U.S. stocks in freefall

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chaz
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Re: U.S. stocks in freefall

Post by chaz » Tue Aug 05, 2014 2:55 pm

Time for a drink. :sharebeer
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Re: U.S. stocks in freefall

Post by Leeraar » Tue Aug 05, 2014 3:02 pm

This time, it's different. :P

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Re: U.S. stocks in freefall

Post by Professor Emeritus » Tue Aug 05, 2014 3:06 pm

Ged wrote:
nisiprius wrote:If an airplane flying at 15,248 feet suddenly experiences a loss of 600 feet of altitude, does that qualify as "freefall?"


If the rate of fall is 32.174 ft/sec^2, yes. :D


Airplane in a vacuum has other issues

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Re: U.S. stocks in freefall

Post by zaboomafoozarg » Tue Aug 05, 2014 3:23 pm

My IPS tells me to buy every time this thread is bumped.

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Re: U.S. stocks in freefall

Post by Beliavsky » Tue Aug 05, 2014 3:24 pm

Lots of Bogleheads seem to simultaneously hold the following contradictory views:
(1) You can't time the market.
(2) When stocks fall, it's a great time to buy.

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Re: U.S. stocks in freefall

Post by oldzey » Tue Aug 05, 2014 3:34 pm

*POOF*

Give it a couple more weeks like this and it'll be time to load up on cat food (when it's on sale). :P
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Re: U.S. stocks in freefall

Post by dbCooperAir » Tue Aug 05, 2014 3:40 pm

oldzey wrote:*POOF*

Give it a couple more weeks like this and it'll be time to load up on cat food (when it's on sale). :P


I find the best time to buy cat food is 3 days before it expires, it last much longer than they say.
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Re: U.S. stocks in freefall

Post by enc0re » Tue Aug 05, 2014 3:42 pm

Sell! Sell! Sell!*

*To me. At low prices.

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Re: U.S. stocks in freefall

Post by Browser » Tue Aug 05, 2014 3:44 pm

dbCooperAir wrote:
oldzey wrote:*POOF*

Give it a couple more weeks like this and it'll be time to load up on cat food (when it's on sale). :P


I find the best time to buy cat food is 3 days before it expires, it last much longer than they say.

The food or the cat? Hopefully the cat will last more than 3 days after eating the expired food. But the cat may reach it's expiration date as a result of eating the expired food. Oh, geez.
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Re: U.S. stocks in freefall

Post by Crow Hunter » Tue Aug 05, 2014 3:52 pm

Yay for me!

I upped my international from 30% to 40% today so I got more for my money.

Plus I have my Roth contributions (to Total International) on it's way to Vanguard right now. Hopefully it will stay down till they get there.

*Snoopy Dance*

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Re: U.S. stocks in freefall

Post by zaboomafoozarg » Tue Aug 05, 2014 4:26 pm

Beliavsky wrote:Lots of Bogleheads seem to simultaneously hold the following contradictory views:
(1) You can't time the market.
(2) When stocks fall, it's a great time to buy.


Well, it is a better time to buy than when prices were higher (unless they go to $0).

I was j/k about my IPS though, I only buy taxable and ira once a year. Plus 401k every two weeks. I am allowed to rebalance whenever I want though.

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Re: U.S. stocks in freefall

Post by InvestorNewb » Tue Aug 05, 2014 5:34 pm

What the [expletive] is going on?
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Re: U.S. stocks in freefall

Post by chaz » Tue Aug 05, 2014 5:39 pm

InvestorNewb wrote:What the [expletive] is going on?

It's fluctuating. :idea:
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Re: U.S. stocks in freefall

Post by countdown » Tue Aug 05, 2014 5:58 pm

I don't like knowing my portfolio has gone down in value the past week(s).
However, there is some comfort that the market seems to be returning to some semblance of 'normality' by actually responding to actual conditions and events, rather than blindly climbing upward regardless. Hope I feel his way through a correction :?

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Re: U.S. stocks in freefall

Post by dognose » Tue Aug 05, 2014 6:01 pm

Look on the bright side. It's now been several days since we've seen a new thread asking "Why not 100 percent equities?"

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Re: U.S. stocks in freefall

Post by nisiprius » Tue Aug 05, 2014 6:39 pm

dognose wrote:Look on the bright side. It's now been several days since we've seen a new thread asking "Why not 100 percent equities?"
And we're starting to see new threads like "All money in TIPs??"

Image

(The timing isn't actually quite right, that was posted August 1st, but I couldn't resist...)
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Re: U.S. stocks in freefall

Post by Clearly_Irrational » Tue Aug 05, 2014 6:57 pm

*shrug* All four of my funds are up YTD, doesn't seem like much to worry about at the moment.

Latest crash indicator reading is only 7.14/100 (over 30 is bad)
Leading indicator swirlogram says we're in an expansion phase
Rail traffic is pretty strong
The current expansion is at least half over but the probability of it ending before January is only 65%

At the moment my IPS says keep your hands off the wheel and continue with buy and hold. If a crash happened now it would be the non-actionable kind.

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Re: U.S. stocks in freefall

Post by baw703916 » Tue Aug 05, 2014 7:46 pm

chaz wrote:Time for a drink. :sharebeer


Why? Did something happen?

Was evidence finally uncovered that proved or disproved the 3-factor Model, and resolved interminable discussions on Bogleheads?

edit; proved, not provide! :-P
Last edited by baw703916 on Tue Aug 05, 2014 8:18 pm, edited 1 time in total.
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Re: U.S. stocks in freefall

Post by zaboomafoozarg » Tue Aug 05, 2014 8:03 pm

baw703916 wrote:Was evidence finally uncovered that provide or disproved the 3-factor Model, and resolved interminable discussions on Bogleheads?


I felt a great disturbance in the Forum, as if millions of voices suddenly cried out in terror, and were suddenly silenced.

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Re: U.S. stocks in freefall

Post by baw703916 » Tue Aug 05, 2014 8:20 pm

zaboomafoozarg wrote:I felt a great disturbance in the Forum, as if millions of voices suddenly cried out in terror, and were suddenly silenced.


Smaller my portfolio is.
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Re: U.S. stocks in freefall

Post by Rick Ferri » Wed Aug 06, 2014 6:16 am

Volatility is your friend; embrace it!

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Re: U.S. stocks in freefall

Post by restandinvest » Wed Aug 06, 2014 6:28 am

Some call it a freefall, others call it a sale. Last time I drove by my favorite store and the sign said "Clearance sale today" it wasn't time to get mad, it was time to buy!
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Re: U.S. stocks in freefall

Post by nisiprius » Wed Aug 06, 2014 7:24 am

Rick Ferri wrote:Volatility is your friend; embrace it!

Rick Ferri
Volatility is not my friend. But I believe that "If you want the rainbow, you must have the rain." If you want the risk premium, you must take the risk. Risk as in risk. Real risk. Risk as in "might take that risk and NOT get the reward," because if you were sure to get the reward, well, that wouldn't be risk, would it?

(I do not believe in the rebalancing fairy. I don't want to debate that beyond a) insisting that there IS a DEBATE, and b) pointing out the measured language that William J. Bernstein has been using lately. "Is this really true? Probably." Strong words, indeed!)
William J. Bernstein wrote:Is there any reason to believe that, on average, rebalancing will help more than it hurts? Not if we believe that market movements are random. After all, we rebalance with the hope that an asset with past higher/lower than average returns will have future lower/higher than average returns.

Is this actually true? Probably. Recall that over short periods of time asset classes display momentum, but that over periods of time over a year or longer tend to mean-revert....
Last edited by nisiprius on Wed Aug 06, 2014 7:37 am, edited 6 times in total.
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Re: U.S. stocks in freefall

Post by Tom_T » Wed Aug 06, 2014 7:32 am

dognose wrote:Look on the bright side. It's now been several days since we've seen a new thread asking "Why not 100 percent equities?"

:)

And some people are still worried about their bond funds, as if those were the volatile assets that could sink their portfolios.

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Re: U.S. stocks in freefall

Post by carolinaman » Wed Aug 06, 2014 7:33 am

Beliavsky wrote:Lots of Bogleheads seem to simultaneously hold the following contradictory views:
(1) You can't time the market.
(2) When stocks fall, it's a great time to buy.


+1

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Re: U.S. stocks in freefall

Post by dbCooperAir » Wed Aug 06, 2014 7:34 am

The news guys are falling all over themselves this AM predicting another bad day in the market, something like "all predictors this AM are pointing to another bad day in the market"

They do have a 50/50 chance of being right, about as good of odds as the weather guys :wink:

I'm always amazed by the news people trying to predict what going happen, its free cheap entertainment.
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Re: U.S. stocks in freefall

Post by Browser » Wed Aug 06, 2014 8:38 am

johnep wrote:
Beliavsky wrote:Lots of Bogleheads seem to simultaneously hold the following contradictory views:
(1) You can't time the market.
(2) When stocks fall, it's a great time to buy.


+1

+2
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Re: U.S. stocks in freefall

Post by Ketawa » Wed Aug 06, 2014 8:45 am

dbCooperAir wrote:The news guys are falling all over themselves this AM predicting another bad day in the market, something like "all predictors this AM are pointing to another bad day in the market"

They do have a 50/50 chance of being right, about as good of odds as the weather guys :wink:

I'm always amazed by the news people trying to predict what going happen, its free cheap entertainment.


There are S&P 500 futures that trade overnight, so a prediction made in the AM can be quite accurate.

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Re: U.S. stocks in freefall

Post by oragne lovre » Fri Aug 08, 2014 1:04 am

johnep wrote:
Beliavsky wrote:Lots of Bogleheads seem to simultaneously hold the following contradictory views:
(1) You can't time the market.
(2) When stocks fall, it's a great time to buy.


+1


I think there is a subtle difference between "time the market" phrase, which means predicting the up and down of the market, and "buy when stocks fall" phrase, which means the obvious falling that triggers a purchase.
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Re: U.S. stocks in freefall

Post by visualguy » Fri Aug 08, 2014 2:05 am

oragne lovre wrote:
johnep wrote:
Beliavsky wrote:Lots of Bogleheads seem to simultaneously hold the following contradictory views:
(1) You can't time the market.
(2) When stocks fall, it's a great time to buy.


+1


I think there is a subtle difference between "time the market" phrase, which means predicting the up and down of the market, and "buy when stocks fall" phrase, which means the obvious falling that triggers a purchase.


No, it's market timing.

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Re: U.S. stocks in freefall

Post by Professor Emeritus » Fri Aug 08, 2014 2:43 am

dbCooperAir wrote:They do have a 50/50 chance of being right, about as good of odds as the weather guys :wink: .


Actuall the weather people do a far better job predicting today than the stock pickers.

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Re: U.S. stocks in freefall

Post by Professor Emeritus » Fri Aug 08, 2014 2:45 am

visualguy wrote:
oragne lovre wrote:
johnep wrote:
Beliavsky wrote:Lots of Bogleheads seem to simultaneously hold the following contradictory views:
(1) You can't time the market.
(2) When stocks fall, it's a great time to buy.


+1


I think there is a subtle difference between "time the market" phrase, which means predicting the up and down of the market, and "buy when stocks fall" phrase, which means the obvious falling that triggers a purchase.


No, it's market timing.


no, its not.Just like indexing is not stock picking. rebalancing is not market timing.

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Re: U.S. stocks in freefall

Post by cb474 » Fri Aug 08, 2014 3:51 am

countdown wrote:I don't like knowing my portfolio has gone down in value the past week(s).
However, there is some comfort that the market seems to be returning to some semblance of 'normality' by actually responding to actual conditions and events, rather than blindly climbing upward regardless. Hope I feel his way through a correction :?

I'm not sure what evidence we have that the markets are responding to actual conditions and events more now than before. They were responding to something when they went up (perhaps or perhaps not too much) and they are responding to something now while they go down (perhaps or perhaps not too much). I think it's pretty hard to explain the day to day and week to week swings in the market.

I do like how the market section of papers always try to attribute the day's movements to something. I noticed the other day a headline that said something like, Markets Drop on Anxiety about Russian Sanctions Against Europe and U.S. Then skipping over to the front page of the NY Times, the latest article about sanctions has everyone in Europe shrugging and saying the sanctions are no big deal, represent a tiny bit of their export market, and are just going to make grocery shopping more expensive for Russians.

Anyway, as someone I heard or read once said, the only true explanation is: The squiggly line went up (down) today.

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Re: U.S. stocks in freefall

Post by bertilak » Fri Aug 08, 2014 6:10 am

cb474 wrote:Anyway, as someone I heard or read once said, the only true explanation is: The squiggly line went up (down) today.

Perhaps you had better see this analysis for a more complete understanding: the blue line
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Re: U.S. stocks in freefall

Post by AviN » Fri Aug 08, 2014 7:47 am

Interestingly, Bernstein's recent rebalancing advice is to rebalance once per year or even less often because rebalancing into assets that performed poorly over the past year adds negative momentum to your portfolio. Makes sense to me.

nisiprius wrote:
Rick Ferri wrote:Volatility is your friend; embrace it!

Rick Ferri
Volatility is not my friend. But I believe that "If you want the rainbow, you must have the rain." If you want the risk premium, you must take the risk. Risk as in risk. Real risk. Risk as in "might take that risk and NOT get the reward," because if you were sure to get the reward, well, that wouldn't be risk, would it?

(I do not believe in the rebalancing fairy. I don't want to debate that beyond a) insisting that there IS a DEBATE, and b) pointing out the measured language that William J. Bernstein has been using lately. "Is this really true? Probably." Strong words, indeed!)
William J. Bernstein wrote:Is there any reason to believe that, on average, rebalancing will help more than it hurts? Not if we believe that market movements are random. After all, we rebalance with the hope that an asset with past higher/lower than average returns will have future lower/higher than average returns.

Is this actually true? Probably. Recall that over short periods of time asset classes display momentum, but that over periods of time over a year or longer tend to mean-revert....

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Re: U.S. stocks in freefall

Post by avalpert » Fri Aug 08, 2014 8:55 am

restandinvest wrote:Some call it a freefall, others call it a sale.

Both those people are wrong and acting rashly on either sentiment is misguided

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Re: U.S. stocks in freefall

Post by avalpert » Fri Aug 08, 2014 8:58 am

Ketawa wrote:
dbCooperAir wrote:The news guys are falling all over themselves this AM predicting another bad day in the market, something like "all predictors this AM are pointing to another bad day in the market"

They do have a 50/50 chance of being right, about as good of odds as the weather guys :wink:

I'm always amazed by the news people trying to predict what going happen, its free cheap entertainment.


There are S&P 500 futures that trade overnight, so a prediction made in the AM can be quite accurate.

They can be accurate of the open if they are watching morning futures trade - not particularly accurate in predicting the direction at closing

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Re: U.S. stocks in freefall

Post by avalpert » Fri Aug 08, 2014 9:00 am

Professor Emeritus wrote:
visualguy wrote:
oragne lovre wrote:
johnep wrote:
Beliavsky wrote:Lots of Bogleheads seem to simultaneously hold the following contradictory views:
(1) You can't time the market.
(2) When stocks fall, it's a great time to buy.


+1


I think there is a subtle difference between "time the market" phrase, which means predicting the up and down of the market, and "buy when stocks fall" phrase, which means the obvious falling that triggers a purchase.


No, it's market timing.


no, its not.Just like indexing is not stock picking. rebalancing is not market timing.

Buying when stocks go down because 'it's a great time to buy' isn't rebalancing unless you are also always selling when they go up by the same amount. Rebalancing is based on relative performance of your assets - not absolute performance of stocks.

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Re: U.S. stocks in freefall

Post by ofcmetz » Fri Aug 08, 2014 10:52 am

I've enjoyed this thread so much. I look back and see how I've grown as an investor just since when it first started.

One of my friends yesterday told me that since the market was down so much these past weeks it must be a good time to put a bunch more money in. I asked him how much it was down and he said over 10%. I just checked and all my funds are still up for the year. :sharebeer
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Re: U.S. stocks in freefall

Post by nisiprius » Fri Aug 08, 2014 11:54 am

ofcmetz wrote:I've enjoyed this thread so much. I look back and see how I've grown as an investor just since when it first started.

One of my friends yesterday told me that since the market was down so much these past weeks it must be a good time to put a bunch more money in. I asked him how much it was down and he said over 10%. I just checked and all my funds are still up for the year. :sharebeer
I just checked and the Dow closed at 17,024.21 on July 7th, and it seems to be 16,431.59 at this instant, and (16,431.59 - 17,024.21) / 17,024.21 = -592.62 / 17,024.21 = 0.0348 = down 3.48%.

That's not 10%. I wonder where he got that number.

Or is this one of these "don't be a nerd, the point is, it's DOWN" deals?

It closed at 16,576.66 on December 31, 2013, so it's only down 0.88% year-to-date.
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Re: U.S. stocks in freefall

Post by YDNAL » Fri Aug 08, 2014 12:07 pm

ofcmetz wrote:One of my friends yesterday told me that since the market was down so much these past weeks it must be a good time to put a bunch more money in. I asked him how much it was down and he said over 10%. I just checked and all my funds are still up for the year.
:sharebeer

For "the year" and the "past weeks" somehow don't relate, ofcmetz. :)

That said, I just looked at Vanguard VFINX -- in turn, looking at the S&P 500 Index return -- and Vanguard shows the Index:
    a. July 2014 ("past weeks") monthly return at -1.38%.
    b. 3-month ("past weeks") return through 7/31/2014 at +3.02%.
ps. I can't believe this 2011 thread is still around.
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Re: U.S. stocks in freefall

Post by oldzey » Fri Aug 08, 2014 1:17 pm

chaz wrote:Time for a drink. :sharebeer


Time for some Acme Bonds.

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Re: U.S. stocks in freefall

Post by ofcmetz » Fri Aug 08, 2014 1:21 pm

YDNAL wrote:
ofcmetz wrote:One of my friends yesterday told me that since the market was down so much these past weeks it must be a good time to put a bunch more money in. I asked him how much it was down and he said over 10%. I just checked and all my funds are still up for the year.
:sharebeer

For "the year" and the "past weeks" somehow don't relate, ofcmetz. :)

That said, I just looked at Vanguard VFINX -- in turn, looking at the S&P 500 Index return -- and Vanguard shows the Index:
    a. July 2014 ("past weeks") monthly return at -1.38%.
    b. 3-month ("past weeks") return through 7/31/2014 at +3.02%.
ps. I can't believe this 2011 thread is still around.



Yup, I agree it was a stretch. I guess I should have related more of the conversation.

I was referring to it to show that people's perceptions about what the market has done can be for off from the truth. He said that he watches the market every day and it has gone done a lot. When I asked how much he said "over 10%". He then related how all the people at his work were moving their G fund into the stock funds to buy while the market was down so much this year. sigh. The media can cause things to seem overblown and give people false impressions.
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Re: U.S. stocks in freefall

Post by Leeraar » Fri Aug 08, 2014 1:27 pm

It's interesting how people "anchor" themselves at some recent market high, discounting all the gains of recent years.

L.
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Re: U.S. stocks in freefall

Post by nisiprius » Fri Aug 08, 2014 1:59 pm

Leeraar wrote:It's interesting how people "anchor" themselves at some recent market high, discounting all the gains of recent years.

L.
The point is that in this case they don't even seem to have done that. The top so far was 17,068.26 on July 3rd. It is currently at 16,518.45. That's only 3.23% below the high for the year.

I can't imagine where the 10% came from. The NASDAQ high appears to have been 4485.93 on July 3rd, 4,368.95 so it is only down 2.6% from the high.

Maybe they heard some guru predicting a 10% drop and confused it with actual events?
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Re: U.S. stocks in freefall

Post by roymeo » Fri Aug 08, 2014 2:15 pm

Or maybe they're just adding several 2 & 3% drops they vaguely remember together.
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Re: U.S. stocks in freefall

Post by Garco » Fri Aug 08, 2014 2:26 pm

I don't anchor myself with reference to the latest or highest highs in the equities markets, but rather with reference to:

(a) my entire portfolio value considering the entire AA (stocks, bonds, real estate, stable value, etc.), and

(b) end of the the previous year.

While I would like my portfolio to go steadily up, instead of the actual +3.7% ytd, I don't consider my trajectory to have been downward despite the recent retracements in the stock markets.

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kenyan
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Re: U.S. stocks in freefall

Post by kenyan » Fri Aug 08, 2014 2:45 pm

Every fund we own is up between 2-17% for the year, except for a crappy high-fee actively managed fund that is regularly emptied out in my wife's SIMPLE IRA. I'm not sure what all the fuss is about. I also don't see how people think that things are 'on sale' due to these minor drops. Rebalancing bands are fine for me, rather than deluding myself into thinking that a tiny drop to a price equivalent to a few months ago represents a bargain price.
Retirement investing is a marathon.

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Taylor Larimore
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A lifetime lesson

Post by Taylor Larimore » Fri Aug 08, 2014 2:59 pm

Bogleheads:

I began investing in 1950 when the S&P 500 Index was under 20. Now it is over 1,900 (not including dividends).

I should have simply bought the market and stayed-the-course. :oops:

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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6miths
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Location: Toronto, Canada

Re: U.S. stocks in freefall

Post by 6miths » Fri Aug 08, 2014 3:07 pm

Help me! I've fallen and I can't get up... Oh wait.
'It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so!' Mark Twain

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