Stock market:Letting it roll or taking a breather

[eharri3]

At 29, after staying over 95% stocks for several years and plunging more money in while barely watching the balance creap up, I have recovered much of my losses. Things seem 'artificial' now, due to government stimulus and not due to any real fundamental strength anywhere. Sometimes I wish the government would stop propping up companies that can't compete so they can just die and something better can take their place as I believe this is what will get us back on track faster. Now they seem to have just prolonged another dip that will be just as bad.

My money in my retirement fund is now mostly in the bond fund for the time being while I am putting small amounts of money back into stocks that will increase if and when there is a significant dip. Im betting there will be another dip in the next couple of years before there is a real rally. When things get better Im hoping bonds will be a good bet to be sitting in as interest rates go back up and at the same time I will plunge more and more new money into the stock market when I see a big dip.

What are other people doing right now. I'm kind of getting away from buy and hold. I know you can't expect short term miracles but I was faithful to the stock market through ups and downs for like 7-8 years and it just seems like I am running on a treadmill compared to others who aren't afraid to move winnings to the areas that nobody else is looking at. Not trying to time the market in the short term but every few years I may start taking cash off the table where things are going good and moving it to areas that aren't too popular at the time. Probably won't move money more than once every couple years as necessary depending on where the economy is.

[Songdog]

I went back to all-in when the S&P hit the 800's. Just riding it out from here.

[garywdixon]

Don't have a penny in stocks - never did. What recession?

[tempetom]

I've never been good at timing the market and at your age, I'd keep in equities. Over the long haul you'll do well. Try not to look at the balance too often unless you take ulcer medicine.

[Donda]

I think the market is going to do what the market is going to do. If the Government could control what it does, they would have done it, cloned that Pres. and kept him around. My .02

[longwoodklon]

Buy and hold is for suckers, that's the #1 thing you have to understand now. I read someone once said something like, "people say you shouldn't time the market.....I wonder if they've ever tried."

Sure, they love to show the average over the last 100 years, but I can tell you that after the '01 crash I learned this lesson for the last time, and it's helped outperform all my buy and hold friends. I was all out in Sept. 08. I have tried to hammer this simple fact home to friends and family, many just don't want to put any effort into studying the market. It isn't rocket science. Get some good newsletters, do some research, understand moving averages/candlesticks/options/etc.. This greatly increases the odds in your favor. Most people think it's like hitting the lottery, pure luck. It's not, by understanding some of the trends behind stock movement, you can tip the odds in your favor.

The best thing to happen recently was I rolled my 401k into a Scottrade IRA account. I can buy ANYTHING. Short ETFs, long ETFs, triple levereged ETF's, individual stocks, gold/silver index. It gives me an opportunity to make money in a down market or an up market, something 401k plans don't allow.

For your question, I don't think it's wise to be all in at this point.

/Mike

[pistolpete]

its NEVER good to be ALL IN one area but mild diversification is best...do not over diversify....as for getting into the market...a famous investor once said "Be aggressive when investors are scared but be scared when investors are aggressive!"

I don't totally agree with longwoodklon, but you should do your due diligence because there are indeed, without a doubt, numerous discounts out there....so I agree with Long get some GOOD newsletters like "Outstanding Investments" or some by a guy named Chris Mayer which provide reasoning and not just "buy this hot stock" read them and learn the rational for the picks...don't ever just blindly follow your friends advice....

with many companies trading BELOW book value now is a great time to be nearly "full in" especially if you are young and far from retirement....this is the basis for the buy and hold theory....yes you can make money by being a "trader" like Longwood suggests but the risk is higher and you need to be comfortable with that risk.....many famous economists like Kurt Richebächer and investors like Buffet made millions with a buy and hold theory...

[SOSHeloPilot]

.

At different ages, you can do different things with your money.

I retired a little early and my wife wants to retire early in maybe another 4 years. With that said, we take very few chances before retirement now.

We got out of the market (sans a couple of short term trades in BoA in 2009) in Oct. 2007 before the downturn and are still out.
The housing market was a giant bubble just like the dot coms and was bound to crash.
We don't try to time the market, we try evaluate the events that will change values of equities and try to calculate how much the market will over correct.


IMO ... the market is way ahead of itself in this recovery and the economic base is changing and some countries ...i.e. .... China, India, Saudi Arabia are buying lots of gold. Maybe, they are wanting the Euro and the USD to tank and making them even more money & control ??

The basics of this economy (spending per capita & manufacturing abilities) have changed for many years to come.

For you all with years to recoup your potential losses ... the market is a good investment as long as you dollar cost in and move your investment if necessary.

I will leave you with one last thought .... who is going to help support all the people with little or no retirement funds in the next few years ??
Especially, in maybe 25 years when most baby boomers (with company retirement accts.) have died and those co. paid retirement accts. are gone forever.

The next time you go out ... just look around you and see how many you think will be able to retire without massive govt. help.

The numbers don't work .... and just be prepared to move your money around and invest in other counties too.

The politicians ... for many years ... from BOTH parties ... have run us too far into this financial ditch and our standard of living (as we knew it) is on a downhill slide.

IMO .. we have too many rats on the ship that are not producing something of value in excess of their needs. ... and this is very scary. ...

So much for my rambling ...

.

[chuckystoy]

Just one major question for me and the stocks. When has it ever, the stock market, gone up when soo many banks are closing?? how does that work? unemployment rates high, people still on long term unemployment causing banks to bankrupt, like 100 or so in 1 day/week??

How, with such bad things going on, and the dollar dropping like a rock in water, can the stocks really be going up?

I don't get it?

chucky

[pistolpete]

Originally Posted by chuckystoy

Just one major question for me and the stocks. When has it ever, the stock market, gone up when soo many banks are closing?? how does that work? unemployment rates high, people still on long term unemployment causing banks to bankrupt, like 100 or so in 1 day/week??

How, with such bad things going on, and the dollar dropping like a rock in water, can the stocks really be going up?

I don't get it?

chucky

EXACTLY...NOW you are getting it....nothing has changed the fundamentals are still the same and the worst is yet to come....this is a psuedo "suckers rally"...gov trying to spin things are getting better and that the "R" is over....IT AINT OVER.....be afraid be very afraid and viligant....don't get suckered in by the false "HOPE"....the country already did that last year and nothing's changed! We are in for some very rough times ahead for some of the very reasons you suggest above

[longwoodklon]

You don't have to be a day trader, that's not what I am saying. It's just that buy and hold doesn't work well, you can do much better. Here is an example. Someone studied the market and came up with a simple system. Split your assets into 5 groups, then once a month look at the 200 day moving average. If the price is above the average, buy(stay in). If it's below, get out. This allows you to be in for most of the gains and get out early when the market tanks, and it results in very few actual trades. Look here, download the paper:
http://www.theivyportfolio.com/errata/

I think his point about diversification is right on too. What class didn't get hammered in the recent stock crash? Diversification gives people a false sense of security, when the market tanks most funds do also. If you can put in an hour a two a week, you'll be way ahead of the game.

Another point, if people didn't already learn this. Watch CNBC. Read the Wall Street Journal. Then understand that you should probably do the EXACT OPPOSITE of what they recommend. If they talk about a stock, it's already too late. Take everything they say with a grain of salt.

/Mike

[tempetom]

There are obviously more than one way to invest for the long haul. I have to tell a story about something that happened to me years ago. We had a layoff in the company where I was working and I landed another job with another company. A guy who used to work with me got a job selling life insurance backed up with mutual funds. He showed the 5 year record and professed that I'd never have to pay premiums for the ins. It sounded fishy to me but I felt sorry for him and bought $500 worth of a mutual fund from him. I think it was Enterprise, but it changed names many times over the years. This was right around 1970 ± a year or two. I never bothered to get rid of it and since it was a non-qualified account, I did have to pay taxes on cap gains and other dividends on it. Two years ago, I wanted to replace my AC/furnace and get high efficiency doors and windows so I sold the fund for around $9,000. This wasn't a particularly good fund but if the gains had been allowed to grow untaxed, it would have been pretty good especially if I had more money in it. I was about the same age as the OP coincidentally.
I have no idea what banks closing will do to the market, but I suspect it too shall pass. When unemployment finally lessens, I think the market will show more steady growth (but don't quote me lol).

[pistolpete]

Originally Posted by longwoodklon

You don't have to be a day trader, that's not what I am saying. It's just that buy and hold doesn't work well, you can do much better. Here is an example. Someone studied the market and came up with a simple system. Split your assets into 5 groups, then once a month look at the 200 day moving average. If the price is above the average, buy(stay in). If it's below, get out. This allows you to be in for most of the gains and get out early when the market tanks, and it results in very few actual trades. Look here, download the paper:
http://www.theivyportfolio.com/errata/

I think his point about diversification is right on too. What class didn't get hammered in the recent stock crash? Diversification gives people a false sense of security, when the market tanks most funds do also. If you can put in an hour a two a week, you'll be way ahead of the game.

Another point, if people didn't already learn this. Watch CNBC. Read the Wall Street Journal. Then understand that you should probably do the EXACT OPPOSITE of what they recommend. If they talk about a stock, it's already too late. Take everything they say with a grain of salt.

/Mike

Mike,

I think we are very close in our thinking...I wasn't suggesting you were hinting at day trading but a milder form of buy and hold....and yes diversification does give a false sense of security...the crux of the matter really is that MOST, not all, people just blindly put their money in based on someone elses recommendation, don't due their own diligence and forget about their investments until the market has large swings in either direction...I agree with you that one needs to monitor their investments but not be obsessed with the daily fluctuations....sounds like you got your act together and are giving some great advice.

[SOSHeloPilot]

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I did a little day trading back in the late 1990s and early 2000s and made a little money. ...
My thought process was to use just a portion (25% - 50%) of my available trading funds + extra margin if needed, and I could usually buy my way out and sell a loser.

Recently, (a few months ago) when BoA was down below $3.00, I bought a little around $3.00 and sold it while it was still going up. ...

I never got rich doing this, but made a little money and it kept my interests honed.
Never could pick a bottom or a top ... I just wanted some of the extra cheese in the middle of the stock's price movement. ...

I do know several people who were addicted to Day Trading . (late 1990s & early 2000s) and basically lost their azz. ...

As Mike said about listening to CNBC, I only lost money on day trading when I watched CNBC or listened to a hot tip from someone. lol ...
When I listened to my own gut instincts and research, I usually did pretty well.

This is ... NOT ... an endorsement of day trading. ... .. no .. no .. no .. .. don't do it.

.

[eharri3]

Someone I know recently put it in pretty simple terms for me. If unemployment is approaching records and fewer people can afford to buy nice stuff, good chance the fundamentals just aren't there right now for a real recovery. He just didn't see how it's possible. More likely the the market is getting ahead of itself through a combination of momentum and the government dumping free money into the economy, and will corrcect sooner rather than later. Guy also went on to say he doesnt know and would never try to figure out where the market will be one year, or one month, or one week from now. He looks at where it should realistically be right now in comparison to where it really is and decides whether he should be all in or on the side lines waiting for bargains. Then he sticks with his position through ups and downs until the fundamentals of where things are compared to where they should be change again.