Stock Market

[geekette]

Practice. I've been doing this a while and haven't lost any money in the market. Market timing is certainly one way to fritter away funds but I am buy and hold (so far). I can't tell you that I always buy at the bottom because I don't, I have no crystal ball. Ignore anyone calling the tops or bottoms because they have no crystal ball either. Nobody Knows.

Dollar Cost Averaging is a good way to buy, and if you are on the other side of the equation, not a bad way to liquidate, especially if in a fund.

It is very easy for me to tune out the noise as I find it unlikely that all the blue chips are going to fail overnight due to the Brussells bombing or whatever next thing lowers the market. I have over 70 companies at this point, some up, some down on any given day or period of measurement, but all trending upward over the long haul, and I am a long haul investor. I invest in companies vs The Market, which also helps tune out the doom and gloom or irrational exuberance.

Keep in mind that it is in the best interest of the brokers that you buy and sell frequently as that generates money for them. The media doesn't really know anything except to put on sad face if Dow is down. Down in One Day! Really, what's that mean to my retirement at age 80? Nothing, it means nothing. The 30 companies of the Dow are not for me an indication of anything but investor sentiment towards those 30 companies.

The best thing a person can do is educate themselves about the stock market. Information is powerful protection against herdthink. Having the confidence to make your own mind up about what any given piece of info means is very liberating and removes you from relying on what anyone else thinks, let alone the biased financial community that needs you to churn your account. Analysts are really just people, as fallible as we are, and you can see this based on the wide variety of opinions since they all interpret known facts differently. Really, who knows how much Company X is going to earn over the next 3 months? It's guesswork, largely based on the past. "An Earnings Miss" is hardly a sell signal for me as 3 months barely registers over the investing lifetime. Look at the actual numbers and not someone's interpretation. If you see a trend of declining earnings, then you may need to dig deeper to see what's going on. Earnings Miss could also happen with a company whose earnings are trending up. The point is, look behind the headline.

I think that time and education are all that an individual needs to confidently invest in the stock market and sleep well at night. Buy quality, tune out the noise. And next time you hear SELL SELL SELL, consider what/why they think you should do that. Look into the matter and make up your own mind. For me, sitting in cash on the sidelines is simply never going to happen because I am never Getting Out. I believe that time in the market is superior to timing the market.

My retirement does not depend on my liquidating as I expect to replace my salary with dividend payments and I am on course to do that within 10 years. I'm no financial genius, just someone that educated themselves young so that I don't buy the hype.

 

[Kal]

One day I sat in a financial advisor's office discussing ideas. He said "...well it's like throwing a spitball up against the wall and see if it sticks".

The next day I transferred my portfolio out of his hands. That was probably 10 years ago but it gave me an insight into the world of investing. Who knows? Maybe he had it right.

 

[ace2000]

I think the lesson learned here is - don't buy in, or get out of the market, based on the advice of a Timeshare User Group thread. There was a lot of doom and gloom around here a month ago, but at some point they will be right - there is probably a major downturn coming. Trying to nail that down though, will be virtually impossible. Hopefully nobody around here made the very wrong choice to get out or to pull back a month ago!

 

[PigsDad]

I believe that time in the market is superior to timing the market.

That is a great little nugget. Thanks, Geekette!

Kurt

 

[easyrider]

Invariably, past market crashes and corrections did occur while someone was funding their retirement. I know plenty of people that were to retire around 2007 and 2008 that are now almost 70 and still working because of losses suffered in their portfolios.

In 2002 , Robert Kyosaki wrote a timeline for the biggest market crash that would ever happen. His general prediction is sometime in 2016 and it seems that it is somewhat based on the first wave of ira retirement accounts of baby boomers being utilized.

http://www.marketwatch.com/story/ri...lapse-he-foresaw-in-2002-is-coming-2016-03-23


Bill

 

[lizap]

The key is to decide how much risk you are comfortable with. After taking a look at our portfolio and desired budget post retirement, we discovered we were taking on more risk than we had to and thus de-risked our portfolio somewhat.

I think the lesson learned here is - don't buy in, or get out of the market, based on the advice of a Timeshare User Group thread. There was a lot of doom and gloom around here a month ago, but at some point they will be right - there is probably a major downturn coming. Trying to nail that down though, will be virtually impossible. Hopefully nobody around here made the very wrong choice to get out or to pull back a month ago!

 

[johnrsrq]

Which turned out to be the best advice... Plenty of doom and gloom in this thread turned out to be completely wrong!!! Don't worry, I'm sure they'll all be back during the next downturn.

Stock rebound erases bad start to 2016, proves point to investors

http://www.usatoday.com/story/money...d-start-2016-proves-point-investors/81914668/

Just a push of a few keys beyond 3-4% and off to the races on the downside. Plenty of air in many floating balloons - richly priced. quite a move in IBM- guess buffet & co. brk.a and buyback took it up and caught some napping.

works both ways. it's coming. patience.

 

[lizap]

Significant losses just prior to retirement or just after can be particularly devastating.

Invariably, past market crashes and corrections did occur while someone was funding their retirement. I know plenty of people that were to retire around 2007 and 2008 that are now almost 70 and still working because of losses suffered in their portfolios.

In 2002 , Robert Kyosaki wrote a timeline for the biggest market crash that would ever happen. His general prediction is sometime in 2016 and it seems that it is somewhat based on the first wave of ira retirement accounts of baby boomers being utilized.

http://www.marketwatch.com/story/ri...lapse-he-foresaw-in-2002-is-coming-2016-03-23


Bill

 

[geekette]

Invariably, past market crashes and corrections did occur while someone was funding their retirement. I know plenty of people that were to retire around 2007 and 2008 that are now almost 70 and still working because of losses suffered in their portfolios.

If they haven't recovered by now, it indicates to me that they panic-sold at lows and stayed out of the market. I stayed in and more than made up for that downturn several years ago.

One can always turn to the old rule of thumb about not having money in the market that you need within 5 years. Consider these non-retirees a cautionary tale if you might be susceptible to panic selling.

 

[Elan]

The key is to decide how much risk you are comfortable with. After taking a look at our portfolio and desired budget post retirement, we discovered we were taking on more risk than we had to and thus de-risked our portfolio somewhat.

This is exactly right. There's no "one size fits all" when it comes to the stock market and retirement planning. I was too exposed to risk, which I knew, but couldn't really quantify my exposure until the market dropped in Dec and Jan. Once it bounced back, I re-allocated into a more conservative balance. If I was 35, I wouldn't have bothered. But I'm not.......

 

[Ironwood]

That is a great little nugget. Thanks, Geekette!

Kurt

"Time in the market" is an oft quoted bit of supposed wise advice that can be fool hardy unless you are under 30 and have a very long horizon. Investment firms only make money when you are invested or actively trading. There are times you should be in the market and times you should be out or lighten up. There is no simple answer, but it is true that most long term gains are derived from the gains of a very few really big days in the market which are almost impossible to predetermine and you don't want to miss them. But if markets are heading for a prolonged sell off don't just close your eyes and hope for the best... get some proper advice and lighten up until better times. Strategic timing is a better approach.

 

[PigsDad]

But if markets are heading for a prolonged sell off don't just close your eyes and hope for the best... get some proper advice and lighten up until better times. Strategic timing is a better approach.

Only if the people you get your "proper advice" from are accurate.

How do you find such sages that know where the markets are heading? The so-called "experts" can just as easily be wrong and cost you a lot in lost opportunity gains. In the long term, it is hard to beat the broad stock market in terms of return and risk -- and it is readily available to the common investor, large and small.

Kurt

 

[Talent312]

I do think it's possible to sense when the market is getting overheated or "toppy." It's usually when I start crowing to my friends and family about how well my investments are doing.

Its at that moment that I should lighten up and take some profits. Unfortunately, its too much of a blast to just ride the wave.
.

 

[PigsDad]

I do think it's possible to sense when the market is getting overheated or "toppy." It's usually when I start crowing to my friends and family about how well my investments are doing.

There were a lot of people saying the market was getting overheated all throughout the 5+ year bull market we had after the end of the crash in 2009. Those that pulled out early lost a ton compared to those who stayed in. Hindsight is 20/20; I would bet that close to 50% of the "experts" are dead wrong at any given point in time.

Its at that moment that I should lighten up and take some profits. Unfortunately, its too much of a blast to just ride the wave.

That has probably given you better returns vs. trying to time the market.

Kurt

 

[lizap]

If anyone can predict/time the stock market, then kudos to them. I cannot.

There were a lot of people saying the market was getting overheated all throughout the 5+ year bull market we had after the end of the crash in 2009. Those that pulled out early lost a ton compared to those who stayed in. Hindsight is 20/20; I would bet that close to 50% of the "experts" are dead wrong at any given point in time.



That has probably given you better returns vs. trying to time the market.

Kurt

 

[bogey21]

I had a choice to make in late 2000, take a lump sum or take an annuity. I opted for the annuity. Had I taken the lump sum I would have had a mental breakdown and ulcer in 2008 when the stock market cratered. IMO taking the annuity added years to my life.

George

 

[geekette]

"Time in the market" is an oft quoted bit of supposed wise advice that can be fool hardy unless you are under 30 and have a very long horizon. Investment firms only make money when you are invested or actively trading. There are times you should be in the market and times you should be out or lighten up. There is no simple answer, but it is true that most long term gains are derived from the gains of a very few really big days in the market which are almost impossible to predetermine and you don't want to miss them. But if markets are heading for a prolonged sell off don't just close your eyes and hope for the best... get some proper advice and lighten up until better times. Strategic timing is a better approach.

Close my eyes and hope?? Nice condescension showing you have no idea how I manage my holdings. Seems you talk about broad market but I invest in individual companies.

We will have to agree to disagree as to strategy. Mine works for me and I am certainly past 30 and still a very long time frame, 50 more years if I am lucky. Buying quality companies and holding them over the long haul hasn't lost me a cent. When exactly is a bad time to own Kimberly Clark or General Mills? Why would I dump them to buy them back later at higher prices when I can buy them at bargain prices on a market downer?

Thanks, I'll skip on the "proper advice" you seem to absorb as "strategic timing" is not workable and generates fees for those brokers at every buy and sell. Churning my own account is not in my best interest.

Good investing to all, no matter how you do it.

 

[geekette]

There were a lot of people saying the market was getting overheated all throughout the 5+ year bull market we had after the end of the crash in 2009. Those that pulled out early lost a ton compared to those who stayed in. Hindsight is 20/20; I would bet that close to 50% of the "experts" are dead wrong at any given point in time.



That has probably given you better returns vs. trying to time the market.

Kurt

Yeah, I was lucky to have started my Roth in 2010 and rolled over my 401k to IRA in 2011. Fantastic run, many triple baggers in my stable. It's not always that way, but I'm happy to have been fully invested.

By the time I rolled over my 401k it had already more than made up for the 2007-2008 slide, because I stayed invested and kept contributing.

It takes more than a standard correction (like January, if we made it to official correction) for me to see more red in my portfolios than green. That is value of time in the market. Last week those 2 retirement portfolios hit all time highs, and the rollover gets no new money so it's not cash infusion doing it.

Hang tough, div pal, the best is yet to come. Tuning out the fear mongering is a skill best learned early.

 

[Ironwood]

Close my eyes and hope?? Nice condescension showing you have no idea how I manage my holdings. Seems you talk about broad market but I invest in individual companies.

We will have to agree to disagree as to strategy. Mine works for me and I am certainly past 30 and still a very long time frame, 50 more years if I am lucky. Buying quality companies and holding them over the long haul hasn't lost me a cent. When exactly is a bad time to own Kimberly Clark or General Mills? Why would I dump them to buy them back later at higher prices when I can buy them at bargain prices on a market downer?

Thanks, I'll skip on the "proper advice" you seem to absorb as "strategic timing" is not workable and generates fees for those brokers at every buy and sell. Churning my own account is not in my best interest.

Good investing to all, no matter how you do it.

Gekette...my comment wasn't directed at you, but as a cautionary counter to the general statement, that time in the market is better than timing the market! I was coming at it from the standpoint that most Tuggers like me in my 60's don't have long time horizons for individual securities or portfolio holdings to come back over time. Like you I invest in individual securities and ETF's, but I'm not married to any investment. I don't wish to ride something down only to have to wait 5 to 10 years or longer for it to come back. Your GIS and MKB have been good investments over the past 5 years at least, but to give you a couple of examples of waiting forever, if you had invested in Citigroup (C) 20 years ago, you would be underwater today, AIG has been an unmitigated disaster over that time frame. Many others like Microsoft (MSFT) have essentially had no gains over the same time frame. I have friends who are middle class folks like us, who only receive portfolio statements quarterly, and have told me they only look at them once a year when they sit down with their advisor. They are good friends, but I think that approach to managing their retirement portfolio is foolhardy and I've as much told them so. I could go on, but I'll just leave it....to each their own!

 

[Elan]

I have an ex-coworker who "retired" around age 40 to day trade. I seldom see him, but I know he sold his used Porsche to another friend so he could buy a new one. Some folks can time the market, others can't. As I said, there's no "one size fits all".

 

[geekette]

Gekette...my comment wasn't directed at you, but as a cautionary counter to the general statement, that time in the market is better than timing the market! I was coming at it from the standpoint that most Tuggers like me in my 60's don't have long time horizons for individual securities or portfolio holdings to come back over time. Like you I invest in individual securities and ETF's, but I'm not married to any investment. I don't wish to ride something down only to have to wait 5 to 10 years or longer for it to come back. Your GIS and MKB have been good investments over the past 5 years at least, but to give you a couple of examples of waiting forever, if you had invested in Citigroup (C) 20 years ago, you would be underwater today, AIG has been an unmitigated disaster over that time frame. Many others like Microsoft (MSFT) have essentially had no gains over the same time frame. I have friends who are middle class folks like us, who only receive portfolio statements quarterly, and have told me they only look at them once a year when they sit down with their advisor. They are good friends, but I think that approach to managing their retirement portfolio is foolhardy and I've as much told them so. I could go on, but I'll just leave it....to each their own!

Thank you, as it sure read as a personal attack.

Certainly, to each their own, but the notion of "come back" is not part of my strategy since price has little to do with it. I buy div payers and let them pay me. GIS has paid dividends for over 100 years. What does the retiree need to wait on price for? Ride down? Ride back up? If you own 100 shares, you're getting paid a div on those 100 shares and the div rate has nothing to do with price. Many companies have a long history of increasing that div rate annually so next year, regardless of market price, those 100 shares can pay you more. Folks are free to avoid getting paid to own a company and jump in and out of the market playing price game exclusively.

Sure, anyone that went big into financials got creamed. This is what diversification is for, and buying quality over some hot stock tip or throwing all in on FANG. If people quit buying TP or food, I'm in trouble as I am very deep in consumer staples, preferring the recession-proof products. Short of that, I'll retire within 10 years with dividend income replacing my salary, wherever the market is. Price has pretty much nothing to do with that, except choosing my buy points.

I completely agree that it takes time to get the compounding to show exponential results, but some of the companies I bought in 2011 have already returned to me over 20% of what I originally put in, just for standing pat and reinvesting dividends. These are not results I can count on occurring with any frequency, there was no way of projecting that and it is only about 3 companies out of 20 in that portfolio: the ones that gave multiple double digit dividend raises. I cannot say if I am more lucky or smart, but I can say you don't need to be a professional investor or financial analyst to have great results. Added plus, the volatility of dividends is far less than volatility of stock price.

At the end of the day, if people are saving and investing, that's a good thing, whatever the strategy or vehicle. Perform your due diligence and many happy returns!

 

[easyrider]

Thank you, as it sure read as a personal attack.

Certainly, to each their own, but the notion of "come back" is not part of my strategy since price has little to do with it. I buy div payers and let them pay me. GIS has paid dividends for over 100 years. What does the retiree need to wait on price for? Ride down? Ride back up? If you own 100 shares, you're getting paid a div on those 100 shares and the div rate has nothing to do with price. Many companies have a long history of increasing that div rate annually so next year, regardless of market price, those 100 shares can pay you more. Folks are free to avoid getting paid to own a company and jump in and out of the market playing price game exclusively.

Sure, anyone that went big into financials got creamed. This is what diversification is for, and buying quality over some hot stock tip or throwing all in on FANG. If people quit buying TP or food, I'm in trouble as I am very deep in consumer staples, preferring the recession-proof products. Short of that, I'll retire within 10 years with dividend income replacing my salary, wherever the market is. Price has pretty much nothing to do with that, except choosing my buy points.

I completely agree that it takes time to get the compounding to show exponential results, but some of the companies I bought in 2011 have already returned to me over 20% of what I originally put in, just for standing pat and reinvesting dividends. These are not results I can count on occurring with any frequency, there was no way of projecting that and it is only about 3 companies out of 20 in that portfolio: the ones that gave multiple double digit dividend raises. I cannot say if I am more lucky or smart, but I can say you don't need to be a professional investor or financial analyst to have great results. Added plus, the volatility of dividends is far less than volatility of stock price.

At the end of the day, if people are saving and investing, that's a good thing, whatever the strategy or vehicle. Perform your due diligence and many happy returns!

Geekeete, your understanding of investing is way above that of most investors. I am thinking this of Kurt as well. While anyone could adopt these investment strategies, most use advice from an employer selected fund manager whose job is to keep their money safe more than creating profit.

The most popular market investments are employer sponsered ira's and 401k's. The return on these products in the last two decades has averaged between 3% - 4% before taxes. Inflation is another factor that hurts the value of these investments.

So if a person had accumulated $1,000,000 in their portfolio by age 65 and decided to draw 3% out each month they might have $2,500 a month before taxes. Most people that followed their employer retirement plans have less than $500,000 in their ira or 401k at age 65 and still have a house payment.

What happened was in 2008 for many people wanting to retire was these accounts lost about 30% or more. For many investors it has taken 8 years to get back to where they were because of their contributions to their account. These accounts didn't just even out by themselves for the most part.

I guess I kind of disagree with your statement on panic selling as most of these people I know with retirement accounts find their accounts not liquid friendly and didn't sell off. Once a person is this close to retirement they are somewhat committed because the 3% - 4% they are now earning is a better return than what a savings account yields.

As a result of not making enough money over twenty years because of corrections and crashes, I had to pull the plug on my mutual funds. I ended up purchasing more real estate.

Bill

 

[PigsDad]

What happened was in 2008 for many people wanting to retire was these accounts lost about 30% or more. For many investors it has taken 8 years to get back to where they were because of their contributions to their account. These accounts didn't just even out by themselves for the most part.

I don't know what to say Bill, as those numbers don't match up to anything I have seen. Most places I have read has stated those who stayed invested through the 2008 crash have fully recovered, plus a good margin. Are you sure your friends didn't have actively managed accounts?

Personally, my 401k is now about double in value from the 2008 peak before the crash. Yes, I have made contributions through that period, but the total contributions count for about 20% of my gain. My 401k has limited fund options, but my mix has been about 50% large cap, 25% small cap, 10% real estate and 15% foreign equity (all funds, no individual stocks). It lost about 40% of its value after the crash, but I know I was back to even less than 3 years after (dollar cost averaging really helped here, as I my regular contributions were buying funds at a huge discount). It was very hard to not panic, but I am much better off now vs. if I had tried to time the market. I know my strengths, and market prediction is not one of them.

Outside of my 401k, I am on Team Geekette -- I look for blue chip, solid companies that have a good history of dividend payments, and buy shares of individual companies. Of course I review the companies every once in a while to see if they are still solid companies. It is rare, but I have divested in a couple of companies when their long-term outlook radically changed.

That works for me. I find it low stress (don't have to check portfolio every day / hour / minute) and diverse enough so that I am comfortable with the risk level. If I were 20 years younger, the only change I would make would be to diversify a bit more into real estate. I think that takes more research / knowledge base than stocks and involves more stress but when done well, the returns are definitely there.

Kurt

 

[geekette]

<<The most popular market investments are employer sponsered ira's and 401k's. The return on these products in the last two decades has averaged between 3% - 4% before taxes. Inflation is another factor that hurts the value of these investments. >>

These are the numbers I'm having trouble with. I've had a 401k since mid 90s and I have had way more than 4%, especially in the 90s! I mean the funds themselves on offer were in the 20 and 30% annual gain territory. I don't know, but I would guess I was probably matching the rough over time return of 10-12% annual average as I have always been most everything in stocks, and some international (adds volatility to the up and down sides).

Any 401k or IRA is limited to what you can invest in (no special deals for me), tho IRAs are much more open. Any of us can make a bad call here and there, but to settle for 3-4% over 20 years is ... ludicrous. What are people choosing in their 401ks that they would have this rate of return over 20 years? I certainly had some lower or negative return years (indeed my 401k plunged like everyone elses in 2007/2008) but those were offset by the dbl digit gain years.

The only way I can see to have had such low returns is if these investors choose the Guaranteed Interest thing that is offered in most any 401k and is generally a low-ish rate, but, Guaranteed. Not branching out from that would indeed provide low yet steady growth. Two decades of that is stifling.

I don't ever consider taxes in a tax shelter, that won't matter until I withdraw, so there is no net of tax when there is no tax liability. Inflation hasn't hurt anything in my tax shelters. I'm confused as to how it could?

Anyone thinking maybe dividends are worth a look, check out the old book The Single Best Investment by Lowell Miller. I read it way back, the data is very old but the concepts still hold true. It's an easy read, thoroughly digestible.

Real estate is not for me, I admire those that want to work that hard, but one property to live in is more than plenty for me. I think I would most dislike finding tenants with top yuck being having to evict if I got it wrong. People do make a lot of money in real estate, but it's not going to be me. I don't want to work that hard ; )

 

[geekette]

I don't know what to say Bill, as those numbers don't match up to anything I have seen. Most places I have read has stated those who stayed invested through the 2008 crash have fully recovered, plus a good margin. Are you sure your friends didn't have actively managed accounts?

If the people can identify the tickers of the funds invested in, it can be easily looked up on Yahoo finance or the like. I agree, they would have had to be doing themselves other damage to have not more than fully recovered by now.

Agree, active management can eat away many percentage points per year, muting the gains.