Market Philosophy: What You Got?

I've alway been interested in the stock market.  Not interested enough to do anything too stoopid, but interested. Tons of opinions out there, I want to hear yours.

Sorry for all choices below, but I tried to think of all the possibilities for answers. Seems like after you post a poll there is always an option you forgot. I added the venerable "other" if you can't find a choices that suits you.

So,the Market took a bit of a digger. My take:

Don't care, don't own stock

Don't care, in it for the long haul

It's the end of the world as we know it

It's 2008 again, ugh

Time to hunker down, move to cash

Just a correction

I'm all good, moved to cash last week

I'm so old all my stuff is in bonds

Hey the market is still my best option

Buy, buy, buy

Wait, what?

Other (please explain)

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Invest in Real Estate in the Gore Mt area!!!

Other: Symptom of a larger problem... I'm thinking there will be a fairly quick rebound from this crash... but there are larger problems on the horizon.

I'm putting my money in R&D for creating snow that never melts.

I've been pairing out big winners with Euro or Asian exposure and clunkers from my portfolio over the past month or so expecting this.  I did increase my bond exposure as well.

August sucks too many pros are on vacation so the computer trades are dominating.  Waiting for a clear up sign in the fall to get back in.

The key is with the current domestic and international combo the fed cant raise rates.  If they did it's time to go to cash.

Safest stocks are health care right now.

The nice thing about about investing long term in a 401k is never caring one bit about markets being up OR down. I used to play around with allocations when I first started investing but now I just allow the financial institution to auto adjust me in age based portfolios. Being in my 30s, it is almost stocks still and I could care less. My rate of return is a reasonable 7% over the long haul plus employer match. Hey, whatever happens, I'll have way more money than I'll need when I pull it out in 30 years. Assuming something catastrophic doesn't happen first.

The computers managing this type of stuff scare me a bit. But the good news is that over adjustments one way catch up pretty quickly. Corrections are just that and they balance out in the long term with positive growth.

You want to talk about getting sucker punched by a market? We bought our house in 2007 one month before the housing market went bust. Eight years later and we're still underwater by $20k, couldn't move if I wanted to. Glad I like it here but I don't like being forced without options. At least with stocks and retirement funds, if you take a small hit... it almost is never a major blow unless you were an idiot and didn't allocate correctly when you are nearing retirement age.

If you are 30, this is undoubtedly a good thing.

I'm kind of pushing allocations at 56. Having enough to retire seems like such a long shot that some risk seems mandatory.

Best advice to the younger crowd is to no matter what put at least 10% of your earnings into your company 401k.

I also shun all index funds.  They have become so big and with computerized trading part of the problem.  They aren't trading on fundamentals on the underlining stocks.  They just move with the "sea level" of the market as a whole.  Look for stocks beating the index with superior long term earnings or non index funds with Morningstar ratings 4+ stars.

I use Blue Chip Growth newsletter.  It's 99 bucks a year and has provided  many of years consistent conservative  market beating portfolio growth.  They also have a free portfolio grader service which is how I got started with them.

http://navelliergrowth.investorplace.com/track-record.html#.Vd2ypUr3arU

riverc0il wrote

I used to play around with allocations when I first started investing but now I just allow the financial institution to auto adjust me in age based portfolios.

Be careful with your provider's rebalancing and portfolio modeling tools.  I work in I.T. domain of the Retirement Services industry.  Especially during volatile market conditions, we have seen some unintended side effects caused by the auto-rebalance feature found in many of the defined contribution retirement plans that we administer.  Also, most portfolio models have some flawed assumptions built into them.  Over the past ten to 15 years, strategies have changed significantly, but most models have remained the same.

nepa wrote

Be careful with your provider's rebalancing and portfolio modeling tools.  I work in I.T. domain of the Retirement Services industry.  Especially during volatile market conditions, we have seen some unintended side effects caused by the auto-rebalance feature found in many of the defined contribution retirement plans that we administer.  Also, most portfolio models have some flawed assumptions built into them.  Over the past ten to 15 years, strategies have changed significantly, but most models have remained the same.

No doubt. The problem is that lay people and amateurs can probably get into trouble trying to make those adjustments. I'm a strong believer that I'd rather not maximize my return and leave some potential on the table rather than trying to play pro investor and make a bad decision and cost me way more money than I might have saved. I'll probably pay a lot more close attention in my 50s but at this time, I can't imagine rebalancing is going to make many changes except slightly less stock when I get out of my 30s.

In my 30s I was 100% stocks.  I do both mutual finds and a portfolio of 10-15 stocks that I manage myself which I have done well with mostly with the help of a few different paid investment newsletters the one I use now I really have done well with.  I also have an MBA.

Now in my later 40's about 80/20.  Will gradually move towards safety as my horizon changes.  

riverc0il wrote

I'm a strong believer that I'd rather not maximize my return and leave some potential on the table rather than trying to play pro investor and make a bad decision and cost me way more money than I might have saved.

Yup.  I couldn't agree more.  I've learned this lesson the hard way.  I now focus more on absolute as opposed to relative returns.  

What the market is doing shouldn't really matter much at all. The most important components to a retirement are time and savings rate. Markets up, Markets down, it doesn't really matter in the long haul as long as you keep your money in. For example, this article provides an example of the hypothetical worst market timer in history, who decided to be 100% in stocks, which he just happened to buy on the worst days in market history. Because he left his money in there and didn't sell after the markets crashed, he still ended up a millionaire:

http://awealthofcommonsense.com/worlds-worst-market-timer/

Time was key for him. But if you don't have time, then savings rate is the most important component:

http://www.mrmoneymustache.com/2011/04/26/why-hardcore-saving-is-much-more-powerful-than-masterful-investing/

Pick one, pick the other, pick both. Just never sell, and you'll be fine in the long haul.

Markets down (2001, 2008) is what has really helped me.  I was fortunate enough to be able save 25% of my income through all of 2001 and about 15% through 2008. My two co-workers who choked (ie moved to safety) in 2008 are still down by a lot.

I can't pretend to beat the average. Save a lot, keep costs rock bottom, never sell.  It's working ok for me.

If you just doing mutual funds it's buy and hold forever with maybe a rebalancing once or twice a year.

If you are going to individual stocks then you need to pay way more attention as to when to take profits of limit a loss on a stock.

Slow day at work... Bernie is from NY... so that makes this a relevant post.

How do you think his policy changes would affect the market?

I can't answer your question regarding the market, but I certainly like what Bernie stands for. He's not wishy-washy about it either, and has been sending the same message for a long time. I hope he makes it. Bernie will have my vote fer sure.

campgottagopee wrote

I can't answer your question regarding the market, but I certainly like what Bernie stands for. He's not wishy-washy about it either, and has been sending the same message for a long time. I hope he makes it. Bernie will have my vote fer sure.

To be honest, some of his potential tax policies will increase my personal obligation to the IRS, but I don't care.  I like what he is saying also.  

I agree with about 80% of what he says. However he is not the guy to get the job done. You need someone from the right side of the aisle to effectively change things. The right will fight him tooth and nail and nothing will get done. We need a progressive republican and dare I say it - the Donald is the closest thing we got.

PeeTex wrote

You need someone from the right side of the aisle to effectively change things.

I think I understand why you are saying in terms of the political landscape.  Are you saying this because of the current partisan composition of Congress? meaning a guy on the left side will get destroyed by the right due to the current numbers.

Would you say the same thing if Congress was dominated by the left?  

nepa wrote

PeeTex wrote

You need someone from the right side of the aisle to effectively change things.

I think I understand why you are saying in terms of the political landscape.  Are you saying this because of the current partisan composition of Congress? meaning a guy on the left side will get destroyed by the right due to the current numbers.

Would you say the same thing if Congress was dominated by the left?

Sort of. Historically, when a major shift has occurred it has been led by politicians that were originally aligned with the issue that was affected. Example, LBJ was the leader of the senate and major blocker of social reforms before he brought on civil rights as president, Eisenhower dismantled the military industrial complex, TRex led the progressive movement, Nixon shut down Vietnam and opened up China. Bernie's ideas might be just fine, but he needs the support of conservatives to get anything done and they will fight him tooth and nail just because he is on the left, study Wilson and the League of Nations - The republicans would have rather seen the world go up in flames rather than admit he was right. What we need is a progressive republican and that will be hard to find.