Puzzley
Recycles dryer sheets
- Joined
- Sep 3, 2007
- Messages
- 169
What will I do? Watch the market a little, yawn, and do nothing....
Who knows? It could be the high for the next few years. Personally I think it's still on it's way down unless some miracle happens. For example the war ends and we win, all closed areas are opened up to drilling oil, the government bails out the lenders and borrowers, the FED sets interest rates at minus 2%, Bush sends out $50,000 stimulous checks to everyone, someone invents a large SUV that gets two hundred MPG and does zero to 60 in 2.5 seconds......all I need is a miracle.the high as compared to what?
What will I do? Watch the market a little, yawn, and do nothing....
Existing money needs to stay where it is, even if it takes nerves of steel. New money can go into CDs, a low-cost index find, or even bonds or treasuries if your portfolio need some rebalancing.At 55, and desperatly wanting to ER, I'm considering pulling out of the market and going to cd's for a while.
your thoughts?
I'm going to take the day off from work and have a nice breakfast
I'm still looking for the system that tells me when that will happen.
Today in the Sun Sentinnel newspaper I read an article about a plant that grows in South America that may be "one" of the alternative fuels of the future...it's oil may power our cars. I don't remember the name of it...look it up in today's Sun Sentinnel(south Florida newspaper)...this plant grows for up to 40 years, needs little water, and doesn't get eaten by wild animals(sounds miraculous to me)....thing is it can take "years" to know and to grow enough of it....there will be alternatives "eventually"....until then the market may go down or sideways(who knows?...not me).Who knows? It could be the high for the next few years. Personally I think it's still on it's way down unless some miracle happens. For example the war ends and we win, all closed areas are opened up to drilling oil, the government bails out the lenders and borrowers, the FED sets interest rates at minus 2%, Bush sends out $50,000 stimulous checks to everyone, someone invents a large SUV that gets two hundred MPG and does zero to 60 in 2.5 seconds......all I need is a miracle.
Today in the Sun Sentinnel newspaper I read an article about a plant that grows in South America that may be "one" of the alternative fuels of the future...it's oil may power our cars. I don't remember the name of it...look it up in today's Sun Sentinnel(south Florida newspaper)...this plant grows for up to 40 years, needs little water, and doesn't get eaten by wild animals(sounds miraculous to me)....thing is it can take "years" to know and to grow enough of it....there will be alternatives "eventually"....until then the market may go down or sideways(who knows?...not me).
Never a truer statement made...even more so when you are months away from ER.
At 55, and desperatly wanting to ER, I'm considering pulling out of the market and going to cd's for a while.
your thoughts?
I'm thinking that we'll need a lot more posts like these before the market reaches capitulation.The doom and gloomer's are predicting another 20% drop.
Last October, they were predicting a dow of 15 by year end '07....lol
We did a 40% drop after 9/11... then our portfolio doubled over the next five years. Things seemed to work out OK.I'm not a "doom and gloomer" but history shows an additional 20% decline is not out of the question. What you do then is the bigger question. Once the crowd starts to dump stocks in earnest it will test your fortitude.
Oh, please, you're trying to apply rational logic to a market that has neither. Spouse's ER'd uncle started shorting the overvalued NASDAQ in late 1998, when it couldn't possibly go higher by any rational logical analysis, and he shorted himself right back into the workforce until 2006.Come on...lets be honest. While I still believe that buy-and-hold is probably the best strategy to either gain wealth, or maintain buying power in retirement (mainly because it is essentially impossible to pick a top or bottom), there is something to be said for capital preservation.
How many of you **really** believed the market could streak further skyward last October? With the credit crunch that appeared in Aug, the meltdown in sub-prime mortgages, home prices plummeting and foreclosures going out the roof?
I'll bet virtually all of you - deep in the gut - knew that it couldn't continue. That a major sell-off wasn't only necessary, but inevitable. This at a time when virtually all of the world's stock markets weren't only at an all-time high, but growing exponentially. Nothing does that over time - exponential growth always ends with a collapse. Just look at China, or maybe closer to home a bacteria colony.
Now its going to take a 27% gain in the DOW to get back to the Oct high.
My only real point here is that while rebalancing, it makes sense to look at the market, try to get a feel for where it is historically valuation wise, consider the economic *knowns*, and if it is more likely than not that downside potential outweighs upside, to at least reduce exposure.
Remember the old adage - not losing money is every bit as important than making money.
Of course the ultimate in capital preservation would be an annuity.
Oh, please, you're trying to apply rational logic to a market that has neither. Spouse's ER'd uncle started shorting the overvalued NASDAQ in late 1998, when it couldn't possibly go higher by any rational logical analysis, and he shorted himself right back into the workforce until 2006.
We rebalanced in February because our asset allocation had gotten too far out of whack. That way we didn't have to be rational or technical or [-]psychotic[/-] psychic. With the appropriate cushion of cash and a chosen asset allocation, the rebalancing should take care of the capital preservation.
Of course the ultimate in capital preservation would be an annuity.
Come on...lets be honest. While I still believe that buy-and-hold is probably the best strategy to either gain wealth, or maintain buying power in retirement (mainly because it is essentially impossible to pick a top or bottom), there is something to be said for capital preservation.
How many of you **really** believed the market could streak further skyward last October? With the credit crunch that appeared in Aug, the meltdown in sub-prime mortgages, home prices plummeting and foreclosures going out the roof?
I'll bet virtually all of you - deep in the gut - knew that it couldn't continue. That a major sell-off wasn't only necessary, but inevitable. This at a time when virtually all of the world's stock markets weren't only at an all-time high, but growing exponentially. Nothing does that over time - exponential growth always ends with a collapse. Just look at China, or maybe closer to home a bacteria colony.
Now its going to take a 27% gain in the DOW to get back to the Oct high.
My only real point here is that while rebalancing, it makes sense to look at the market, try to get a feel for where it is historically valuation wise, consider the economic *knowns*, and if it is more likely than not that downside potential outweighs upside, to at least reduce exposure.
Remember the old adage - not losing money is every bit as important than making money.
A list of excellent books for those who would like to or need to learn more about investing:
Investment Books
One of the books on the list providing an interesting discussion of financial history that some here might find beneficial is A Random Walk Down Wall Street by Burton Malkiel.
Required reading would include The Four Pillars of Investing by Bernstein and The Bogleheads' Guide to Investing by Larimore et al.
The question is how do you reduce the risk of losing money. The buy and hold folks say pick an AA you can live with, climb on the roller coaster and hold on to your hat. What you are proposing is in essence market timing, no? Nothing wrong with it, but basically you have to be able to recognize a top in order to make the right move. In general I keep my asset allocation pretty conservative for someone my age (I am 34 and my AA is only 65-70% stocks), so I tend to ride the ups and downs. And so far that's exactly what I have been doing. My portfolio overall is down only about 8.6% from July 2007, much less than the overall stock market and I don't feel panicked about it. Nor am I kicking myself for missing the top.
But I have to admit that in mid 2007 I started feeling like we were heading into trouble, so I put my play money to work and I bought a bear market fund (when the DOW passed 13,000 on the way up). But by October of last year, when the DOW passed 14,000 I felt like I had made a big mistake and I almost got rid of it but for once my procrastination paid off. I am glad I didn't, but I think it showed me that it is difficult to make the right decision at the right time and not second guess yourself all the way. And now I have to decide when to sell this puppy...
You see, FIREdreamer - you actually have more guts than I do.
Yes, in a sense it is market timing. But when P/E ratios climb into the upper bounds of historical ranges, you'd better have a damn good reason to believe that they will be sustainable.
Nothing wrong with taking some money off the table if you're lucky enough to have a gain. Theres also nothing wrong with not investing when the markets are excessively expensive.