Importance of sticking to a plan

[Stormy Kromer]

In early October the Middle East was shook loose.

I told DW that "the DJ and S&P be down 20% this week and gasoline would be $5 bucks a gallon in the next two weeks"

I didn't do a thing and watched myself be wrong. Saved me a lot of money.

 

[W2R]

In early October the Middle East was shook loose.

I told DW that "the DJ and S&P be down 20% this week and gasoline would be $5 bucks a gallon in the next two weeks"

I didn't do a thing and watched myself be wrong. Saved me a lot of money.

Good decision!

I have noticed much the same, every time I am tempted to market time. Never have done so, thank goodness, because every time it turns out that I was wrong. Luckily it doesn't cost a penny to be wrong if I do nothing.

 

[COcheesehead]

Old Wall St saying paraphrased: buy when the cannons are booming. It was the time to buy.

 

[GrayHare]

Large scale events can cause predictable market changes. That event was too small for me to feel confident about future market moves.

 

[Markola]

Good decision!

I have noticed much the same, every time I am tempted to market time. Never have done so, thank goodness, because every time it turns out that I was wrong. Luckily it doesn't cost a penny to be wrong if I do nothing.

Sure wish I could say that.

 

[Dean56]

"Stay the course"......the storm will always pass.

 

[COcheesehead]

When fear is high, it’s time to buy.

 

[jollystomper]

Here is an interesting article from Investopedia regarding markets and war, with historical numbers and examples of changes to the S&P 500 during times of conflict:

https://www.investopedia.com/solving-the-war-puzzle-4780889

The too-long-to-read summary:

Though war and defense spending can amount to a sizable portion of the U.S. GDP, wars often have little sustained impact on stock markets or economic growth at home.

Markets largely have ignored recent conflicts related to the Middle East and Iran.

A broader regional war, however, may have a more severe impact, especially on oil and other commodity prices.

Still, stock markets have often quickly recovered to pre-invasion levels only a matter of days or weeks after armed conflicts or standoffs begin.

 

[mrfeh]

Everybody should have one of these: https://www.bogleheads.org/wiki/Investment_policy_statement

Mine does not state "ignore geopolitical events" because that is a given.

 

[VanWinkle]

As Buffet says: "The stock market is a device for transferring money from the impatient to the patient.” I think about this quote every time I think I know something and should make a move. It stops me from doing something foolish,.

VW

 

[Midpack]

Remember 1987 Black Monday, 2000 Y2K/Dotcom Bubble, 2008 Financial Crisis, 2020 Covid, wars in Kuwait, Afghanistan, Iraq, Ukraine and whatever other catastrophes you can think of. Now look at the market trend, those events were all trivial in the LONG TERM. Buy & hold looks pretty good - and that is what I have done since 1987, like MANY others here...

 

[jebmke]

Remember 1987 Black Monday, 2000 Y2K/Dotcom Bubble, 2008 Financial Crisis, 2020 Covid, wars in Kuwait, Afghanistan, Iraq, Ukraine and whatever other catastrophes you can think of. Now look at the market trend, those events were all trivial in the LONG TERM. Buy & hold looks pretty good - and that is what I have done since 1987...

This is my #1 memory "chip" on market timing. My wife was in the investing business at the time (buy side). It was wild but with no internet and no real time valuations it wasn't like you could do anything about it. We mainly focused on making sure we didn't get hit by falling investment analysts on the way to Chinatown in Boston for dinner.

 

[Closet_Gamer]

I completely agree with the buy-and-hold view on these things.

That said, I don't think we have seen an intense, wide regional conflict that has significant, negative impacts for a sustained period of time. A war that made the Strait of Hormuz impassable for five years may be a completely different animal, particularly for folks living on the nest egg rather than building it. China v Taiwan would be an even bigger dislocation due to the supply chain impacts.

When we cut off Russia over Ukraine, we cut off their exports oil, gas, vodka, caviar, and not much else. The world has lots of substitutes for all four and could flex pretty easily. The current Israel/Gaza situation is tragic beyond measure but economically irrelevant.

A massive dislocation of oil from the entire middle east would be different. Similarly the collapse of Chinese (and perhaps regional) supply chains.

Over the long-long arc all wars end and the markets would be fine. But those could go 5-10 years and represent economic (and human) catastrophies that very few of us have experience with.

 

[Chuckanut]

An acquaintance of mine sold his US stock index funds in the later half of 2022 because “rising interest rates, even if they leveled off would keep the market down throughout 2023.” So far the SP500 is up 20% this years.

No doubt this acquaintance will soon be on TV saying “The stock market of 2022 wiped out my savings and ruined my retirement.”

 

[GrayHare]

Historically, 5% on the 10 year Treasury has been the inflection point for stocks. Higher than that and stocks wallow. That rate got close to 5% this year but then pulled back.

 

[OldShooter]

As Buffet says: "The stock market is a device for transferring money from the impatient to the patient.” ...

Another:

Buffett: "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell." ... "Lethargy, bordering on sloth should remain the cornerstone of an investment style."

 

[Healthy Lifestyle]

It appears that once the news hits the public air waves, it is too late for everyday people to have an advantage.

 

[TheWizard]

It appears that once the news hits the public air waves, it is too late for everyday people to have an advantage.

Well, there IS no advantage to be had, you see.
So it's not a simple matter of being fast to react, not at all...

 

[Gumby]

Everybody should have one of these: https://www.bogleheads.org/wiki/Investment_policy_statement

Mine does not state "ignore geopolitical events" because that is a given.

Seems too much like work.

 

[Sunset]

Seems too much like work.

+1

I'm too lazy to do much trading and those rare times where I did, it sometimes didn't work out well, so no encouragement to keep trying.

I've failed at trading and got rich..

 

[audreyh1]

"Lethargy, bordering on sloth should remain the cornerstone of an investment style."

Ha ha, sounds like my investing style!

Most of the time anyway. I wake back up around the end of the year for tax management etc.

 

[Gumby]

I personally prefer indolence to sloth.

 

[ERD50]

Another:

Buffett: "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell." ... "Lethargy, bordering on sloth should remain the cornerstone of an investment style."

It's very appealing to me that the lazy/simple way is typically the best for personal investing. Suits me to a tee! And isn't the case in many other endeavors.


I guess it's not a literal quote, but Woody Allen said some things which were simplified to something like 'I attribute 80% of my success to just showing up'.

I think personal investing is like that - just put your money in the market. Just do it. Or, "Time in the market is more important than timing the market".

-ERD50

 

[Gumby]

I have refined Woody Allen's adage over the years. I think 90% of success is just showing up, and 9% is not being a chicken. Only 1% is due to talent.

 

[ERD50]

I have refined Woody Allen's adage over the years. I think 90% of success is just showing up, and 9% is not being a chicken. Only 1% is due to talent.

That's good too. A real-world example for me is, a member of our old home-brew club made a contribution to the hobby and achieved some national recognition for it, and his name is associated with this, and many home brewers would see the name w/o really thinking about it any further (like who wonders who "Phillips" was when they use a Phillips screwdriver?).

When I learned this, I complimented him, and he was very humble about it, "all I did was...". Well, when I looked into it further, what he did actually was very simple/basic, and I understand why he was kind of dismissive of any accolades, so when it came up again, he added "anyone with a little basic math knowledge could have done it", I said "But they didn't, you did!".

He showed up, he wasn't 'chicken' about presenting this info so it would become widespread, but the amount of talent required was actually not such a big deal (not exactly trivial though, but close).

-ERD50