Are you staying invested in the market?

[ctr]

I lost quite a bit of my 401 k in 2008. In 2016 I put all my eggs into a Stable Value Fund, since retirement was just around the corner and i was not willing to lose anything. It does not give you the big gains one could get with being heavily invested in stocks. But, I did not loose anything over the last few years.

Money loses buying power over time. Inflation in normal years is maybe around 4 percent. The rate of return on say Vanguard's Stable Value Fund is around 2 percent just to make the math easy. Represents a 2% loss in buying power each year. Adds up over 10 - 30 years.

Not disagreeing with your choice. Everyone has different risk tolerance. Important to understand the full implications of low risk low return investments.

The numbers are not exact but representative.

 

[SparkyLB]

I'm staying in. IMO the worst move to make is to sell off your losses, unless you must for tax-related reasons.

As I approach retirement, (about 8 years now), no more stocks. Everything from a few months ago and forward goes into funds. If things really take a pounding, it's time for bonds.

 

[TexLaw]

I'm staying in. IMO the worst move to make is to sell off your losses, unless you must for tax-related reasons.

Or unless you have a better place to put it.

 

[Rusty Blade]

I'm staying in. It seems history tells us what goes down must eventually go up. If you dont need that cash in hand now, then ride out the storm.

 

[musicman1951]

It's what it does, the market goes up and down. It's been going up for way too long, so this correction is no big surprise.

Timing the market is ridiculous. I'm staying in and sorry I'm no longer in my buying years as this would be a good time to buy more.

 

[Hms123]

Never try to catch a falling knife.

Staying in. I stayed in after 2008 and have made it all back and then some. IIRC, the Dow was below 8000 in late 2008. It is now “down” to 29000. Do the math.

Btw, I have been retired for ten years.

 

[lasta]

I'm glad we have so many level headed people here. Being an industry insider, I'm seeing a lot of anxious customers.

As for me, I'm staying in too.

Played around with absolute return for a few year (Long-short, multi-asset, market neutral kind of stuff), but talking with people who work for them, it's a lot of labour for very little return. Past few years hasn't been easy for them either, with sharp drawdowns and little participation in the upside.

Nowadays, I'm 30% equity, 70% fixed income, with equity edging up slowly.

Down about 2% this year, and sleeping sound. Easier time than most, but I don't expect to catch on to the next big push either.

 

[CCS]

I've never been "burned" because I've never gotten out in over 40 years. It goes up and down but the trendline is up over the years. If you don't have a long timeline, don't invest. I also only have bought index funds these last decades - total market and S&P. That's it. Reinvest everything. I add less now but we're pretty comfortable and this money is for the next generation, I doubt we'll ever need it. RMDs go from money market into non-retirement accounts which are mostly index funds (and cash).

FWIW, this used to be my business but I've been retired for a very long time (my 40's and I'm about to turn 72).

 

[Hms123]

I've never been "burned" because I've never gotten out in over 40 years. It goes up and down but the trendline is up over the years. If you don't have a long timeline, don't invest. I also only have bought index funds these last decades - total market and S&P. That's it. Reinvest everything. I add less now but we're pretty comfortable and this money is for the next generation, I doubt we'll ever need it. RMDs go from money market into non-retirement accounts which are mostly index funds (and cash).

FWIW, this used to be my business but I've been retired for a very long time (my 40's and I'm about to turn 72).

Exactly what we do…total market (VTI) and S&P500.

 

[Ron R]

I have known lots of folks who are up 20 to 30% in their mutual funds or index funds where I worked before and I would say to them pull out and lock in for a 1 or 2 years and they watch it go down -20 to -30 % and wished they pulled out and then the market corrects and they are even or up a few % points after another 3 years but in the mean time inflation is up 2% per year for the longest time.
Folks do not count hidden inflation that is encouraged by the banking system & Governments, banks need that 2% per year or they stagnate or money devalues in their minds because of bad investing on their part and I'm not no Money scientist but I have personally traded for many years and know a little bit about human behaviour when it comes to investing & market behaviour.
Staying disciplined when investing is very hard, but look at it this way there are so many variables that can change market direction(wars, recessions, plagues.... and if I'm up 4% on a stock or index there is no way a few years back banks would not give out 4% GIC, but today with inflation at 8% because of energy issues because of the war in Ukraine and the greed factor. So why not mention to friend who is up 30% enjoy it in a GIC (aka> Guaranteed income certificate)at 1-2% and enjoy the market ride and implant your money when economy starts to rebound again & again cycle. (catch it before the down turn or market timing and throw out common sense because behind the scenes the system is being manipulated by powerful computers & bankers no doubt in my mind.) + markets use to work on Greed & FEAR emotion factors and now with having computers having no emotions so the market has changed 100% fundamentally IMO. Over 80% of trading is done automatically by powerful computers.
Another way to also remember if your down 20% on 100 thousand dollars and want to break even, your know starting at 80 thousand dollars it takes about a 25>% to reach 100 thousand dollars and then count in 2% inflation per year it is closer to 30% needed to break even.
I can rant on but these are fundamental knowns that your investment councillor might not want you to know possibly because they are making 1-2% per year just letting your money sit dormant in a investment vehicle of some sort.
Majority of People are not educated in money matters and there might be a reason for this (boring to some) that I have not understood but it is how the cycle seems to work over and over through out time. Staying disciplined is very hard because of other issues that distract a keen investor like health or other unknowns.
Readers digest version of Ron's investing knowledge.

 

[SparkyLB]

Those are some pretty long sentences there, my friend.

Buy low and sell high. There is rarely a sane reason for doing the opposite. Selling off losses will only save that which you have not lost. As been mentioned above, if you're retiring timeline makes it unlikely that you'll recoup your losses, then switch instruments for low risk/low reward vehicles.

If one plans on pulling out, locking into something with nearly no risk--and "holding off until things get better," they must have a crystal ball or they'll miss the boat.

Not once in history has the market not bounced back. If you're young, buy like everything is on sale, because it is. Your 10 year older self will thank you.

 

[something better]

Exactly what we do…total market (VTI) and S&P500.

My reason for getting out of the market is I feel like it may take 10 years to get back to the highs it reach this time which I would like to retire in probably 8 to 10 years so I don’t know if I have the time to wait

 

[Doc4]

If owning gold is so great, why do those who possess gold want to sell it to you? Why don't they just hold onto it?

They don't want to sell to you ... they want you to start wanting to buy.

 

[CCS]

I retired in 2013. Like everyone else, my portfolio dropped in 2008. However, it came back. I still have more now, even with the decline in the market this year, than I did when I retired. The problem is that I am now at the point of having to take required minimum distributions, so I will have to pull out funds while the market is down.

If you are younger, the stock market and owning your own home are the best investments you can make long term. The problem with pulling out of the market is that you never know when to get back in. The way to make money is to buy low and sell high, but fearful people buy when the market is near its peak, thinking it will go even higher, and sell when the market tanks, thinking it might go even lower.

Those who trade in gold try to make you think that gold is the "world's only real currency". The truth is that it is a commodity to be bought and sold like any other commodity. Gold is just easier to store than barrels of oil or bushels of corn and wheat. If owning gold is so great, why do those who possess gold want to sell it to you? Why don't they just hold onto it? Gold prices fluctuate based on supply and demand, just as any other commodity. Gold prices peaked at $2050 USD per ounce in March 2022 and are now below $1700, a 17% drop, similar to the decline in the Dow Jones Industrial index. Because gold is used in such things as circuit boards, the price for gold is closely tied to the health of the overall economy, just like the stock market.

Spot on! I still own a little bit of gold and a little bit of silver but brass, powder, primers, and lead is even better.

 

[TinyTim]

People who are driven by greed when the market is rising or fear when the market is falling should not invest in the stock market. I've taken emotions out of it and hold the course during good times and the inevitable bad times. I invest primarily in Index funds, which cover most of the market. With age, I've dropped gradually changed the balance from mostly stock funds to mostly bond funds.

 

[StillShaving]

I have stayed invested. Though I was tempted to get cash heavy when market rose back a good bit at the beginning of the year (maybe it was early spring). As it seemed pretty obvious that with the Federal Reserve's clear statements of raising interest rates and relatively high market valuations that there would be a drop in both the bond and stock markets. It is puzzling how the Fed could not see looming inflation about to speed over the horizon after all the economic disruptions due to covid fear that reduced supply while there was accelerated government spending and money printing. I think the average Joe understood this better than our highly educated leaders, but they don't have many financial assets.

If one is saving for retirement and does get out of the market, it creates the problem of when to get back in. Dollar cost averaging getting out and back in helps avoid the worst outcome but is really a form of market timing. IMO if one was already invested and did not need the funds for five years or more it would be risky to try and time getting out and back in.

 

[StillShaving]

The quick answer is that I already got out (pretty much) and don't see myself getting back in to any great extent any time soon. I don't really mind the volatility, but I got tired of putting in the hours to take advantage of that volatility. The quick story is that I was a very active investor from around 1995 until late 2019 (really early 2020, but I was a good 80%+ out by the end of 2019). I made a bunch of money doing that, but I learned a few very important things along the way.

The largest assets to investing in the stock market are volatility and liquidity. If you aren't willing to take advantage of at least one of those (both really), then you probably have better options out there. Volatility only is good if you have a very long outlook (at least 5 years and more like 10) or you are willing to put in a lot of time for monitoring and research. Liquidity only is good if you are willing to close a position when its time (gain or loss).

Accessibility used to be a great asset of the publicly traded market, but that's changed a lot in recent years. More investment vehicles have become more accessible to many investors, and it looks like that trend is continuing.

If you cannot stomach volatility and you are not willing to take advantage of the volatility (and you are not willing to pay someone to do that for you), then might be better off finding an alternative.

By asset do you mean net positive attribute? I ask because the more common usage of the term in this context would be some type of financial asset, like a stock, bond, or real estate that one possessed. And in that vein any fund, stock, bond, traded in the public market...the sort of thing available to most working people to invest in their 401k or online brokerage account are by definition very liquid. Volatility is great for the day trader, or the patient long term investor who is not exactly dollar cost averaging. Otherwise I don't see how these are assets, though perhaps you are implying some Options strategy.

 

[FarmerTan]

Or unless you have a better place to put it.

I'm going to start again what I did when Clinton was in office: CD laddering (or whatever it's called, lol!) I had never heard of it, and we didn't have any real money 30+ years ago, but my CDs were paying 5 to 6 percent on a measly $500.... Of course, we were newly married and poor, but we lived like no one else so now we can live like no one else, as Dave Ramsey says. Like my brother @Lightcs1776 , we slammed hard on the mortgage and that set us up for life. My only begotten and some charities will see me and the War Department's earthly wealth, but remember this: the currency of this life is what they make the pavement out of in the next life. So..... ENJOY (some) of the fruits of your labor while you are still young enough to really enjoy it, but freely give, and kiss yer wife every chance you get while you are young, do at least half of what she tells you, and go to bed as early as you can.

 

[Lightcs1776]

I'm going to start again what I did when Clinton was in office: CD laddering (or whatever it's called, lol!) I had never heard of it, and we didn't have any real money 30+ years ago, but my CDs were paying 5 to 6 percent on a measly $500.... Of course, we were newly married and poor, but we lived like no one else so now we can live like no one else, as Dave Ramsey says. Like my brother @Lightcs1776 , we slammed hard on the mortgage and that set us up for life. My only begotten and some charities will see me and the War Department's earthly wealth, but remember this: the currency of this life is what they make the pavement out of in the next life. So..... ENJOY (some) of the fruits of your labor while you are still young enough to really enjoy it, but freely give, and kiss yer wife every chance you get while you are young, do at least half of what she tells you, and go to bed as early as you can.

I think we could compare "how poor were we" stories. It was rough when my bride and I first started out, especially as she was a stay at home mom when are kids were young. I have a lot of respect for you, Sir. And Dave Ramsey has a lot great advice, though I don't agree with everything he claims.

 

[Hms123]

The SP500 was about 3900 when this discussion started on 9/18/2022. It is now about 4070, for a gain of roughly 4.35%. Much of this gain was from last Thursday’s whopping 3% rise. To me the lesson is that if you weren’t in the market on Thursday you missed out. The only way not to miss out is to be in.