Assessing my investment strategy / managing emotions during the dip

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future_endo
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Joined: Wed Mar 18, 2020 12:57 am

Assessing my investment strategy / managing emotions during the dip

Post by future_endo » Wed Mar 25, 2020 2:50 pm

Hey guys,

Wondering if I could get your thoughts on investing during the dip. Newbie investor here. I set up my solo 401K recently and have $8.5K ready to put in to VTI (Vanguard Total Stock Market ETF). I have read it is more lucrative to put money into individual stocks at this time, but I'm still learning the ropes and want to tread on the safer side with index funds for now. The thing is, I am second-guessing myself about when and how much to buy - I think I am chasing the bottom with my current strategy, which I have read to not do. Right now, VTI is trading at about 76% of its peak. I have put limit orders for 72%, 62%, & 52% - all orders being 1/3 of my capital.

The stingy part of me wants the best deal I can get, and this is why I have set the orders in this way. However, another part of me feels like I should just set a limit order at something reasonable (70%? - which is already a nice discount! And I'm fairly certain that at some point during the next weeks it will fall back there) for the entirety of the $8.5K. After all, I am investing for the long-term and it seems better to just get something into the market when it's down rather than miss the opportunity entirely.

Do you guys have any feedback on my thought processes? What is your own investment strategy during this market? Is it irrelevant to think about what the bottom is, being that no one can predict the bottom?

Any words offered are much appreciated, thank you!

SanAntionetta
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Joined: Fri Apr 06, 2018 1:42 pm

Re: Assessing my investment strategy / managing emotions during the dip

Post by SanAntionetta » Wed Mar 25, 2020 3:01 pm

This decision might seem big now but won’t have a big difference at your ultimate retirement. If you “save” 20% of 8.5k ($1600) that will mean nothing compared to your future ongoing contributions.the most important things are time in the market and continued contributions.

If you really want you could always put 50% in now and spread the rest biweekly for a few months for the benefit of dollar cost averaging.

ETA: my investment strategy is to continue to purchase per my AA (90/10) semimonthly in index funds and to make no changes to my portfolio.

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Assessing my investment strategy / managing emotions during the dip

Post by livesoft » Wed Mar 25, 2020 3:06 pm

Here's what I do:

1. No matter whether I am buying or selling, I say to myself, "livesoft, you are going to lose some money with this trade -- it's inevitable."

2. Since I expect to lose money, I don't have much regret when I lose money.

3. But sometimes the unexpected happens and I make money. I get some joy from the unexpected.

And I would never put in limit orders like you have done. Instead, you can have your broker send you an alert via text or e-mail when one of those price points is reached. Then at that time you can make an intelligent, informed decision on whether you should place an order. I do use good-for-one-day limit orders occasionally, but I don't think that is what you are doing.
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Topic Author
future_endo
Posts: 3
Joined: Wed Mar 18, 2020 12:57 am

Re: Assessing my investment strategy / managing emotions during the dip

Post by future_endo » Wed Mar 25, 2020 3:36 pm

SanAntionetta wrote:
Wed Mar 25, 2020 3:01 pm
This decision might seem big now but won’t have a big difference at your ultimate retirement. If you “save” 20% of 8.5k ($1600) that will mean nothing compared to your future ongoing contributions.the most important things are time in the market and continued contributions.
When I think about it like that, I certainly get some more perspective. Thank you.
ETA: my investment strategy is to continue to purchase per my AA (90/10) semimonthly in index funds and to make no changes to my portfolio.
Are you putting more capital in than normal though as you invest semi-monthly? That seems to make sense during a bear market.
livesoft wrote:
Wed Mar 25, 2020 3:06 pm
And I would never put in limit orders like you have done. Instead, you can have your broker send you an alert via text or e-mail when one of those price points is reached. Then at that time you can make an intelligent, informed decision on whether you should place an order. I do use good-for-one-day limit orders occasionally, but I don't think that is what you are doing.
This makes a lot of sense, thank you.

Thesaints
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Joined: Tue Jun 20, 2017 12:25 am

Re: Assessing my investment strategy / managing emotions during the dip

Post by Thesaints » Wed Mar 25, 2020 3:38 pm

future_endo wrote:
Wed Mar 25, 2020 2:50 pm
Do you guys have any feedback on my thought processes? What is your own investment strategy during this market? Is it irrelevant to think about what the bottom is, being that no one can predict the bottom?

Any words offered are much appreciated, thank you!
Usually, nobody can predict the time of the bottom. This time nobody has a clue of its depth as well.

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