What to do now with market crash?

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reneeh63
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Joined: Wed Dec 17, 2014 6:12 pm

Re: What to do now with market crash?

Post by reneeh63 »

BolderBoy wrote:
evilityb wrote:
Stan Dup wrote:Put 60% in Vanguard Total Stock and 40% in Vanguard Total Bond. If they grow to a point where they are 15% or more out of balance from that ratio then sell some of the high one and buy the cheaper one until you return to a 60/40 asset allocation (you will probably do this once a year; do it on your birthday).
This asset allocation is WAY too conservative for a 21 year old. You don't need to hold more than 10% of your assets in bonds. Instead of 60/40, think more like 90/10.
Whoa... That is a pretty strong statement. It flies in the face of some legendary investing advice.

I'm not sure there is that much difference between 90/10 and 100/0, so why not suggest that? The AA decision ought to include one's temperament for watching what big market swings do to one's portfolio. Wanna bet there are a lot of 90/10 folks out there right now who are eating Dramamine by the handful?
Well, I have about 10 years to retirement and just THIS YEAR did I go to 75/25 from 90/10.....so for a 21 year old to have such a high proportion of bonds seems to be akin to sticking a toe in the water. But if that's what it takes for him to eventually "take the plunge", so be it! And I don't exactly enjoy seeing the market down, but intellectually I know it's fine and that I have a couple more decades even after I retire that this money will need to stay invested...so no tranquilizers for me, thank you!
reneeh63
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Re: What to do now with market crash?

Post by reneeh63 »

juliewongferra wrote:I know that you may be being unintentionally flip with your words, but calling the loss of ~3.5 % a "crash" only contributes to absurd hysteria and hyperbole about the market's move. Why did the Dow decline by 588 today? Because it had been up so much, and a smallish percentage can only be represented by an apparently large absolute number.

This isn't even close to a "crash" so let's not call it that.

cheers!
--jwf
Yes, I greatly object to "journalists" making "news" by reporting point drops that sound scary but to me are meaningless. Give me a PERCENTAGE, thank you - and even then, I don't even really want to hear about it unless it is 10% or more...and I STILL won't get out of the market :happy
Jfet
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Re: What to do now with market crash?

Post by Jfet »

The only things we can really use the word crash on are oil related stocks and mining stocks.

Those have definitely crashed. Still crashing actually.

When your $40 stock is $1, then you really can panic.
Mambo_Diablo
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Re: What to do now with market crash?

Post by Mambo_Diablo »

TFinator wrote: It's dropped like 4% or 5%? In 30 years you won't even remember this blip. If it turns into a real 'crash' then maybe you will, but we don't know if it will. You said you have no choice but to sit tight. You do have a choice. You could decide that your current investments are too risky for your psyche. Go buy bonds instead, then. You'll have lost maybe 5% of your money, which isn't a big deal, and would be a very very very cheap lesson in what your risk tolerance is.
If you're this worried, then I suspect your tolerance is lower than you went in thinking it was.
I'm not worried at all because my investment fundamentals are sound. That doesn't mean I can't be annoyed that I made an unlucky decision 4-5 months ago to put a sum of money into a well structured diversified ETF portfolio rather than put the cash into an offset account that saves me money each month and be in a position now to purchase into a rising property market in Australia where I'm from. I'm just getting started and my plan was to get my etf portfolio rolling first, and then start work on property. Had I done this the other way around, then in 10 yrs time reckon I would have been in a markedly better position than what I will be.

When I said I had no choice, what I meant was that I will definitely NOT sell anything, otherwise I loose out in both the short term and the long run. The choices that I do have are as follows: a) dollar cost average into the market during this period of uncertainty and take advantage of the volatility, or b) put all my savings over the next 6 months into my offset account. If I choose option (a) then I delay option (b). If I choose option (b) then I potentially miss some of the advantages of dollar cost averaging into a market following a correction.
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Jerry55
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Re: What to do now with market crash?

Post by Jerry55 »

Mambo_Diablo wrote:All I can think is that I should be adding some funds into the market right now to take advantage of the crash and the effect of dollar cost averaging? Thoughts anyone???
Yep !!! In late 2008 to early 2009, I was 50/25/25 in the TSP @ C/G/F funds. For those 6 months, I moved my

G and F funds into the C fund in about 8-12 movements. I also went to 100% C fund starting around Nov. 2008.

I had maxed out my contributions + over 50, and believe me...if I was working and had "earned income", I'd be

running wild investing and such, but I can't. The ONLY thing I can do is put $$$ into my daughters Vanguard

Target Retirement 2055 Fund. I did last Thursday, but I'll watch this market for now...I'm certain the option will

appear soon....very soon. Then I'll POUNCE on her behalf. :moneybag
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!
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siamond
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Re: What to do now with market crash?

Post by siamond »

Goedheiligman wrote:I am 21 years old and have $10k investing cash set aside. What would be a good course of action in a situation like this?
Don't overthink it. You're very young, and this is a small amount of money compared to your future savings. Just put your $10k in Vanguard Total Stock Market Index Fund Investor Shares (VTSMX), in one chunk, and go back to save more! Right now sounds like a pretty good opportunity to start.

Then yes, do more reading to refine your future strategy (AA and IPS). If you liked "If You Can", then maybe you're ready for a more beefy (and yet easy to read) book from the same author, e.g. the Four Pillars of Investing.
rgs92
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Re: What to do now with market crash?

Post by rgs92 »

Down about 10% is a crash? After 100% up in the last few years, I think we should all be grateful for the bounty and rewards of the stock market.
wxyz
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Re: What to do now with market crash?

Post by wxyz »

DOOM&GLOOM REPORT 2.0

For those that are all DOOM&GLOOM or those that are currently paralyzed by fear, indecision, panic, or similar adjectives, here is where we are as of the close yesterday.

SP500 YEAR TO DATE (-2.21%)

DOW YEAR TO DATE (-4.33%)

CONSIDERING THAT both have a dividend yield in the neighborhood of +2% or a little above the REALITY, at the moment, is......

SP500 YEAR TO DATE NO GAIN, NO LOSS. 0%

DOW YEAR TO DATE SLIGHT LOSS OF ABOUT (-2.2%)

That is it. In other words after all the panic and fear and flailing around of the past month or so and this year to date......ALL OF THE MASSIVE GAINS OF THE PAST 7 YEARS ARE INTACT.

AS USUAL..........those that hold through events and drama and panic and fear do just fine and over the LONG TERM will handily beat those that try to time the markets.

(Not intending to advise anyone else to do anything, make your own decisions based on your own personal factors)
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Sheepdog
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Re: What to do now with market crash?

Post by Sheepdog »

Time to bring this up again. Hope no one panicked at the "crash". And, I hope the OP invested when he started this. Today, 10/22/15, the Dow posted it's biggest gain since Sept. 8. It is now at 17489.
It was at 15781 on 8/24 when this thread started..
Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
Grt2bOutdoors
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Re: What to do now with market crash?

Post by Grt2bOutdoors »

Sheepdog wrote:Time to bring this up again. Hope no one panicked at the "crash". And, I hope the OP invested when he started this. Today, 10/22/15, the Dow posted it's biggest gain since Sept. 8. It is now at 17489.
It was at 15781 on 8/24 when this thread started..
True, but most folks aren't buying the "DOW", they are buying the S&P 500 or the Total Stock Market Index.
The S&P 500 was 1893.21, yesterday it closed at 2052.51; a gain of 8.24%. The Total Stock Market Index was up 7.8% in the same time period.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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