Bought in, and then they start tumbling

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winguy
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Bought in, and then they start tumbling

Post by winguy » Mon Jan 27, 2014 10:36 am

Hi,

I seem to have a bad timing when it comes to making contributions to my portfolio. I only contribute quarterly. Last time I did so in bonds, it was just before bonds started to fall. Recently when I did so in stocks, it was just before the recent plunge.

Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?
Last edited by winguy on Mon Jan 27, 2014 11:03 am, edited 2 times in total.

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Re: Bought in, and then they start tumbling

Post by tfb » Mon Jan 27, 2014 10:38 am

winguy wrote:How do you deal with this? How do you make yourself happier?
Look ahead. Think about the prices you will buy at for your next installment.
Harry Sit, taking a break from the forums.

Mike Scott
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Re: Bought in, and then they start tumbling

Post by Mike Scott » Mon Jan 27, 2014 10:39 am

Seriously, just don't look at prices for a while after buying. And no, I don't follow my own advice.

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Re: Bought in, and then they start tumbling

Post by dbr » Mon Jan 27, 2014 10:48 am

I would think that happiness does not derive from investments going up and down at any particular point in time.

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Re: Bought in, and then they start tumbling

Post by kerplunk » Mon Jan 27, 2014 10:53 am

I invested a couple hundred thousand around the middle of July 2011 right before stocks fell about 22% for the next month. It was awesome. Didn't worry me though, because I am a long-term investor, and I know that it would go back up eventually ;)

But, of course, not the ideal time to put money in, but hindsight is 20/20.

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Re: Bought in, and then they start tumbling

Post by ResearchMed » Mon Jan 27, 2014 10:58 am

How long have you been investing like this?

If you didn't just start, then you might want to take a look at what you purchased 2 or 4 years ago - or even 1 year ago :happy

What matters most is not "how the investment changed within weeks (or even months)", but what happens over a MUCH longer period of time - years, decades...

You don't have to track your actual dollar investments.
Just look at a chart of the funds you purchased (bonds AND equities), or even those you were already holding.

And see how they "did" since "then" (whichever starting dates you want to compare).

Look at both bond funds and stock funds. It's how the total together perform that matters.

If you've been investing for many years, you'll see nice progress, and that should help minimize the "what happened since I purchased X a short time ago" concerns.

Then try to ignore the short term noise. (Yes, easier said than done. It takes practice - and looking at the longer term trends in your balances.)

RM

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Re: Bought in, and then they start tumbling

Post by DonCamillo » Mon Jan 27, 2014 11:01 am

Short term fluctuations are noise. Long term should be your concern. I learned in 2000 that it was stupid to buy stocks at very high P/E ratios, and I suspect it would be just as foolish to buy 30 year treasuries at 1%. But continuous investing at near average prices should be good practice. Rebalancing forces you to sell high and buy low, so it should reduce the impact of minor timing mistakes.
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Re: Bought in, and then they start tumbling

Post by nisiprius » Mon Jan 27, 2014 11:01 am

winguy wrote:Hi,

I seem to have a bad timing when it comes to making contributions to my portfolio. I only contribute quarterly. Last time I did so in bonds, it was just before bonds started to fall. Recently when I did so in stocks, it was just before the recent plunge.

Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself happier?
It is tough. I always feel the same way. I deal with it as best I can by being fatalistic and trying to accept that there's a big element of gambling or chance and it is what it is.

One thing I think is important is to try hard to remember your feelings later on when the market is up. I will not say it is universal, but I always get more upset by an X% decline in my portfolio then I think I will. Even after I allow for the fact that I know I always get more upset than I think I will. You want to be brutally honest about your own risk tolerance, and when times are good and have been good for a long time you want to judge how much of your comfort is due to your virtuous tough-mindedness and how much is just due to the bull market. Fred Schwed wrote in 1940:
Like all of life's rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature. Art cannot convey to an inexperienced girl what it is truly like to be a wife and mother. There are certain things that cannot be adequately explained to a virgin either by words or pictures. Nor can any description I might offer here even approximate what it feels like to lose a real chunk of money that you used to own.
I haven't looked at my Vanguard total because I try not to peek too often and because I know it will be painful. 2% of a lifetime's savings is a big number compared to everyday budget numbers. If the stock market gets down 10% from where it was last year, my wife and I will feel a considerable decrease in our "wealth illusion" and will start nagging at each other about spending. 20%, we will be jittery. In 2008-2009, we were deer caught in the headlights and terrified. But had a low stock allocation and just barely managed to hang on.

For me there is a good measure of "feel the fear and do it anyway," where "it" means "nothing." Feel the fear and do nothing anyway. Feel the fear and stay the course anyway.

I can't feel the same way about losing money as I do about deciding not to bother with the umbrella and having it rain.
Last edited by nisiprius on Mon Jan 27, 2014 11:04 am, edited 1 time in total.
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Re: Bought in, and then they start tumbling

Post by TFinator » Mon Jan 27, 2014 11:04 am

If it bothers you that much, maybe set up recurring buys that are smaller and happen monthly. Then you'll be dollar cost averaging monthly instead of quarterly and the dips won't seem as large.
It might also give you a sense of it being 'out of your hands'. So you don't feel the need to blame yourself when investments dip down.
I have no idea what your plan is, or how much you pay to make trades, so this might be off-base.

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Re: Bought in, and then they start tumbling

Post by Grt2bOutdoors » Mon Jan 27, 2014 11:14 am

For every seller, there is a buyer - if that wasn't the case, you could expect your holdings value to really plummet. Do you see that occurring?
Stay the course - while you will not be buying over the next 2 months, I will be as will countless others, the price will rise over time.
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Re: Bought in, and then they start tumbling

Post by Oilburner » Mon Jan 27, 2014 11:22 am

Just be glad you HAVE the money to buy into the stock market. The average person does not.

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Re: Bought in, and then they start tumbling

Post by Scooter57 » Mon Jan 27, 2014 11:37 am

You could also read up about Value Averaging, which is a technique recommended by Dr. Bill Bernstein in his "Four Pillars of Investing" book. After reading Bernstein's recommendation,I obtained the book, Value Averaging, which xplains in great detail how to invest in this way and why it is advantageous. After a year of applying it, I have found it the ideal way to avoid buyer's remorse. In the past I had some very unpleasant experiences with lump summing into the market, and having a larger sum to invest now, I wanted to do it in a way that caused the least pain. While I might have made more money lump summing last December, I might have lost a lot more money lump summing this past December, and I am very happy to split the outcomes. Value Averaging is a very good approach for people who aren't greedy and are looking for the long-term average market yield.

To summarize, with Value Averaging you decide how much money you would like to have in the market at the end of a given time period. So for example, you might want to have $100,000 in stocks at the end of 2017. For me, the number I picked was one that allowed for a certain amount of reasonable growth each year in the money I would be investing each year over that 3 year period. So it was the amount that currently represented a certain percentage of my assets plus an added percentage of those assets to allow for annual growth.

Then you use a spreadsheet (downloadable online), tell it how much money you have in stocks right now, and then the spreadsheet comes up with a "Value path" which is a schedule that tells you NOT how much to invest each month (the way Dollar Cost Averaging would do) but how much money you should have invested in stocks each month, with that amount rising in an orderly fashion until by the end of 2017 you would have $100,000 invested in stocks. If stocks stayed completely flat, your path would have you put in $2,778 each month starting from no investment to get to that $100,000 goal. But stocks don't stay constant, so if the prices of what you bought rose during the month so your $2778 first investment was now worth $3000, you would only need to invest $2,556 the next month. On the other hand, if the value of your $2,778 first investment dropped to $2500, you would have to invest $3,056 to keep up with your value path.

So what you end up having to do is invest more when prices get cheaper and less when they get more expensive.

This has worked out really well for me this past year, as it made me put the most money in during the early part of the year and during this summer's dip. By December my investments had done so well--too well, really, as some of the surge in the value of my investments was froth--that I didn't have to invest anything. I already had all I needed to have invested to match my value path. Now, coming up to my next investment date, with the market price drop some of that froth has disappeared and I will have to put more into the market to keep up with my path, but I am buying at lower prices, so that works for me.

There are various ways to tweak this, but though you won't see the huge gains you might get from investing heavily right before prices surge, you avoid the big losses from investing heavily right before they drop.

When people post about Value Averaging here someone always points out that it is a poor strategy because during a steep drop in the market you might run out of money to invest, but I don't see this as a problem since it is very easy to put in some kind of limit on how much you would invest in each period and avoid this problem. Common sense has a place in any investment strategy. So if your usual investment is somewhere around $2700 per month, you might decide you won't ever invest more than 1.5 times that, or $4050 in any single period. This may make it take longer to get to your target, but it keeps you from investing too heavily at any one point. And in that case, you will still come out ahead buying much more stock when prices are lower than when they are high, which is the point.

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Re: Bought in, and then they start tumbling

Post by YDNAL » Mon Jan 27, 2014 11:43 am

winguy wrote:Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?
Investing long-term = hoping for growth.
  • Yes, buying at 2% higher than last Friday can make one feel bad, but we hope the purchase price is higher in 2 months, 2 years, 20 years hence.
  • The price that ultimately matters is when you sell to use the money as you originally planned.
http://quicktake.morningstar.com/index/ ... X[code]S&P 500 Index SPX -- Trailing Total Return
1 Month -2.23
3 Month 2.71
1 Year 22.33
3 Yr Avg 13.95
5 Yr Avg 19.12
10 Yr Avg 6.78[/code]
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Re: Bought in, and then they start tumbling

Post by SteveNet » Mon Jan 27, 2014 11:55 am

"Bought in, and then they start tumbling"

Well now we know who's to blame... :beer
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Re: Bought in, and then they start tumbling

Post by Sbashore » Mon Jan 27, 2014 12:28 pm

winguy wrote:Hi,

I seem to have a bad timing when it comes to making contributions to my portfolio. I only contribute quarterly. Last time I did so in bonds, it was just before bonds started to fall. Recently when I did so in stocks, it was just before the recent plunge.

Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?
Plunge? I don't see one yet. Start looking at a chart that shows where the market has been over the past year or five. That will help your perspective.
Steve | Semper Fi

LRonHalfelven
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Re: Bought in, and then they start tumbling

Post by LRonHalfelven » Mon Jan 27, 2014 12:54 pm

I remind myself that the same thing happened to me in January, 2009. That ended rather well.
"If you change your strategy frequently you don't really have one." --Garry Kasparov

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Re: Bought in, and then they start tumbling

Post by max12377 » Mon Jan 27, 2014 12:58 pm

winguy wrote:Hi,

I seem to have a bad timing when it comes to making contributions to my portfolio. I only contribute quarterly. Last time I did so in bonds, it was just before bonds started to fall. Recently when I did so in stocks, it was just before the recent plunge.

Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?

Just think of the good you did for humanity. The guy who sold you the shares is now better off. :beer

I'm kidding.

I think it stinks when you buy and the next day things tank - so I sympathize. I guess that's where a balanced approach can be helpful. Go in, perhaps, 50 stocks/50 bonds next time as it might be easier to stomach. Although if the market takes off you may regret not going in 100% stocks.

To deal with the market, keep thinking that stocks pay dividends - so if you keep reinvesting them as the market goes lower you'll make out ok when things recover. Also, take a look at the slope of the typical S&P 500 chart over 1, 5, 10, 20 year periods - the longer the period, the more likely the slope is UP.

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Re: Bought in, and then they start tumbling

Post by amitb00 » Mon Jan 27, 2014 1:00 pm

Please just ignore the price movement. You seem to be in the accumulation phase. If funds fall, you are accumulating more in general. If they go up, your worth is going up. So basically change your perspective. Of course, if you need some money for something, take that money out of the market when you feel that it is a good price and don't worry if it goes up again after you sell it.
Mr. Market tests all of us and most of us feel that once we buy or sell, Mr. M reacts adversely. Just learn to live with his idiosyncrasies and don't become very active to do some thing as he shakes us big time.

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Re: Bought in, and then they start tumbling

Post by Methedras » Mon Jan 27, 2014 1:14 pm

I'm one of the lucky ones. I am in the process of consolidating my IRA assets to make them easier to manage. As part of that process, I am selling all holdings and then transferring them to another institution. It so happens that I sold my holdings with one brokerage they day before this mini-dip. So, I have saved about 5% drop on about 16% on my portfolio, yielding a nearly 1% benefit! Take the small victories. :beer

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Re: Bought in, and then they start tumbling

Post by an_asker » Mon Jan 27, 2014 1:31 pm

SteveNet wrote:"Bought in, and then they start tumbling"

Well now we know who's to blame... :beer
Please give us adequate warning on your stock market related transactions next time (of course, I will try to do the opposite). :moneybag

Seriously though, I have the same darned luck, especially with my DCA and with my 401(k) contributions - my latest contributions went in the day before everything crashed last week. :oops:

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Re: Bought in, and then they start tumbling

Post by livesoft » Mon Jan 27, 2014 1:33 pm

winguy wrote:Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?
There is a really easy solution:

Exchange everything that is red into a something similar. For example, exchange VTIAX into VFWIX. The red VTIAX goes away leaving you with only the black VFWIX. Your asset allocation hasn't really changed at all, but when you look at your account, it's all black.

If VFWIX goes red, then exchange back into VTIAX. The new VTIAX will be black.

It's so easy. :)
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Re: Bought in, and then they start tumbling

Post by Daniel O » Mon Jan 27, 2014 1:51 pm

"peak" "tumbling" "plunge"

Seriously? Are you sure this isn't just a speed bump on the way to new highs next week? How can you know? If you could take back your latest contribution and wait, what would be the signal that would tell you the market was done being red? One green day? Two green days? How about two green weeks? Doh! Now you missed the rally. Just something to consider.
~ daniel

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Re: Bought in, and then they start tumbling

Post by basspond » Mon Jan 27, 2014 3:46 pm

The main errors made by investors are driven by emotions that are driven by inherent short term market fluctuations. It takes a strong will and understanding of these bumps in the road of investing to stay the course.

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Re: Bought in, and then they start tumbling

Post by Seekwhat » Mon Jan 27, 2014 3:57 pm

I sympathize. I recently sold my stocks with an advisor, and Thursday put 500K, one third of my assets, into the total US market, and 50 K more Friday. It sucks.

Here's what I've told myself:

It matters where it is in ten years, not today.
I have forgotten all the many days when I was happy that I'd "earned" 5 or 10 thousand on a good market day.
I am fortunate, because I still have another 30% of assets for equity purchases in cash to invest.
I bought Thursday night, missing a 1% dip, and Friday night, missing another 1% decline.
Losses hurt more than gains, but ultimately it's all the same money.
Long term is all that matters.
Put the money in and forget it.
It helps. But it still sucks. Good luck!

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Re: Bought in, and then they start tumbling

Post by dmcmahon » Mon Jan 27, 2014 4:39 pm

winguy wrote:Hi,

I seem to have a bad timing when it comes to making contributions to my portfolio. I only contribute quarterly. Last time I did so in bonds, it was just before bonds started to fall. Recently when I did so in stocks, it was just before the recent plunge.

Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?
This is why I use DCA over long periods if I have a lump sum to invest.

Caduceus
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Re: Bought in, and then they start tumbling

Post by Caduceus » Mon Jan 27, 2014 4:45 pm

Stop looking so frequently. That might work.

What matters is the price when you retire, not the price over the next few days, weeks, or months.

simpsonlang
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Re: Bought in, and then they start tumbling

Post by simpsonlang » Mon Jan 27, 2014 4:55 pm

Loss? Not till I sell. I have the same number of shares. :D

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Re: Bought in, and then they start tumbling

Post by Kevin M » Mon Jan 27, 2014 5:01 pm

Another vote for value averaging here. I used a rough version of that approach for some time, and it helped me learn to feel good about declining share prices since I got to buy more at lower prices. It also has worked for my adult children, but currently they just don't pay much attention.

Rather than buying quarterly, you could use rough VA and buy monthly. If the market goes up you will buy less, and if it goes down you will buy more.

Other than that, just don't look at your portfolio value if it makes you feel bad. If you hear the market went down some day or week, just don't look. At some point it probably will be higher, and then you can look.

As mentioned by others, once your portfolio becomes large enough, its daily or weekly change in value in dollars can be quite large relative to something like your monthly or even annual salary. If you do look, you just have to get used to that.

It's well known that people tend to feel the pain from losses more than the pleasure from gains. You need to find behavioral tricks to help counter that, which I think is what you're asking for.

Kevin
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Re: Bought in, and then they start tumbling

Post by scone » Mon Jan 27, 2014 5:32 pm

Sometimes you get the bear, sometimes the bear gets you. We've all been there, and we'll be there again and again.
I'm working on developing selective amnesia about the bad stuff.
This helps: :sharebeer
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Re: Bought in, and then they start tumbling

Post by gkaplan » Mon Jan 27, 2014 6:13 pm

Sometimes you're the windshield. Sometimes you're the bug.
Gordon

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Re: Bought in, and then they start tumbling

Post by placeholder » Mon Jan 27, 2014 7:05 pm

Sorry it's my fault I'm consolidating some Roth accounts at a brokerage and I'm borderline on having enough for the $600 bonus.

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Re: Bought in, and then they start tumbling

Post by surfstar » Mon Jan 27, 2014 7:07 pm

My paycheck's 457b contribution will hit Thu, end of day. I expect the markets to rise back up before then ;)

I just checked to see how my 2014's Roth contribution has done - yep I mis-timed that one apparently, too :oops: ;)

But, I did bring rain locally in California by washing my car yesterday :D

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Re: Bought in, and then they start tumbling

Post by surfstar » Thu Jan 30, 2014 10:43 am

surfstar wrote:My paycheck's 457b contribution will hit Thu, end of day. I expect the markets to rise back up before then ;)
Nailed it!

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Re: Bought in, and then they start tumbling

Post by Fallible » Thu Jan 30, 2014 1:10 pm

winguy wrote:...
Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?
You already know how to deal with the market's daily ups and downs and you're doing it: going long term. And then you make yourself unhappy by looking at the short term. So, make yourself happy by looking at something else in your life, something or someone needing your attention, or a new challenge, something you'd love to do or do better. Again, your best decision has been made - to go long term. Truly believe it and move on to the important things in life. That's the Bogleheads' philosophy.
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Re: Bought in, and then they start tumbling

Post by Toons » Thu Jan 30, 2014 1:29 pm

winguy wrote:Hi,

I seem to have a bad timing when it comes to making contributions to my portfolio. I only contribute quarterly. Last time I did so in bonds, it was just before bonds started to fall. Recently when I did so in stocks, it was just before the recent plunge.

Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?

When investing keep thinking in 10 year time frames,not 10 minutes ,10 days ,10 months,,,and just keep investing ,slow and steady just like a tortoise,you will reach the finish line.It works. One more thing if you are not already, keep reinvesting the dividends and capital gains,when prices are depressed you will get more shares,and shares are what you are trying to accumulate. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Bought in, and then they start tumbling

Post by Caduceus » Thu Jan 30, 2014 8:47 pm

Bill Bernstein says in the Four Pillars of Investing that early to mid-stage investors should hope for prolonged bear markets where they can buy stocks inexpensively. So if you buy in and have already invested the capital, the rational thing to do with future promises of income is to hope you can buy more at even lower prices.

Of course, this doesn't apply if you buy into the EMH.

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Re: Bought in, and then they start tumbling

Post by Jaxfann » Thu Jan 30, 2014 10:10 pm

Oilburner wrote:Just be glad you HAVE the money to buy into the stock market. The average person does not.
Very true!

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Re: Bought in, and then they start tumbling

Post by Globalviewer58 » Thu Jan 30, 2014 10:18 pm

This year my plan is to invest enough to save what will be 3% of the value of my portfolio on Jan. 1. If we look at the relatively modest amount put away each year it may not be so daunting to consider whether the market is high, low or in between. Stay the course!

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Re: Bought in, and then they start tumbling

Post by pennstater2005 » Thu Jan 30, 2014 10:23 pm

I just don't look anymore.
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winguy
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Re: Bought in, and then they start tumbling

Post by winguy » Sun Feb 02, 2014 10:19 pm

Thanks for all the kind words.

Is January a bad time to buy? The red days continue...

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Re: Bought in, and then they start tumbling

Post by WhiskeyJ » Sun Feb 02, 2014 11:13 pm

winguy wrote:Is January a bad time to buy? The red days continue...
Last January my parents gifted our kids (age 2 and 4), $10k each. In January 2013 I put $5k each in the 529s. In March, after a little dip, I put in an additional $2k. I've been waiting for another big dip to put the last $3k in. I would need to see like a 20% drop before my waiting turned out to be a good idea...

cme
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Re: Bought in, and then they start tumbling

Post by cme » Sun Feb 02, 2014 11:34 pm

livesoft was already making this point, I believe, but just in case it wasn't entirely clear:

If these investments are taxable (I presume they are with a quarterly investment pattern), then you might read up on Tax Loss Harvesting. It makes me feel better to know that I'm getting a % of the losses back.

I thought there was a study kicking around that said that since the stock market tends to increase, that - on average - you are better off investing your cash as soon as it's available, rather than holding onto it and investing later. Here's one whitepaper by Vanguard.

IFKC
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Re: Bought in, and then they start tumbling

Post by IFKC » Mon Feb 03, 2014 12:03 am

Already mentioned in detail by at least one poster, but I use Value Averaging. Similar to you with Dollar Cost Averaging (presumably), I do it quarterly.

But (and I know this is sacrilegious to some…) something else is going on too: I've made a deal that I won't be blind or ignorant when I put in $. Yes, I'll contribute quarterly, but I don't mind if it's done +/- 20 days of that date. Sometimes nothing eventful happens during that time and I'll just put it in. Other times a market freakout happens and I take advantage of the short-term noise. And I keep in mind that in the long run the market is going up, so even if I get to day +20, put $ in, and the whole thing tanks, I don't stay stressed.

Theoretical support for this is found multiple times in A Random Walk.
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LAlearning
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Re: Bought in, and then they start tumbling

Post by LAlearning » Mon Feb 03, 2014 12:14 am

winguy wrote: Is January a bad time to buy? The red days continue...
It has been attributed to Mark Twain that "October: This is one of the peculiarly dangerous months to invest in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February."

I mean, THE Mark Twain.......how could you ever go wrong with that?
I know nothing!

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DonCamillo
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Re: Bought in, and then they start tumbling

Post by DonCamillo » Mon Feb 03, 2014 12:12 pm

My son was lucky. He took a new job in 2000 and decided to max out his 401k. So he was putting the maximum amount aside during the declines in 2000 to 2002 and 2007 to 2009. Looks like the company is going to close his plant in 2016. But he is financially secure.

The current market reminds me of a job I had in 1980. These were the days of honest package sizes, when a jar of peanut butter or can of coffee was 16 oz, not 12, yogurt came in 8 oz cups, not 6 oz, and ice cream came in half gallons, not 1 1/2 quarts. But they were already practicing deceptive pricing. For months, I used to walk across the street to Acme and buy a cup of yogurt for 34 cents for lunch. Then, one week the price had gone up to 37 cents. The following week I saw a sign; SALE! 35 cents. They raised the price temporarily to 37 cents so people like me would think they were getting a bargain when the raised the price from 34 cents to 35 cents.

That is what I feel like in today's market. My stocks went up 30%, and now I am getting a discount of 5% from the peak when I make my biweekly retirement investments. But it still feels like I am overpaying.
Les vieillards aiment à donner de bons préceptes, pour se consoler de n'être plus en état de donner de mauvais exemples. | (François, duc de La Rochefoucauld, maxim 93)

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youngindexer
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Re: Bought in, and then they start tumbling

Post by youngindexer » Tue Feb 04, 2014 12:42 am

Toons wrote:One more thing if you are not already, keep reinvesting the dividends and capital gains,when prices are depressed you will get more shares,and shares are what you are trying to accumulate. :happy
Can someone explain why you get more shares when prices are depressed?

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frugaltype
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Re: Bought in, and then they start tumbling

Post by frugaltype » Tue Feb 04, 2014 8:00 am

winguy wrote:
Although I know I am holding for the long-term, it is demoralizing when you buy at the "peak" and then see all the red figures the following days (especially when you do a lump sum). How do you deal with this? How do you make yourself feel happier better?
I stare at Vanguards growth of $10,000 over decades chart for my Vanguard funds.

livesoft
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Re: Bought in, and then they start tumbling

Post by livesoft » Tue Feb 04, 2014 8:02 am

youngindexer wrote:
Toons wrote:One more thing if you are not already, keep reinvesting the dividends and capital gains,when prices are depressed you will get more shares,and shares are what you are trying to accumulate. :happy
Can someone explain why you get more shares when prices are depressed?
If you get $10 in dividends and reinvest at $10 a share, then you get 1 share.
If you get $10 in dividends and reinvest at $1 a share, then you get 10 shares.

$1 a share is a depressed price and 10 shares is more than 1 share.
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Re: Bought in, and then they start tumbling

Post by Call_Me_Op » Tue Feb 04, 2014 8:25 am

I have separate taxable and tax-deferred accounts. Interestingly, if there are losses in the deferred account, it doesn't seem to faze me. That's probably because I have assumed that money won't be touched until I am 70 1/2. But losses in the taxable account cut deep; they seem so much more meaningful. In any case, we are all in the same boat - and you cannot get any real return without taking risk. So periodic losses are part of the process of investing.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

ProfessorX
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Re: Bought in, and then they start tumbling

Post by ProfessorX » Tue Feb 04, 2014 9:11 am

What do I do?

First thing, whenever I make a large contribution I also "rebalance my AA". So even if the market starts tumbling, and it was high, I likely sold stocks and bought Bonds and I remind myself that I just took some stocks off the table.

Second thing, I never buy stocks if I don't plan to "buy and hold" for 15+ years and probably much longer. So I remind myself that my long term outlook has not changed and that I expect the present to be minor price fluctuations in comparison to where I think the market will be when I do finally sell.

Last thing, I look at my total gains in my investments, and remind myself that I am still "way up" even with the current market tumble. (As long as this is possible.)

Finally I consider such an event to be yet another vindication of the Boglehead philosophy that it is nearly impossible for you and me to time the market successfully.

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