Stef wrote: ↑Sun Jun 07, 2020 1:43 am
billy269 wrote: ↑Sat Jun 06, 2020 7:15 pm
I am feeling very irritated. I'm in the accumulation phase and my 401k contributions go in every month, which means with bear markets that last for a couple weeks, I never get stocks at cheaper valuations. These V recoveries are terrible for those of us that don't have the cash on hand to put a huge lump sum down towards the bottom of the V and have to wait for our contributions to hit from a paycheck. Second V recovery in a row this happened. I'd love to have the market remain in bear territory for even six months!
Yeah sucks for me too. There was literally no time to profit from this crash as it recovered so fast! Monthly savings rate from March and Aprily, but that's it. My avg. price of the last 6 months (money weighted) was 3280 lol.
Only a few ways I can see this being a problem, and each has a silver lining, but perhaps also a lesson:
1) You are young, have little invested, in which case, congrats! You have decades to go and these small amounts don't matter long-term.
2) You are mostly or entirely in US large stocks, in which case, congrats! Might be worth diversifying international to better values ...
3) You don't rebalance regularly, in which case, congrats! You missed the ups and downs and tuned out the noise, did OK.
For this to have gone better, you may have needed to follow a pretty typical Boglehead strategy and allocation, like:
3) Have a balanced portfolio of global stocks and bonds, rebalanced at bands along the way, which would have netted you a tidy profit. Having a combination of stocks and bonds (and other sub-asset-classes) automatically helps you buy low and sell high, and the reverse.
I really didn't know what to expect heading into this. I didn't game out the scenarios, just followed my plan, used bands, bought and sold to rebalance. Yet somehow this year I'm up overall despite a number of holdings being down significantly. I mean, I'm holding things like small cap value, that got decimated, with mixed recoveries, and somehow it all adds up to a pretty smooth ride and solid returns. I was utterly shocked when I realized I was doing way better than the majority of my asset classes taken individually or in combination. Rebalancing helped. And that was only made possible by having a diversified portfolio. It won't always provide a tailwind, but in this case, it offered a significant one.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe