Originally Posted by joesxm3
I had sat for over five years with my ultra-conservative allocation and finally got itchy and started making changes at what, in hind sight, was not a good time.
Is your name Randy? I ask because long ago I had the "Randy" indicator.
I've been investing in the market every since I got a job after college (late 70's). In the late 90's (I think it was Sept 99 or so), I was at a party and was chatting with a guy there (Randy). He had inherited a big chunk of change from his parents, but was super conservative with it. He had watched the market rally though the 90's, all the while this $ was in savings accounts and CD's.
He had finally decided to move the $ into the stock market. My advice to him, given how much the market had run, to dollar cost average in over the next couple/few years.
He of course ignored that advice, and moved the money into the market towards the end of 1999.
I then saw Randy (again at a party), a couple years later where he was complaining about having lost so much money in the market. He was thinking of "selling it all" and moving it back to savings/CD's. I mentioned to him that selling it all would likely not be a good long term decision.
I asked him (and our mutual friend) to let me know when he gave in and sold it all. That occurred in late 2002. I decided to increase my market allocation when I heard the news.
I'm not relaying this story to pick on you or belittle you. What I am trying to convey is that our emotions can play havoc with investing results.
. I too have made mistakes because of this, and that the "madness of crowds" is a factor at market peaks and valleys. This is by definition, because SOMEONE has to be buying stocks to drive them to valuations which are unsound, and SOMEONE has to be selling due to fear even those those factors (and more) are already priced into the market.
While I play with market timing, the above is why so many here rightfully suggest that people should NOT try to time the market. Pick an asset allocation and stick with it, and stop beating yourself based on past history.
It is also why I am a very strong believer in doing things in small steps, never big changes all at once.
Why? Because I don't want my emotions to make me a Randy.