Good questions Bigdawg. I am 55 so 7 years till I can take early SS. I have retiree healthcare thru megacorp. I have come to pay little attention to the swings in the market and do not invest emotionally so I would not panic and sell with a 30% drop in the market.
Would you sell with a 50% drop in the market? 55%? 60%?
None of these are out of the question. We experienced greater than 50% drop in 2008-2009. And the PE 10 where the drop halted was not as low as PE10 has been at other times in my investing life. Here's a good thought experiment-The S&P lost 86.1% between 1929 and 1932. No wonder people jumped out of windows! If this happened today, our political system might not survive.
IMO, the question should be is there any drop that might lead me to sell? If so, I should sell enough now so that I can answer that question with a no. This is not a "let it ride", go for broke plan, but it is a safer one.
I know that realistically, few manage money this way, but it does actually make better sense than assuming some arbitrary limits on what might happen.
It cannot be denied that equity index investments with lower basis are more likely to lead to profit and larger profit, than the same indexes held at higher prices.
I am re-reading a Brazilian novel written 50 or so years ago called
Dona Flor and Her Two Husbands. One of these gentlemen is a gambler, and it really brings to mind the warring feelings that many of us investors may experience but may not mark. Also recently bought a 99 cent Kindle edition of Dostoevsky's
The Gambler. If someone has been an investor for long time, he may know that the same feelings that live in gamblers often enough are also present in investors, especially when markets are high and apparently going higher.
Ha
