Once in a lifetime buying opportunity???

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armor99

Full time employment: Posting here.
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Feb 24, 2007
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Well.... now that the stockmarket has dipped below 9000, (although on a massive upswing today), I am thinking how can I capitalize on this situation. I have been reading others opinions, and thought I would ask the group their thoughts. After all... the combined financial knowlege and experience would put most brokerage houses to shame... :) Like all of you I have been living the LBYM lifestyle for a long time. As a result I have quite a bit of liquid assets right now. Normally this would have been foolish, but just happened to work out now that the market has gone down so much. I was thinking of opening up a taxable Vanguard Mutual fund account. I am already maxed out on Roth IRA and 401k. I was thinking of taking 15k and splitting it between Vanguards Total Market, and Total internation market. I am currently 35, so I still have a long retirement horizon... So what do you all think.... a smart move... or a foolish one? Thanks for all of your thoughts...
 
what if the market falls below today's levels next year? just like in 2000 - 2002. first it was dot bust, then 9/11, then enron/wcom and then october 2002 was the final capitulation low.
 
al_bundy said:
what if the market falls below today's levels next year? just like in 2000 - 2002. first it was dot bust, then 9/11, then enron/wcom and then october 2002 was the final capitulation low.
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Just to play devil's advocate, what if it DOESN'T??

There's about as much bad news as I can remember in recent history. There could be another sell-off but I don't think the Dows is going to hit 7000 or anything dire like that.......;)
 
FinanceDude said:
Just to play devil's advocate, what if it DOESN'T??

There's about as much bad news as I can remember in recent history. There could be another sell-off but I don't think the Dows is going to hit 7000 or anything dire like that.......;)
Click to expand...

Cramer says DOW 4700 by tomorrow.;)
 
al_bundy said:
what if the market falls below today's levels next year? just like in 2000 - 2002. first it was dot bust, then 9/11, then enron/wcom and then october 2002 was the final capitulation low.
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Possible. But valuations using long-term earnings trends were quite a bit lower in October 2007 than they were in March 2000. And given a fairly similar loss in the Dow and S&P, I have to think that means valuations today are even lower than they were in 2002, assuming you don't think we're headed for the D-word this time.
 
If I were in your shoes, I'd definitely do it. I'd probably wait until tomorrow or later. IMHO, it looks like we'll enjoy a major rally today in both domestic and international stock. As the week wears on, the euphoria will dissipate and I think stocks will temporarily go down. You may want to consider dollar cost averaging in.
 
REWahoo said:
Dawg, have another beer and take your pooch for a walk. Wait, you could be hit by a truck if you do that.

Maybe just go back to bed and pull the covers up over your head...:)
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I think I've had one too many beers the last few days. Almost passed out this morning. Felt good yesterday. Oh well, lay off the beer today. Sucking down coffee this morning.:)
 
Best time to buy is during the big panic days....Agree about waiting on days when the markets are up big....I dont agree with this being like 2000 - 2002...there were a lot of excess to be worked out during that time....as I remember couldnt say that much was cheap...now is another matter;)
 
ziggy29 said:
If the market doesn't recover enough for a 35-year-old to grow a retirement portfolio over 20-30 years or more, we're screwed anyway, whether invested or not.
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Actually I was replying to Al Bundy's statement.

Originally Posted by al_bundy
what if the market falls below today's levels next year? just like in 2000 - 2002. first it was dot bust, then 9/11, then enron/wcom and then october 2002 was the final capitulation low.

I think it will recover. I'm sticking to my 5 day prediction.;)
 
historically secular bear markets run 15-20 years on average. don't have any data on 1873, but the Great Depression was just over 20 years and the 1970's bear market was around 14 years.

median SP500 PE is 15.17 from 1920 to the present. google it to confirm it.

if you factor in $50 earnings for the SP 500 for 2008 then we are right around a PE of 18. the last estimate i read was $63, but that was in the summertime. if the SP500 rallies to 1200 then $63 gives you a PE of 19 and $50 gives you a PE of 24.

if you factor in 10% earnings growth then the numbers are a little better but still way above the historic mean. and there is still a lot of unknowns of what kind of damage the last few months caused that aren't going to be seen until next year. but add in the deleveraging that is going on and then earnings growth that will come out in time and possible bankruptcies next year and we'll see what happens next year.

i bet a lot of corporations are having a lot of meetings to talk about reducing the risk of using short term funding to meet operating expenses
 
al_bundy said:
if you factor in $50 earnings for the SP 500 for 2008 then we are right around a PE of 18. the last estimate i read was $63, but that was in the summertime. if the SP500 rallies to 1200 then $63 gives you a PE of 19 and $50 gives you a PE of 24.
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Historically, P/E is a terrible indicator of valuation during an economic downturn because short-term weak earnings make the market seem way overvalued, even though a classical security analysis valuation wouldn't make it seem so. I think PE5 or PE10 is a much better indicator as it tends to smooth out the boom and bust cycles.
 
To put Cramer's idiotic predictions in perspective he says, referring to G-7 strategies this weekend:

"This strategy, which I presume will not be adopted, but which makes the most sense, would allow for shotgun weddings for all the weak banks to eliminate the bleeding. Without this kind of action I am reverting to a downside target of 6,700 for Monday and then 4,700 for Tuesday in keeping with the hopeful '87 playbook." http://www.thestreet.com/story/10441974/1/why-im-negative-now.html

Today the DOW is up over 500 points, so that puts the first part of his prediction in the toilet.
 
armor99 said:
I was thinking of taking 15k and splitting it between Vanguards Total Market, and Total internation market.
Click to expand...

I think getting in now is a good idea, although I might DCA in over the next 6 months.

My question is in regards to the OPs allocation, since I'm thinking similar thoughts. Would it be better to do the Vanguard Total Internation Fund, or the Vanguard FTSE All-World ex-US Fund? I think there is a significant overlap between the two Totoal funds. Just curious what y'alls opinions are.
 
i personally prefer to look at charts first and fundamentals second since wall street has a lot more computers to forecast these things, and chart wise i don't think we've seen the bottom yet.

i don't like PE that much either but there is a lot of history where we get periods of PE expansion and then years of PE contraction. PE bottomed out in 1982 at around 9. it wasn't the lower than 1973 levels, but i think we are in for some PE contraction.

Safe Haven | The Market is Now in Phase 3: The De-leveraging Margin Debt ...

we're still probably not through the deleveraging process either

and these bear markets are pretty good at wiping out a lot of big companies and cleansing the indexes for the next generation of household names
 
harley said:
I think getting in now is a good idea, although I might DCA in over the next 6 months.

My question is in regards to the OPs allocation, since I'm thinking similar thoughts. Would it be better to do the Vanguard Total Internation Fund, or the Vanguard FTSE All-World ex-US Fund? I think there is a significant overlap between the two Totoal funds. Just curious what y'alls opinions are.
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Taxable or tax deferred?

There is significant overlap, yes. You should check, but I think the FTSE all-world will let you claim the foreign tax credit if it's taxable. The Total International is a fund of funds and, as such, no tax credit.
 
armor99 said:
... I have quite a bit of liquid assets right now.... I was thinking of opening up a taxable Vanguard Mutual fund account. I am already maxed out on Roth IRA and 401k. I was thinking of taking 15k and splitting it between Vanguards Total Market, and Total internation market. I am currently 35, so I still have a long retirement horizon... So what do you all think.... a smart move... or a foolish one? ...
Click to expand...

Smart move, yes, yes, yes! I was in 100% equities until age 45. I'm just now retired, age 62, with 2% of my portfolio from a recent lump sum payout to allocate, 70% of that went into equities last week, I'm thinking about waiting until Friday to put the other 30% in but may have trouble restraining myself that long. I will receive some unexpected small amounts (about two months living expenses) before the end of the year; IMO, it would be a smart move to put them straight into the market. This also looks like a good time for me to move interest and dividend amounts into a stock index. I don't see any risk to my 4% plan in doing this, in fact it should increase the odds of portfolio survival.
 
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