U.S. stocks in freefall

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Postby ddb » Wed Aug 10, 2011 9:13 am

Lbill wrote:But, even more important, I want to see stocks get killed so I can buy. The last time I bought was the very day the S&P hit bottom at 666 back in March 2009. Going for a 2-fer.


Lbill wrote:No, I honestly think that investing in stocks stinks. It's a legitimate viewpoint even though it's a voice in wilderness in the Cult of Equities. You can make pretty good returns without undergoing the torture of the stock market - I always have.


In quote 1 above, you say that you've owned stocks before, and want to own them again. In quote 2, you say you have always earned good returns without being invested in stocks. Which is it?

In any event, you are obviously skilled, as you managed to not only buy stocks near the bottom in 2009, but on the actual lowest day which occurred. Well done!

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Postby Lbill » Thu Aug 18, 2011 10:24 am

HE's BAAAACK!!!

Image
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Postby exoilman » Thu Aug 18, 2011 10:27 am

:yawn
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Postby neverknow » Thu Aug 18, 2011 10:31 am

exoilman wrote::yawn

:yawn :yawn :yawn
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Postby BigD53 » Thu Aug 18, 2011 10:48 am

We Don't Know, and We Don't Care???

:shock: :roll: :undecided :oops: :confused :(

Some of these Bogleheads must have Cast Iron stomachs! :lol

:thumbsdown
:thumbsdown
:moneybag
:moneybag
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Postby Sidney » Thu Aug 18, 2011 10:57 am

I love the pictures that appear in the news web pages of traders with their hands over their eyes.

Image
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Postby Calum » Thu Aug 18, 2011 10:59 am

Old news, the twitter fund is way ahead of this.

http://www.theatlanticwire.com/business ... ket/41389/

:P
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Postby DaveS » Thu Aug 18, 2011 11:01 am

How's that 100% equity allocation working out for ya. Dave
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Postby VictoriaF » Thu Aug 18, 2011 11:03 am

I have never been a fan of a bumper-sticker logic whether it is "Sell!" or "Yawn." For me, a day like today is quite unnerving. I successfully avoided last week's gyration by the virtue of being disconnected from the media. I prefer spending my money on vacations to having them disappear into the abyss of falling markets.

Victoria
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Postby nisiprius » Thu Aug 18, 2011 11:06 am

Isn't it annoying when you can just see exactly how the market is going to go, and then it doesn't?

Image

Darn!

Image

Darn!
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Postby Lbill » Thu Aug 18, 2011 11:07 am

Dare I say it? As of the price today, the S&P 500 has a cumulative return of 5% for the last 12 years, including dividends. That's not counting inflation. Puts me in mind of the Count of Monte Cristo's last words:

"But, as Until the day when God will deign to reveal the future to man, all human wisdom is contained in these two words, Wait and hope."
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Postby Dieharder » Thu Aug 18, 2011 11:14 am

I am buying. Bought last week, this week, and buying again today.

At some point I figure I will reach levels beyond which I don't want to deplete my cash position. If the market keeps falling after that point then I would have bought too early.

Oh, well, the perils of not having crystal balls.
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Postby Trader007 » Thu Aug 18, 2011 11:18 am

Bad numbers today. High inflation as well so Fed can´t do much if they ever could.
Focus on the butterfly..
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Postby Michael Baker » Thu Aug 18, 2011 11:19 am

Dieharder wrote:I am buying. Bought last week, this week, and buying again today.

At some point I figure I will reach levels beyond which I don't want to deplete my cash position. If the market keeps falling after that point then I would have bought too early.

Oh, well, the perils of not having crystal balls.


I am doing the same thing.
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Postby neverknow » Thu Aug 18, 2011 11:22 am

VictoriaF wrote:I have never been a fan of a bumper-sticker logic whether it is "Sell!" or "Yawn." For me, a day like today is quite unnerving. I successfully avoided last week's gyration by the virtue of being disconnected from the media. I prefer spending my money on vacations to having them disappear into the abyss of falling markets.

Victoria


Good point, Victoria.

I am yawning, because I didn't believe in the first place. There is most definitely something unnerving going in the world -- don't know that I am smart enough to know what it is, but as for stock markets -- I have very little exposure.

I'm postal mailing in my CD renewal forms this morning, and turning in my saved up change, all neatly rolled for the bank ($36 worth ... coins by themselves don't buy anything anymore).

I don't know what else to do other then return to my roots. Spend less then you earn.

When I was 7 years old (1962) I could get into a Saturday matinee for 35 cents and for 15 cents more, buy a box of milk duds that would last the whole movie (or I made them last). 50 cents. Nothing costs 50 cents anymore, other then a roll of pennies.
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Postby btenny » Thu Aug 18, 2011 11:45 am

Boy do I know nothing is like it used to be. Back when I was in high school we used to go to a small Mexican town across the border from our home for a fun day. We would get a haircut for 50 cents, fill up the car with gas for 10 cents per gallon and then walk over to the pool hall and play a game for 5 cents and have a beer for 10 cents.Then we would go swimming at the water hole on the way home. Life was good. The whole day would cost maybe $2.

Bill
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Postby neverknow » Thu Aug 18, 2011 12:01 pm

btenny wrote:Then we would go swimming at the water hole on the way home. Life was good.
Bill


I've thought a poll on who has swam in wild water. Not a swimming beach, but wild water. You know, you climb up the tree roots and jump off the limb. And don't even anyone think the water was cleaner back then, because prior to 1970 and the first "Earth Day" -- it sure wasn't.
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Postby HomerJ » Thu Aug 18, 2011 12:11 pm

Lbill wrote:Dare I say it? As of the price today, the S&P 500 has a cumulative return of 5% for the last 12 years, including dividends. That's not counting inflation.


Rats, it's too bad I put all my money in the market 12 years ago, and haven't added to it, or rebalanced since.

"Lies, damn lies, and statistics"

One could just as easily post a postive thread pointing out that "as of the price today, the S&P 500 has a cumulative return of 75% for the last 2.5 years, including dividends"...

Interestingly enough, one could also post that "as of the price today, the S&P 500 has a cumulative return of 75% for the last 8 years, including dividends"

Both are as true as your post.

Also one could say this.... "as of the price today, the S&P 500 has returned 10.55% a year for the last 35 years"

That's right, those historical returns of 9%-10% INCLUDE decades of poor performance and bear markets.... Weird, huh? A bear market does not "prove" that investing in stocks is a bad idea... We've had multi-decade bear markets before, and STILL stocks returned 9%-10% over the long run.

It MAY be different this time... I doubt it though... But I find it very disconcerting that you take JOY in the downturn and HOPE that it IS different this time and we all get permanently financially devastated.

That would make you happy?

Very sad.
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Postby bigDanShan » Thu Aug 18, 2011 12:15 pm

Lbill wrote:Dare I say it? As of the price today, the S&P 500 has a cumulative return of 5% for the last 12 years, including dividends. That's not counting inflation. Puts me in mind of the Count of Monte Cristo's last words:

"But, as Until the day when God will deign to reveal the future to man, all human wisdom is contained in these two words, Wait and hope."


The S&P , excluding dividends, is down 40% in real terms since it's all time high back in tech bubble days. The awesome power of the secular bear.
"Be kind, for everyone you meet is fighting a hard battle." – Plato
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Postby HomerJ » Thu Aug 18, 2011 12:17 pm

bigDanShan wrote:
The S&P , excluding dividends, is down 40% in real terms since it's all time high back in tech bubble days. The awesome power of the secular bear.


Behold the awesome power of calculating from the last peak! (also, the awesome power of excluding dividends!)

Kind of like those guys who always compare gold's return from the absolute peak in 1980, assuming that anyone who has ever bought gold, bought it all during that one week in 1980.
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Postby woof755 » Thu Aug 18, 2011 12:21 pm

rrosenkoetter wrote:
bigDanShan wrote:
The S&P , excluding dividends, is down 40% in real terms since it's all time high back in tech bubble days. The awesome power of the secular bear.


Behold the awesome power of calculating from the last peak! (also, the awesome power of excluding dividends!)

Kind of like those guys who always compare gold's return from the absolute peak in 1980, assuming that anyone who has ever bought gold, bought it all during that one week in 1980.


For the record, I'm with you. But, a twinge in my brain says that a behavioral economist might say that many, many people do buy more during the peaks. Investor returns lag fund returns by significant margins. That is what makes me sad.
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Postby SVariance1 » Thu Aug 18, 2011 12:25 pm

I suspect that the majority of people on this board are heavily invested in bonds so this downturn may be somewhat muted for them. Until this year I was 100% equities but the risks, IMO were too high to justify that type of allocation. At this point, anything I would sell would have a cost associated with the sale. Not sure that I want to go down that path. At the same time, I am not a buyer of equities on any of these dips. Lastly, I don't think it is wise to dismiss these large declines and high volatility as routine.
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Postby Lbill » Thu Aug 18, 2011 12:41 pm

Behold the awesome power of calculating from the last peak! (also, the awesome power of excluding dividends!)

Kind of like those guys who always compare gold's return from the absolute peak in 1980, assuming that anyone who has ever bought gold, bought it all during that one week in 1980.

Yeh, you've got a good point there. It's good to remind stockbugs that they can be cut with the same sword they often wield against goldbugs. Each has their day in the sun, and now it's the goldbugs' turn. :mrgreen:
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Postby GregLee » Thu Aug 18, 2011 1:04 pm

Dieharder wrote:I am buying. Bought last week, this week, and buying again today.

At some point I figure I will reach levels beyond which I don't want to deplete my cash position. If the market keeps falling after that point then I would have bought too early.

Same here, and trying to be patient and keep some cash back in case prices get still better.
Greg, retired 8/10.
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Postby Beagler » Thu Aug 18, 2011 1:20 pm

Days like this are why dry powder can be useful: some high quality stocks are (again) on sale. However, this is tempered by the real pain of investors who must liquidate equities to make ends mee; for them I certainly hope things change, but I'm not betting on it. Low FI rates don't help.
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Postby Lbill » Thu Aug 18, 2011 1:44 pm

I feel sympathy for those especially depending on their equity-tilted investment portfolios to fund their retirement. It would be heartless to feel otherwise. I feel real animosity toward the financial investment establishment and financial media that probably put them in the position they're in. The last decade has been a sad lesson for us all, and class isn't over yet, apparently. There is sounder guidance available to those who are nearing retirement if they have the opportunity to avail themselves and I hope they can.
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"You can't connect the dots looking forward; but only by looking backwards." ~ Steve Jobs
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Postby Daffy » Thu Aug 18, 2011 1:57 pm

neverknow wrote:When I was 7 years old (1962) I could get into a Saturday matinee for 35 cents and for 15 cents more, buy a box of milk duds that would last the whole movie (or I made them last). 50 cents. Nothing costs 50 cents anymore, other then a roll of pennies.
neverknow


50-years later you can now get a movie from a Redbox or Blockbuster Express vending machine on any street corner for $1, or in some case free with a coupon code. Throw in a box of milk duds for 0.50 cents and there's your entertainment for the night, just as cheap as it was 50 years ago.
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Postby SVariance1 » Thu Aug 18, 2011 2:00 pm

Beagler wrote:Days like this are why dry powder can be useful: some high quality stocks are (again) on sale.


I hope it is not a final sale, where you can't return the item
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Postby UnderTheMatress » Thu Aug 18, 2011 2:01 pm

I rebalanced part of my 401k to purely large cap Stock funds earlier this week (figured sell bonds high, buy stocks low). So much for that idea. Good thing I only rebalanced a small amount as I was afraid there was more red to go.

Wonder what tomorrow will bring. I want to rebalance more bond into my Spartan 500 fund, but not when it's still freefalling...
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Postby zeugmite » Thu Aug 18, 2011 2:02 pm

Lbill wrote:I feel sympathy for those especially depending on their equity-tilted investment portfolios to fund their retirement. It would be heartless to feel otherwise. I feel real animosity toward the financial investment establishment and financial media that probably put them in the position they're in. The last decade has been a sad lesson for us all, and class isn't over yet, apparently. There is sounder guidance available to those who are nearing retirement if they have the opportunity to avail themselves and I hope they can.


I think there is a lesson here, but in a more subtle way than whether stocks or bonds should fund one's retirement. At the end of the day, stocks and bonds are sold at certain prices such that either could fund a retirement. All stocks could do for you is give you a bit more risk premium over the long run. It's something but not that much really. In good times, people do tend to forget that (1) the 20% returns of stocks going up is only on the upswing, not a long-term trend, and (2) the long-term risk premium is only gotten when there is panic in the streets. I think you're absolutely right that the financial media overhypes stocks, when compared to their objective pluses over boring bonds, so much so that when you hear the word "market" you think stocks, even though the bond market is larger.
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Postby MWCA » Thu Aug 18, 2011 2:09 pm

Beagler wrote:Days like this are why dry powder can be useful: some high quality stocks are (again) on sale. However, this is tempered by the real pain of investors who must liquidate equities to make ends mee; for them I certainly hope things change, but I'm not betting on it. Low FI rates don't help.


What happens when you run out of powder.
We are all worms. But I believe that I am a glow-worm.
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Postby TrustNoOne » Thu Aug 18, 2011 2:10 pm

VictoriaF wrote:I have never been a fan of a bumper-sticker logic whether it is "Sell!" or "Yawn." For me, a day like today is quite unnerving. I successfully avoided last week's gyration by the virtue of being disconnected from the media. I prefer spending my money on vacations to having them disappear into the abyss of falling markets.Victoria


No reason you can't do both at once.....
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Postby Sheepdog » Thu Aug 18, 2011 2:14 pm

Those in the accumulation stage can feel panic, but they can also feel "buying opportunity." But, I feel for those retirees who need income from their nesteggs, but maintain higher stock levels. Some can't learn from the past. "Everyone" says they should have more in order to grow, beat inflation, etc. Now their panic is deeply felt.
Thankfully, I learned so there is no panic......at least, I think so.
Jim
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Postby VictoriaF » Thu Aug 18, 2011 2:15 pm

TrustNoOne wrote:
VictoriaF wrote:I have never been a fan of a bumper-sticker logic whether it is "Sell!" or "Yawn." For me, a day like today is quite unnerving. I successfully avoided last week's gyration by the virtue of being disconnected from the media. I prefer spending my money on vacations to having them disappear into the abyss of falling markets.Victoria


No reason you can't do both at once.....


I do my part, the market does her part. And yes, she and I can do it simultaneously.

Victoria
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Postby maxinout » Thu Aug 18, 2011 2:38 pm

MWCA wrote:
Beagler wrote:Days like this are why dry powder can be useful: some high quality stocks are (again) on sale. However, this is tempered by the real pain of investors who must liquidate equities to make ends mee; for them I certainly hope things change, but I'm not betting on it. Low FI rates don't help.


What happens when you run out of powder.


You hope the market goes on a rally!
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Postby oragne lovre » Thu Aug 18, 2011 2:39 pm

btenny wrote:Boy do I know nothing is like it used to be. Back when I was in high school we used to go to a small Mexican town across the border from our home for a fun day. We would get a haircut for 50 cents, fill up the car with gas for 10 cents per gallon and then walk over to the pool hall and play a game for 5 cents and have a beer for 10 cents.Then we would go swimming at the water hole on the way home. Life was good. The whole day would cost maybe $2.

Bill


Boys, you really had a good time then.
Let see if I can do something that is that cheap today: Probably an evening tennis match and 30-lap swimming that are free at free home association court and pool. Oh, and getting a bit of TSM shares when they're cheaper anyway.
Just trying to make life good when "the sky is falling down." :)
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Postby Random Musings » Thu Aug 18, 2011 2:42 pm

I'm sure when we are in a secular bull - Lbill will remind us why equities are so great.

As long as he calls the bottom within 2 S&P handles or on the day of the low, it'll be okay.

RM
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Postby Calum » Thu Aug 18, 2011 2:44 pm

MWCA wrote:What happens when you run out of powder.


I think that means you didn't catch the knife.
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Postby jh » Thu Aug 18, 2011 2:54 pm

.....
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Postby SVariance1 » Thu Aug 18, 2011 2:59 pm

Lbill wrote:HE's BAAAACK!!!

Image


As a fellow bear on this market, I have to say that you might be a little too enthusiastic about the downside. My guess is that posts like this might irritate some people.
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Postby SVariance1 » Thu Aug 18, 2011 3:06 pm

jh wrote:Plenty of blood on the streets today. This bear is mauling equity owners, chomping on them like salmon.


I don't think there is any blood yet. We have had strong rallies within the declines that gives people some hope.
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Postby HiAlphaLowBeta » Thu Aug 18, 2011 3:12 pm

Dieharder wrote:I am buying. Bought last week, this week, and buying again today.

At some point I figure I will reach levels beyond which I don't want to deplete my cash position. If the market keeps falling after that point then I would have bought too early.

Oh, well, the perils of not having crystal balls.
I'm somewhat of a novice so please don't slam me but isn't the "Boglehead" way to (for the most part) only buy/sell during rebalancing periods and trying to buy/sell when you think the market is too low/high is merely timing the market which is a loser's game? Not trying to offend, just asking since I haven't bought/sold a thing during these past few weeks. I'm also 30 and I feel as though I can ride this out like 2008, but just want some input in case I'm way off base.
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Postby Mel Lindauer » Thu Aug 18, 2011 3:14 pm

HiAlphaLowBeta wrote:
Dieharder wrote:I am buying. Bought last week, this week, and buying again today.

At some point I figure I will reach levels beyond which I don't want to deplete my cash position. If the market keeps falling after that point then I would have bought too early.

Oh, well, the perils of not having crystal balls.
I'm somewhat of a novice so please don't slam me but isn't the "Boglehead" way to (for the most part) only buy/sell during rebalancing periods and trying to buy/sell when you think the market is too low/high is merely timing the market which is a loser's game? Not trying to offend, just asking since I haven't bought/sold a thing during these past few weeks. I'm also 30 and I feel as though I can ride this out like 2008, but just want some input in case I'm way off base.


Many younger investors (like you) are buying in these down markets because they're investing via their 401k, 403b or other retirement plan on a regular basis. They like it when the market is down, since they're getting more shares for their invested dollars, and so should you.
Best Regards - Mel

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Postby SVariance1 » Thu Aug 18, 2011 3:20 pm

HiAlphaLowBeta wrote:
Dieharder wrote:I am buying. Bought last week, this week, and buying again today.

At some point I figure I will reach levels beyond which I don't want to deplete my cash position. If the market keeps falling after that point then I would have bought too early.

Oh, well, the perils of not having crystal balls.
I'm somewhat of a novice so please don't slam me but isn't the "Boglehead" way to (for the most part) only buy/sell during rebalancing periods and trying to buy/sell when you think the market is too low/high is merely timing the market which is a loser's game? Not trying to offend, just asking since I haven't bought/sold a thing during these past few weeks. I'm also 30 and I feel as though I can ride this out like 2008, but just want some input in case I'm way off base.


I think for the most part you are right. Most people here would tell you to ignore the daily gyrations and buy/sell based on your investment plan. Rebalancing is a big part of it. This approach has lots of research to support it. My approach is a little different.
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Postby HomerJ » Thu Aug 18, 2011 3:21 pm

HiAlphaLowBeta wrote:
Dieharder wrote:I am buying. Bought last week, this week, and buying again today.

At some point I figure I will reach levels beyond which I don't want to deplete my cash position. If the market keeps falling after that point then I would have bought too early.

Oh, well, the perils of not having crystal balls.
I'm somewhat of a novice so please don't slam me but isn't the "Boglehead" way to (for the most part) only buy/sell during rebalancing periods and trying to buy/sell when you think the market is too low/high is merely timing the market which is a loser's game? Not trying to offend, just asking since I haven't bought/sold a thing during these past few weeks. I'm also 30 and I feel as though I can ride this out like 2008, but just want some input in case I'm way off base.


You're right that one shouldn't "rebalance" (i.e. sell bonds and buy stocks) inside your bands based on a gut feeling.

But an easier way to "rebalance" is to change all new 401k purchases, taxable contributions, etc to be 100% stocks...

So yeah I'm buying stocks during this downturn... 100% of all new contributions are stocks for me right now.
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Postby UnderTheMatress » Thu Aug 18, 2011 3:25 pm

Mel Lindauer wrote:Many younger investors (like you) are buying in these down markets because they're investing via their 401k, 403b or other retirement plan on a regular basis. They like it when the market is down, since they're getting more shares for their invested dollars, and so should you.


Which is what I'm doing. I reallocated some of my bond funds in my 401k over to Large Cap Spartan 500 fund. Figured I might as well sell my bonds high and get a low price on the stock fund. I usually don't rebalance (as said in the post above me) on a whim but I figured this is a good time.

Then again, I probably did it a bit too conservatively as I only rebalanced about 5%-8% of my total bonds into the stock fund today.

Probably tomorrow (depending on if we continue the freefall), I'll fund my RIRA too with stock heavy funds.
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Postby Manbaerpig » Thu Aug 18, 2011 3:35 pm

I've got all new contributions into 401ks/etc to be 50/50 stocks/bonds for now

who knows how far this rabbit hole goes..
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Postby xerty24 » Thu Aug 18, 2011 3:35 pm

SVariance1 wrote:I don't think there is any blood yet.

I agree.
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Postby Beagler » Thu Aug 18, 2011 3:35 pm

MWCA wrote:
Beagler wrote:Days like this are why dry powder can be useful: some high quality stocks are (again) on sale. However, this is tempered by the real pain of investors who must liquidate equities to make ends mee; for them I certainly hope things change, but I'm not betting on it. Low FI rates don't help.


What happens when you run out of powder.


Work provides more dry powder, I don't anticipate running out.
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.
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Postby HiAlphaLowBeta » Thu Aug 18, 2011 3:39 pm

Thanks for the feedback. I'm still working on my AA plan, and I do contribute to my 401k (My balance is very small (1%) compared to my taxable so it hardly impacts my AA). Still kinda seems like market timing because by buying 100% stocks you are changing your AA based off market conditions rather than the three risk factors (ability, willingness and need). However, if you keep your AA in your 401k, then naturally by regularly investing at pay periods, you will be buying more stocks when low and less when high.
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