Article highlighting merits of buy and hold...

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huskerfan1414
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Article highlighting merits of buy and hold...

Post by huskerfan1414 »

I ran across this article with a hypothetical test: What if an investor only invested at market peaks before a crash, yet held and didn't panic sell after each crash, since 1970? What would the returns be?

I think it's a good illustration of why the Boglehead mentality prevails, and a good reminder to set an asset allocation and not panic. It is also reassuring to people who face the usual mental dilemma of contributing at market highs with fears of a crash coming later; or 'market timing'.

Of course the example is not a perfect illustration of an individual person's ability to save each year with different life 'occurrences', but the overall message is clear.

https://seekingalpha.com/article/439873 ... arket-tops
“I’m confident, but not really sure.” -Tom Petty
Jwulgaru
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The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by Jwulgaru »

[merged this post and its replies into the existing topic - moderator prudent]

I came across this article today and found it impactful.

https://seekingalpha.com/article/439873 ... arket-tops

Despite being comfortable with my asset allocation, I still at times find myself hesitating a day or two to pull the trigger on my monthly taxable purchase "just in case". This article lays out a powerful case for just how powerful time in the market is.
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Sandtrap
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Re: The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by Sandtrap »

From the forum "wiki".
Read About Bob, The Worst Market Timer
What happens if you only invested at market highs?
http://awealthofcommonsense.com/2014/0 ... ket-timer/

From the OP linked article:
Image

OP: Can you put your monthly taxable contributions on "autopilot" so you don't have to look at it and ignore the "noise" and "tempting thoughts"/?
Wiki Bogleheads Wiki: Everything You Need to Know
Topic Author
huskerfan1414
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Re: The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by huskerfan1414 »

I posted the same article a little while ago; I didn't see your post. (apologies to the mods).

It is a very interesting article.
“I’m confident, but not really sure.” -Tom Petty
Jwulgaru
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Re: The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by Jwulgaru »

Thanks for the link. I have most of my investments (Roth, 457) on autopilot, but the taxable amount changes from month to month based on my leftovers. I need to just exert some more discipline. Which after reading that article I immediately logged in and made purchases with the money sitting in taxable and felt great about it.
Sandtrap wrote: Wed Jan 13, 2021 2:15 pm From the forum "wiki".
Read About Bob, The Worst Market Timer
What happens if you only invested at market highs?
http://awealthofcommonsense.com/2014/0 ... ket-timer/

From the OP linked article:
Image

OP: Can you put your monthly taxable contributions on "autopilot" so you don't have to look at it and ignore the "noise" and "tempting thoughts"/?
jhsu802701
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Re: The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by jhsu802701 »

What percentage of the people who were enticed to first buy stocks in 1972 actually stayed the course and held on long enough to benefit from the strong bull market of the 1980s? The Wall Street gossip machine and the cocktail party chatter would NOT have encouraged them to do so during 1974-1982. The assets being hyped up included just about everything other than financial assets (stocks and bonds). Instead, gold, silver, oil, gas, other natural resources, and tax shelters were being hyped up. The double digit interest rates also encouraged many people to play it safe in CDs and money market funds. (They thought it was a no-brainer to earn 15%-20% from a short-term CD rather than "take a chance" on an underperforming stock market.)

If you had told people you were bullish on large cap US stocks in 1974 or 1982, you would have received the same reaction I'm getting now in regards to my bullishness on international stocks.

In other words:
1. International stocks today = large cap US stocks then
2. Large cap US stocks today = gold/silver/oil/gas then
3. Bonds today = short-term CDs then
4. Bitcoin today = tax shelters then
Triple digit golfer
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Re: The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by Triple digit golfer »

jhsu802701 wrote: Wed Jan 13, 2021 3:50 pm What percentage of the people who were enticed to first buy stocks in 1972 actually stayed the course and held on long enough to benefit from the strong bull market of the 1980s? The Wall Street gossip machine and the cocktail party chatter would NOT have encouraged them to do so during 1974-1982. The assets being hyped up included just about everything other than financial assets (stocks and bonds). Instead, gold, silver, oil, gas, other natural resources, and tax shelters were being hyped up. The double digit interest rates also encouraged many people to play it safe in CDs and money market funds. (They thought it was a no-brainer to earn 15%-20% from a short-term CD rather than "take a chance" on an underperforming stock market.)

If you had told people you were bullish on large cap US stocks in 1974 or 1982, you would have received the same reaction I'm getting now in regards to my bullishness on international stocks.

In other words:
1. International stocks today = large cap US stocks then
2. Large cap US stocks today = gold/silver/oil/gas then
3. Bonds today = short-term CDs then
4. Bitcoin today = tax shelters then
The point is not about what people did or should have done in the 1970s. The point is that historically, investing at market tops still turned out fine, so one should not be afraid to invest at current all time highs.
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Re: The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by Grt2bOutdoors »

jhsu802701 wrote: Wed Jan 13, 2021 3:50 pm What percentage of the people who were enticed to first buy stocks in 1972 actually stayed the course and held on long enough to benefit from the strong bull market of the 1980s? The Wall Street gossip machine and the cocktail party chatter would NOT have encouraged them to do so during 1974-1982. The assets being hyped up included just about everything other than financial assets (stocks and bonds). Instead, gold, silver, oil, gas, other natural resources, and tax shelters were being hyped up. The double digit interest rates also encouraged many people to play it safe in CDs and money market funds. (They thought it was a no-brainer to earn 15%-20% from a short-term CD rather than "take a chance" on an underperforming stock market.)

If you had told people you were bullish on large cap US stocks in 1974 or 1982, you would have received the same reaction I'm getting now in regards to my bullishness on international stocks.

In other words:
1. International stocks today = large cap US stocks then
2. Large cap US stocks today = gold/silver/oil/gas then
3. Bonds today = short-term CDs then
4. Bitcoin today = tax shelters then
5. Small value = small stocks then
6. Large cap value = large cap US stocks then
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by Grt2bOutdoors »

Triple digit golfer wrote: Wed Jan 13, 2021 3:52 pm
jhsu802701 wrote: Wed Jan 13, 2021 3:50 pm What percentage of the people who were enticed to first buy stocks in 1972 actually stayed the course and held on long enough to benefit from the strong bull market of the 1980s? The Wall Street gossip machine and the cocktail party chatter would NOT have encouraged them to do so during 1974-1982. The assets being hyped up included just about everything other than financial assets (stocks and bonds). Instead, gold, silver, oil, gas, other natural resources, and tax shelters were being hyped up. The double digit interest rates also encouraged many people to play it safe in CDs and money market funds. (They thought it was a no-brainer to earn 15%-20% from a short-term CD rather than "take a chance" on an underperforming stock market.)

If you had told people you were bullish on large cap US stocks in 1974 or 1982, you would have received the same reaction I'm getting now in regards to my bullishness on international stocks.

In other words:
1. International stocks today = large cap US stocks then
2. Large cap US stocks today = gold/silver/oil/gas then
3. Bonds today = short-term CDs then
4. Bitcoin today = tax shelters then
The point is not about what people did or should have done in the 1970s. The point is that historically, investing at market tops still turned out fine, so one should not be afraid to invest at current all time highs.
Of course, every day is a new opportunity for reaching a higher pinnacle or a dip in the valley. No one knows.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
nigel_ht
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Re: The Shocking Returns Of The Investor Who Bought Only At Market Tops

Post by nigel_ht »

jhsu802701 wrote: Wed Jan 13, 2021 3:50 pm What percentage of the people who were enticed to first buy stocks in 1972 actually stayed the course and held on long enough to benefit from the strong bull market of the 1980s? The Wall Street gossip machine and the cocktail party chatter would NOT have encouraged them to do so during 1974-1982. The assets being hyped up included just about everything other than financial assets (stocks and bonds). Instead, gold, silver, oil, gas, other natural resources, and tax shelters were being hyped up. The double digit interest rates also encouraged many people to play it safe in CDs and money market funds. (They thought it was a no-brainer to earn 15%-20% from a short-term CD rather than "take a chance" on an underperforming stock market.)

If you had told people you were bullish on large cap US stocks in 1974 or 1982, you would have received the same reaction I'm getting now in regards to my bullishness on international stocks.

In other words:
1. International stocks today = large cap US stocks then
2. Large cap US stocks today = gold/silver/oil/gas then
3. Bonds today = short-term CDs then
4. Bitcoin today = tax shelters then
Not really.

Large Cap US today isn't gold/silver/oil/gas then and there isn't any data to show that or any of your other questionable assertions.

Bonds are bonds.
CDs are CDs.
etc.
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