because of health issues, he and I have had to sometimes re-visit our tolerance for risk.

I'm certainly not encouraging anyone here to do the same. It's just that he and I worked with too many "returning retirees," who had to go back to work to pay their medical premiums after the drop in '08. Because of DH's health, neither one of us wants to find ourselves in that position (by possibly losing savings in the market).

Please forgive me, readers, if I am serving as a bad example!
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Old 03-11-2013, 07:56 PM   #43
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Please forgive me, readers, if I am serving as a bad example!
I'll ask the question I can never answer whenever I'm tempted to "sell during a higher market", how do you know it isn't going even higher? And even more troubling (for me), if you do sell how do you know when to buy back in?
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Naivete, Part II
Old 03-11-2013, 08:29 PM   #44
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Naivete, Part II

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I'll ask the question I can never answer whenever I'm tempted to "sell during a higher market", how do you know it isn't going even higher? And even more troubling (for me), if you do sell how do you know when to buy back in?
Re. the first question, "How do you know it isn't going even higher?"

We don't. If it does, DH and I simply know we won't be there to cash in on those gains. (Too bad for us; but why be greedy?)

Re. the second question, "...when to buy back in?"

When the market looks like it's heading for a trough (or in one), we/I check the prices on funds we wished we'd had at the previous peak. How much are they costing now? (Probably a much lower price.) Time to buy.

Kind of like shopping for my favorite sandals. I will not spend $100 for them when everyone's wearing them in July. But, in Jan. (when the world couldn't care less about them-- well, the Ohio world, that is), I check them out on line. Then order them up for $39, plus free shipping because the co. is trying to unload them. Come July, I have my sandals and an extra $60 in my pocket. Everyone else who likes them is back to paying $100 for them, plus whatever the inflation is for that year.

Please don't breathe a word of this "method in my madness" to my brother the successful accountant. It would probably curl his hair, plus he would surely try to talk some business sense into me. But he wouldn't have time, because he works such crazy long hours.

So I just try to keep reading more books, and learning about this investment world. Still, a top priority for me is to NOT return to grading essays and research papers, hundreds of hours a year. DH and I try to keep abreast of our risk tolerance. It has evolved over the past 30 yrs. Right now it is pretty low.

Again, my apologies for any "dumb approaches" described above.
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Old 03-11-2013, 08:31 PM   #45
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Kind of like shopping for my favorite sandals.
You need to start an investment newsletter...
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Naivete, Part III
Old 03-11-2013, 08:36 PM   #46
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Naivete, Part III

LOL!

That's when my dear brother would get involved, to help humanity avoid such risk (bless his heart).
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Old 03-12-2013, 01:08 AM   #47
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Tyro, I'm not sure what you mean by differentiation; do you mean between dollar-cost-averaging and valuation?
I meant differentiating between market timing and dollar-cost-averaging. The way you phrased it might be confusing to noobs (or not).

Tyro
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Old 03-12-2013, 01:19 AM   #48
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I'll ask the question I can never answer whenever I'm tempted to "sell during a higher market", how do you know it isn't going even higher? And even more troubling (for me), if you do sell how do you know when to buy back in?
1. You don't, but like horseshoes, hand grenades, and thermonuclear explosions, close is usually good enough. What's important (according to what I've read about it, which was a very long time ago) is to be in during bull markets and out during bear markets.

2. The "whens" in either case depend on the timing model/theory being followed.

I'm not "pro" timing either. I'm on the fence, keeping an open mind, and learning trying to learn.

Tyro
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Thanks, Tyro
Old 03-12-2013, 07:00 AM   #49
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Thanks, Tyro

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I meant differentiating between market timing and dollar-cost-averaging. The way you phrased it might be confusing to noobs (or not).

Tyro
OK-- I see what you mean. So, it seems that DH and I've been using dollar-cost-averaging for much of the past 25 yrs, but then resorting to market timing occasionally when our risk tolerance suggested it.
This is a much clearer way to say it.

Thanks for the help.
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