Do you think this is a bad time to enter the market? With the dow at 18,000

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danaht
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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by danaht » Fri Apr 22, 2016 9:23 pm

I believe that US stocks are a lot more expensive than foreign stocks (developed + emerging markets). So, I am dollar cost averaging most of my new 401k + Roth IRA + HSA contributions in IEMG, VWO, IEFA, SCHE, VEA, and SCHF. I am mainly doing this because I want more foreign stock exposure.

note: the reason why there is a large variety of ETFs listed is because of the different brokerages. I only invest in ETFs that are commission free for that brokerage.

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in_reality
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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by in_reality » Fri Apr 22, 2016 9:32 pm

danaht wrote:I believe that US stocks are a lot more expensive than foreign stocks (developed + emerging markets). So, I am dollar cost averaging most of my new 401k + Roth IRA + HSA contributions in IEMG, VWO, IEFA, SCHE, VEA, and SCHF. I am mainly doing this because I want more foreign stock exposure.

note: the reason why there is a large variety of ETFs listed is because of the different brokerages. I only invest in ETFs that are commission free for that brokerage.


I agree with this strategy. If valuations are very high, also hold assets classes that are out of favor.

It's good practice regardless of valuations really but some people just like the safety of home. High valuations calls home only into question more I think.

Here's a look at some out of favor assets and how they've go won to do after being out of favor in the past!

http://www.researchaffiliates.com/Our%2 ... NvbQ%3d%3d

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by rgs92 » Fri Apr 22, 2016 10:27 pm

OK rec7, here is some practical advice. Put half your money in the market, half in bonds (total stock and bond market indexes, obviously).
If the market sinks, you can feel very happy about your nice safe probably rising bonds.
If the market rises, look at your winning stock portfolio and be happy with your nice gains.
Either way, you will deserve to congratulate yourself on being a smart, successful investor (and all the Bogleheads will agree).
And then sleep well.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by Index Fan » Fri Apr 22, 2016 11:00 pm

Nobody knows. Really.

You are looking for emotional support for a choice that will be more or less a coin toss.
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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by reriodan » Fri Apr 22, 2016 11:08 pm

No. Anytime I have money to put in the market I think it's a great time to enter the market. What difference does 18,000 make? lol.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by bertie wooster » Fri Apr 22, 2016 11:19 pm

KlangFool wrote:
rec7,

I think you should not invest in the market at all since you need to know when is a good time to enter the market.

KlangFool


How does this remark help anyone? When people are beginning they have questions and putting money on the stock market can be intimidating. I'm sure you had misgivings as well, so give the OP a break.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by Erwin » Fri Apr 22, 2016 11:50 pm

rec7 wrote:Do you think this is a bad time to enter the market? With the dow at 18,000


Diversify globally. You never know what the future will bring.
Erwin

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by rocketrex » Sat Apr 23, 2016 12:05 am

If it makes you feel better, I just lump sum'd in today with my 118k fed tax return. I just stuck to my asset allocation and I feel happy. The market will go up, the market will go down. Just get in the market.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by MossySF » Sat Apr 23, 2016 12:11 am

bertie wooster wrote:
KlangFool wrote:I think you should not invest in the market at all since you need to know when is a good time to enter the market.


How does this remark help anyone? When people are beginning they have questions and putting money on the stock market can be intimidating. I'm sure you had misgivings as well, so give the OP a break.


Except the OP (rec7) doesn't really fit the definition of beginner. OP panicked/sold at lows in 2008, has been out of the market for 8 years now and has been lurking/reading/participating on Bogleheads with 1800 posts.

If a person doesn't can't stomach the volatility and can't pull the trigger during the 5+ years of lows, not investing in stocks is a viable option. You don't need to own stocks to retire. Many people comfortably retire on a combo of bonds/CDs + real estate + social security + living-below-your-means. It's not an aspirational retirement where you scuba dive Australia, go shopping in Hong Kong and then ski in Switzerland -- but that dream is doubtful even for most Bogleheads.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by letsgobobby » Sat Apr 23, 2016 12:26 am

MossySF wrote:
bertie wooster wrote:
KlangFool wrote:I think you should not invest in the market at all since you need to know when is a good time to enter the market.


How does this remark help anyone? When people are beginning they have questions and putting money on the stock market can be intimidating. I'm sure you had misgivings as well, so give the OP a break.


Except the OP (rec7) doesn't really fit the definition of beginner. OP panicked/sold at lows in 2008, has been out of the market for 8 years now and has been lurking/reading/participating on Bogleheads with 1800 posts.

If a person doesn't can't stomach the volatility and can't pull the trigger during the 5+ years of lows, not investing in stocks is a viable option. You don't need to own stocks to retire. Many people comfortably retire on a combo of bonds/CDs + real estate + social security + living-below-your-means. It's not an aspirational retirement where you scuba dive Australia, go shopping in Hong Kong and then ski in Switzerland -- but that dream is doubtful even for most Bogleheads.

How do you know so much about him? Did you read all of his posts?

If what you are saying is true, that is very sad.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by MossySF » Sat Apr 23, 2016 3:14 am

letsgobobby wrote:How do you know so much about him? Did you read all of his posts?

If what you are saying is true, that is very sad.


This thread has many quotes from the OP describing the situation.

I wouldn't say it's sad. Some people just can't stomach the volatility -- or can't buy when there's blood in the streets -- and there's nothing wrong with that. You can still live well without the stock market.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by letsgobobby » Sat Apr 23, 2016 11:26 am

He didn't explicitly state he's been completely out of the market since 08, just that he sold then.

What I thought was sad is someone on the forums, reading the threads, posting here for almost a decade, but never actually acting on the information within.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by ControlContentment » Sat Apr 23, 2016 11:28 am

I think people were asking that question at Dow 1,800

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by wilson08 » Sat Apr 23, 2016 11:47 am

When in doubt just follow your IPS.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by nedsaid » Sat Apr 23, 2016 11:47 am

rec7 wrote:Do you think this is a bad time to enter the market? With the dow at 18,000


Hint: The market looks high most of the time. Don't let that deter you from investing.
A fool and his money are good for business.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by sschullo » Sat Apr 23, 2016 11:51 am

Longdog wrote:
rec7 wrote:I got scared in 08 and sold the total market.


Given that, and the fact that you are obviously still anxious about the market, you may not have the temperament to invest in the stock market. Yet for some reason you feel compelled that you should invest in it. My sense is that you are risk averse, and even if you do invest in stocks, you probably should not invest too large a portion of your portfolio, and not all at one time.


Along with what everybody else said, I agree that you probably should invest in fixed accounts, but even then, bonds are pricey too. You would be making a 2nd mistake by getting back in when the market is high and a third mistake by selling out again with the first sign of a correction, such as the one we recently had in January of this year, the worst start in stock market history.

Get help. Your emotions are in control and a fee only adviser might help you stick with your plan. After 1800 posts, its clear you have not learned much here. That's fine, the investing process is difficult for many people.
Public School K-12 Educators: "Ask NOT what your annuity sales person can do for you, ask what you can do to be a Do-It-Yourselfer (DIY)."

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by whodidntante » Sat Apr 23, 2016 12:00 pm

Only buy at the absolute bottom, unless you don't know when that will happen. :mrgreen:

Some international indexes have much lower valuations by various measures right now. That doesn't necessarily mean those will outperform a given U.S. index going forward, but if you want to find lower valuations, you can.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by rec7 » Sat Apr 23, 2016 1:49 pm

sschullo wrote:
Longdog wrote:
rec7 wrote:I got scared in 08 and sold the total market.


After 1800 posts, its clear you have not learned much here. That's fine, the investing process is difficult for many people.


My emotions might have a strong hold on me but to say I have not learned much here that would not be true. I feel that I have learned a great deal I just have a fear problem.
Disclaimer: You might lose money doing anything I say. Although that was not my intent. | Favorite song: Sometimes He Whispers Jay Parrack

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by pennstater2005 » Sat Apr 23, 2016 1:52 pm

So, after all the advice given here, do you have any idea what you are going to do?
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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by ChicagoMedStudent » Sat Apr 23, 2016 2:07 pm

rec7 wrote:My emotions might have a strong hold on me but to say I have not learned much here that would not be true. I feel that I have learned a great deal I just have a fear problem.


Looks like there has been a wide range of responses so far here.

So what do you think the best thing to do is?
Passions are the only orators which always persuade. - François de La Rochefoucauld

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by hoops777 » Sat Apr 23, 2016 2:30 pm

If you are emotional about your investing,you are better off finding a low cost manager like Rick Ferri or Vanguard advisors.
I understand your pain from 2008 because I did the same idiotic :oops: thing.When you experience a loss like that it stays with you mentally as well as in your bank account.I would not dump it all in at these levels because you will probably be so stressed out worrying about it.
Bogleheads or not,there are a lot of very successful,very smart people who subscribe to the theory of NOT buying at all time highs and of course NOT selling when the market is low.

I would suggest again that you hire someone to manage it for you and not think about it.
K.I.S.S........so easy to say so difficult to do.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by mengo » Sat Apr 23, 2016 3:06 pm

OP: Ignore the 18,000 number. Find a chart that lays it out in percentage terms, and I bet you'll feel a bit better.

Obviously, 5% of 18,000 is a bigger number than 5% of 3,000, but it still comes out to 5% of whatever you put in.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by minesweep » Sat Apr 23, 2016 3:37 pm

Maybe a conservative portfolio would be best suited for you. Similar to the advice you gave to someone back in 2008.

If it were me I would go with Vanguard Target Retirement Income Fund or Vanguard LifeStrategy Income Fund.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by Electron » Sat Apr 23, 2016 4:23 pm

I would identify any issues you have related to the Dow Industrials at 18,000. Perhaps you are concerned about equity valuations, the trend of interest rates, a possible economic slowdown or recession, trouble in the European Union, a bear market, or the always present short term risk in the market.

If you don't have a Financial Plan, it is time to generate one along with an Investment Policy Statement. What kind of return do you need going forward to meet your lifetime goals? If that return is relatively modest, you might be able to meet your goals with conservative investments and a low equity allocation. It's possible that Immediate Annuities could play a role.

I would explore my entire financial picture including all sources of future income. A single question in isolation is not the correct way to start.

If you do proceed with a defined stock and bond asset allocation, you could dollar cost average over the next year or two. With the right discipline, you might also be able to take advantage of market declines such as the ones we just experienced August through February. Did you consider investing a percentage of assets when that opportunity presented itself?

Also keep in mind that returns may be modest going forward. The simple models described by John Bogle in his book Common Sense on Mutual Funds suggest that stock and bond returns will likely be quite a bit less than what we experienced since the start of the 1982 bull market.
Electron

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by Toons » Sat Apr 23, 2016 4:36 pm

The Dow was "too high" at 840,
In 1979 when I started investing.
:mrgreen:
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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by hoops777 » Sat Apr 23, 2016 4:55 pm

Again,hire someone.It will save you from yourself. :moneybag 8-)
Market close to an all time high with all kinds of stuff going on.The market will drop and you will be doing what?Calmly sitting there and accepting that you just saw your portfolio drop 20 pct?Good luck with that.
K.I.S.S........so easy to say so difficult to do.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by sschullo » Sun Apr 24, 2016 8:06 am

rec7 wrote:
sschullo wrote:
Longdog wrote:
rec7 wrote:I got scared in 08 and sold the total market.


After 1800 posts, its clear you have not learned much here. That's fine, the investing process is difficult for many people.


My emotions might have a strong hold on me but to say I have not learned much here that would not be true. I feel that I have learned a great deal I just have a fear problem.


Fear is a powerful emotion. I have a 77 year old friend who was told by three people including a fee only financial adviser who loves and uses Vanguard to sell his over-the-top position in gold. He refuses absolutely and walked out of the adviser's office! 3 years ago when gold tumbled, he was livid with his broker, but after three years he is STILL with this broker who now tells my friend that gold will rise to $3,000! Sad. His emotions: fear of change, fear of accepting a loss and learning from mistakes. He knows what a diversified portfolio looks like for his age, but knowledge doesn't mean much.

I have fear too: My asset allocation right now is about 37% stock% / 63 bonds. I am getting concerned because my original plan is 30% stock / 70% bonds as I am closing in on 70 years old. Use your fear to double down on getting help. When I read people older than me with anything over 50% stock allocation in their portfolio, I feel fear for them. Of course, we are different, with different goals and needs.

I am practicing what I am preaching regarding my fear. For the first time in a decade, I have an appointment with a Vanguard CFP to rebalance out of equities and lower my 53% tilt to value stocks, so I can return to my original asset allocation and stock bond split. I need help as I hate to trade, and like my friend, I naturally resist change too. Last year, I rebalanced by selling a stock and selling some of my Total Stock Market Index and had to pay cap. gains taxes. This year, I am seeking a strategy to getting to my asset allocation goal with the least amount of tax implications and getting help about the most efficient tax strategy for on going distributions.
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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by pkcrafter » Sun Apr 24, 2016 9:15 am

rec7 wrote:I know it seems like a silly question. I just have got burned bad before so I am super careful. I think I will dollar cost average over a longer period of time maybe 7 years.

I don't know if you are serious with this idea, but it's not what you should be thinking about.

First, if and when you get back in, what will you use for an overall asset allocation?

Some people are just risk averse and that's OK, but education about the market and about behavior might help you stay on track. Here's a few other tips.

Write an Investment Policy Contract This is not simply a statement, it is a commitment. It describes what you're going to invest in, your asset allocation, and how you will respond to uncomfortable market volatility. Next, write a Ulysses Contract as a back up. This contract requires you to talk to someone or post on the forum before you change anything. If these things are not enough, then using an advisor who is tuned into behavioral finance is the best option.

Here's some information on what to expect from the market.

http://auminabox.com/market-mini-reason ... freak-out/

http://timmaurer.com/2015/11/23/if-you- ... -tomorrow/

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by looking » Sun Apr 24, 2016 9:34 am

Do you think this is a bad time to enter the market? With the dow at 18,000

too expensive wait till 10-15% corrections since there is no correction since 2008 my take on --

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by Ron Ronnerson » Sun Apr 24, 2016 9:59 am

looking wrote:Do you think this is a bad time to enter the market? With the dow at 18,000

too expensive wait till 10-15% corrections since there is no correction since 2008 my take on --


Hasn't the 10% correction already occurred? Dow was above 18k last summer then fell to below $16k in the winter. That's over a 10% drop. Hopefully those trying to time the market were successful as it's fully recovered since January and there is potential to go much higher (of course, it could plummet too).

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by JW-Retired » Sun Apr 24, 2016 10:38 am

hoops777 wrote:Again,hire someone. It will save you from yourself. :moneybag 8-)
Market close to an all time high with all kinds of stuff going on.The market will drop and you will be doing what? Calmly sitting there and accepting that you just saw your portfolio drop 20 pct?Good luck with that.

Is hiring someone panic proof? If the client directs the advisor to bail out of equities can the advisor refused to do it?

Never had an advisor so I don't know if it can be set up that way.
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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by Ricola » Sun Apr 24, 2016 12:06 pm

To me it is a legitimate question. Anybody that bought a large position in 2007 would probably agree. Gut wrenching losses can be disastrous to your health and family. If investing a large portion of your portfolio, I would recommend buying incrementally at your personal comfort level. If a small amount, well then just jump in. The investor is always more important than the investment.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by hoops777 » Sun Apr 24, 2016 12:12 pm

Hiring an advisor is not panic proof,but it does make it more difficult to panic if they are managing your investments and doing the buying/selling.If you have to call them to sell something,they can talk you down off the ledge :D
K.I.S.S........so easy to say so difficult to do.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by JW-Retired » Sun Apr 24, 2016 5:42 pm

hoops777 wrote:Hiring an advisor is not panic proof,but it does make it more difficult to panic if they are managing your investments and doing the buying/selling.If you have to call them to sell something,they can talk you down off the ledge :D

That's what I thought. Could be helpful and work for some, but not necessarily panic proof for the OP.

Did you have an advisor in 2008 rec7? Have you talked to one since then?
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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by StormShadow » Sun Apr 24, 2016 5:55 pm

My advice for the OP, don't invest in stocks.

Stick with what you are comfortable with: bonds, CD's, savings... whatever. Live frugally with peace of mind.

Some people are risk averse, and there is nothing wrong with that.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by Constant Chaos » Mon Apr 25, 2016 8:23 am

looking wrote:Do you think this is a bad time to enter the market? With the dow at 18,000

too expensive wait till 10-15% corrections since there is no correction since 2008 my take on --


There have been multiple corrections since 2008. (http://www.yardeni.com/pub/sp500corrbear.pdf)

2010: 16% decline
2011: 19.4% decline (very close to bear market definition) and then a 9.8% decline
2012: 9.9% decline
2015: 12.4% decline and then 13.3% decline going into 2016

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by goingup » Mon Apr 25, 2016 9:08 am

Constant Chaos wrote:
looking wrote:Do you think this is a bad time to enter the market? With the dow at 18,000

too expensive wait till 10-15% corrections since there is no correction since 2008 my take on --


There have been multiple corrections since 2008. (http://www.yardeni.com/pub/sp500corrbear.pdf)

2010: 16% decline
2011: 19.4% decline (very close to bear market definition) and then a 9.8% decline
2012: 9.9% decline
2015: 12.4% decline and then 13.3% decline going into 2016

Exactly! Thanks for posting.

It's the irony of investing. Market pullbacks are scary and some investors want to wait until previous highs are reached to start investing.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by Electron » Mon Apr 25, 2016 12:32 pm

To me it is a legitimate question. Anybody that bought a large position in 2007 would probably agree.

It is a reasonable question especially when you consider the 6+ year bull market from March 2009 through 2015. Intermediate term uptrends are typically shorter in duration.

The gains over that period were very significant and the Fed encouraged risk taking with its low interest rate policy. The market also tends to perform better on average October through April. Personally, my equity allocation is less than target and I'm currently only adding to positions on market corrections.
Electron

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by hoops777 » Mon Apr 25, 2016 1:36 pm

This has been a surprising thread.Normally there are many more just put it all in,do you have a crystal ball type comments. :)
K.I.S.S........so easy to say so difficult to do.

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Re: Do you think this is a bad time to enter the market? With the dow at 18,000

Post by OakPhilliesFan » Mon Apr 25, 2016 1:56 pm

Electron wrote:The gains over that period were very significant and the Fed encouraged risk taking with its low interest rate policy. The market also tends to perform better on average October through April. Personally, my equity allocation is less than target and I'm currently only adding to positions on market corrections.


Whether it makes sense to wait for market corrections might depend on your time horizon. I am 35 and intend to be in the market for 30+ years, so what's going on from month to month this year doesn't seem very relevant to me. For me the biggest risk is not investing, so I put money from my paycheck in on a regular schedule each month.

Waiting for market corrections to invest seems OK as long as (1) you put the money in a safe place in the mean time and don't spend it, (2) you eventually stop waiting for the correction if it doesn't come after a sufficiently long period of time, (3) you don't get too bogged down in details of whether the correction will continue or is "big enough" yet. As long as you're investing everything you need to invest at least once or twice a year, it will probably come out OK. Any less often than that and I'd worry about the opportunity cost. But then, as I already explained, I don't do this anyway. :D

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