Let's say you wanted to buy some investments....

[ScooterBob]

I have an asset allocation plan in place and I'm sticking with it (took me a lot of time and planning to come up with it) BUT, if you DIDN'T have a plan, what would experienced bogleheads think is best to buy during a downturn such as we are experiencing for the long term? Total stock market index comes to my mind but I'd like to hear others opinions.

I have a friend, that after many, many, BIG losses buying individual stocks called me today and told me what he was buying. He won't listen to my suggestions to visit this site or ANYTHING I suggest. His investment skills are something to behold. I should learn if he says "buy" I should "short" but I don't buy individual stocks...

This is just for conversation...

Bob

[Day9]

So you're asking what is the best plan for someone who doesn't have a plan?

[livesoft]

I would buy an investment that was an index fund with several hundred or more different companies in it. The fund would also have to have a Really Bad Day and it would not hurt that the fund had dropped more than similar funds. So for instance, if I look at VTI, VBR, VXF, VXUS, VEU, VSS, and VNQ, then today there were a couple of standout buys. I bought.

By doing so, I would not have single company risk and I could be assured that my purchase would participate reasonably well with the long-term growth of the USA and the world.

[dc81584]

Nothing. Despite the current correction, domestic equities remain quite pricey. I'm contributing to my 403(b) through work, but in no way, shape, or form am I purchasing equities outside of my workplace retirement plan. My extra cash has been, and will continue to go, right into my savings account until the market is more fairly valued. People can call me a market timer, but price matters. If I'm going to take on risk, I want to be well-compensated. No way am I binge-buying U.S. stocks when the S&P 500 is at 4,793,128.

[ScooterBob]

Nothing. Despite the current correction, domestic equities remain quite pricey. I'm contributing to my 403(b) through work, but in no way, shape, or form am I purchasing equities outside of my workplace retirement plan. My extra cash has been, and will continue to go, right into my savings account until the market is more fairly valued. People can call me a market timer, but price matters. If I'm going to take on risk, I want to be well-compensated. No way am I binge-buying U.S. stocks when the S&P 500 is at 4,793,128.

I see what you are saying but finding the bottom is almost impossible. After watching the market for the past 30 years (in my case) it would seem probable that the market will continue to fall from present levels but it might turn tomorrow and advance straight up. I've seen this happen.

I'm just trying to gauge others thinking.

I personally have been saying for quite along time that we are in an (overtly) artificial economy and that when things finally start to get back to reality a major downturn would happen. Of course that is just MY thinking, I'm not an economist just some dude that thinks things through as analytically as possible.

Bob

[cheese_breath]

... if you DIDN'T have a plan, what would experienced bogleheads think is best to buy during a downturn such as we are experiencing for the long term?...

Experienced Bogleheads would have a plan.

[Chris001122]

Just like I stay away from alcohol since I know I have a weakness for it, I also abstain from my weakness for speculation. The thrill and agony of picking correctly plays tricks on me and makes me poor indeed. Unlike the gambler who knows when to stop, I turn winners into losers by being overconfident. I'll take the path of the slow and steady almost guaranteed rise over the thrill of boom or bust. I also worry my wife less when she knows I am not playing the market.

[ScooterBob]

... if you DIDN'T have a plan, what would experienced bogleheads think is best to buy during a downturn such as we are experiencing for the long term?...

Experienced Bogleheads would have a plan.

True! Maybe I should have phrased that a bit differently...

Bob

[Watty]

I would not recommend anything to him except some books to read,or at most something like a target date retirment fund.

He is not ready to change, he is just looking for the next hot thing.

[RenoJay]

I am considering buying more of Vanguard's Energy ETF (VDE) and am considering adding to my position in Vanguard's Total International Stock (VTIAX). I agree with a previous poster that the US markets do not strike me as a bargain despite the recent pullback. When we're in Dow 14,000 - 15,000 territory, I'll consider buying more US stocks.

In other news, I'm trying to make my fixed income side of the ledger a little more vanilla and am pulling back on some riskier type investments.

[ScooterBob]

I would not recommend anything to him except some books to read,or at most something like a target date retirment fund.

He is not ready to change, he is just looking for the next hot thing.

He keeps me more motivated to follow my plan than anything else on earth! He loses tons but keeps a great attitude. He definitely IS trying to find the next hot thing. He "hears" someone talking about a stock and runs out and buys it as if he and the other guy are the only two people who "know" about this company. It's actually humorous but sad in a way. No research at all other than "this can't miss." His current buy is AAPL. They're now doomed.... This guy has that kind of power to kill a company.... At least this is the first LARGE company he has invested in.

Bob

[dc81584]

Nothing. Despite the current correction, domestic equities remain quite pricey. I'm contributing to my 403(b) through work, but in no way, shape, or form am I purchasing equities outside of my workplace retirement plan. My extra cash has been, and will continue to go, right into my savings account until the market is more fairly valued. People can call me a market timer, but price matters. If I'm going to take on risk, I want to be well-compensated. No way am I binge-buying U.S. stocks when the S&P 500 is at 4,793,128.

I see what you are saying but finding the bottom is almost impossible. After watching the market for the past 30 years (in my case) it would seem probable that the market will continue to fall from present levels but it might turn tomorrow and advance straight up. I've seen this happen.

I'm just trying to gauge others thinking.

I personally have been saying for quite along time that we are in an (overtly) artificial economy and that when things finally start to get back to reality a major downturn would happen. Of course that is just MY thinking, I'm not an economist just some dude that thinks things through as analytically as possible.

Bob

Yup. Totally understand. I guess I'd load up on international equities (both developed and emerging markets).

[Toons]

Vanguard Balanced Index Fund.

[JoMoney]

...I personally have been saying for quite along time that we are in an (overtly) artificial economy and that when things finally start to get back to reality a major downturn would happen. Of course that is just MY thinking, I'm not an economist just some dude that thinks things through as analytically as possible.

Bob

Funny... I have the same thoughts on the first part, but opposite opinion on the result. I think we've been going through relatively depressed economic times with stagnate growth. Things have been smoothed over (... well, not really "smooth"...) with artificial financial engineering and government monetary policy. When brighter days come, and we start seeing some real growth in the economy, the doom-n-gloom crowd will be left far behind anchoring on numbers from a relatively depressed period.

[grabiner]

I have an asset allocation plan in place and I'm sticking with it (took me a lot of time and planning to come up with it) BUT, if you DIDN'T have a plan, what would experienced bogleheads think is best to buy during a downturn such as we are experiencing for the long term? Total stock market index comes to my mind but I'd like to hear others opinions.

A money-market fund. Then, make a plan, and once you have a plan, move the money from the money-market fund to the appropriate investments. (The plan can be very simple; many investors do just fine with their entire portfolios in a target-date fund, and almost anyone can do well with X% in Total Stock Market, Y% in Total International, and Z% in Total Bond Market, once he or she determines the correct X, Y, and Z.)

This is similar to the standard advice for managing a windfall. If you have never had a big investment, and suddenly you inherit a huge sum, you should leave it in cash until you have had time to make a proper plan. Cash may not be the ideal investment, but it can't be seriously wrong; investing in something too risky, or something which doesn't fit your needs and is expensive to get out of, can be seriously wrong.

[nisiprius]

The rule is: don't invest in anything you don't understand.

Most people have had long experience with bank accounts and have some idea what to expect from them. Many people really have little or no grasp of stock market risk, or the relative risk of individual stocks versus a broadly diversified stock mutual fund versus a balanced fund with stocks and bonds. People parrot verbal statements about risk but unless they've spent some quality time on their own looking at charts and numbers, they don't get it. They'll uncritically believe ideas like "there's not much risk in stocks if you're prepared to hold them for at least five years" or (recently in this forum!) that stocks crash every 7-10 years.

Giving advice is very, very, very dangerous because if you suggest anything and it goes down, it's your fault.

People have got to make their own decisions. They have to be convinced, themselves, that they understand what they're doing. How well? Well enough for their own satisfaction.

[itsmeagain]

People parrot verbal statements about risk but unless they've spent some quality time on their own looking at charts and numbers, they don't get it.

I'd say one has to experience these swings in individual stocks and the markets as a whole with his or her own hard-earned money on the line to really, truly "get it."

Just looking at charts without the knowledge that comes from experience it's too easy to think "oh yeah, I can handle the drops because look at how things came back in that chart."

[pkcrafter]

I have a friend, that after many, many, BIG losses buying individual stocks called me today and told me what he was buying. He won't listen to my suggestions to visit this site or ANYTHING I suggest.

Good example of how NOT to invest. Your friend has no plan, or useful knowledge. Did he even ask you what he should buy, for just make a statement?

Paul

[ScooterBob]

I have a friend, that after many, many, BIG losses buying individual stocks called me today and told me what he was buying. He won't listen to my suggestions to visit this site or ANYTHING I suggest.

Good example of how NOT to invest. Your friend has no plan, or useful knowledge. Did he even ask you what he should buy, for just make a statement?

Paul

I could write a book about "what not to do" regarding investing from observing him over the years. He tries to hit the home run with each transaction. He asks me what I do but then blows it off as "that will take to long and no guarantees". I know he's waiting for that one day, you know the old saying "even a blind squirrel finds a nut once in awhile" that he'll find success then tell me all about it. Different strokes.....

Bob