Dow Crash Coming To Your 401k

[Agnostic007]

people have made millions and lost millions trying to predict when a bubble will bust. Yes, it will, when is the question. I remember not too long ago when stocks fell to 15K. My coworkers or some of them panicked. This is it... get out get out. I did what some smart investors have always said. "When everyone one runs, get in" and here were are pushing 26K. I don't know what will happen tomorrow but I do know that the DOW is a pretty good bet at the moment.   

[Primemuscle]

The balloon has to pop at some point.

No one knows when but we're getting closer.

Keep some dry powder available.

My advice is consider how you would feel if your stock portfolio dropped 50%.

If you are close to retirement would you still be ok financially or would you be in trouble?

If your answer is "in trouble" you have too much in stocks and better dial it back.

A 50% drop is well within the realm of possibility.

If you are right, I'm glad that the bulk of my income is from guaranteed annuities.

[IroNat]

If you are right, I'm glad that the bulk of my income is from guaranteed annuities.

I don't think anybody will argue that the market will take a big hit sometime.

No one knows when.

It's like riding a hot streak in craps.  Sooner or later the dice roll against you.

If you keep all your money riding eventually you lose it.

[Thin Lizzy]

I don't think anybody will argue that the market will take a big hit sometime.

No one knows when.

It's like riding a hot streak in craps.  Sooner or later the dice roll against you.

If you keep all your money riding eventually you lose it.

The market will always take a big hit at some point, but you can’t think that way. Otherwise you’ll never be in the market.

You just need to have an escape plan for when it does happen. Markets don’t crash in a day. When things start looking bad, you get out. Of course, you might be wrong and the market turns around and doesn’t crash but that’s the game. If you can’t  handle this reality, don’t play.

[loco]

The market will always take a big hit at some point, but you can’t think that way. Otherwise you’ll never be in the market.

You just need to have an escape plan for when it does happen. Markets don’t crash in a day. When things start looking bad, you get out. Of course, you might be wrong and the market turns around and doesn’t crash but that’s the game. If you can’t  handle this reality, don’t play.

I respectfully disagree. Market timing never works.  Nobody can accurately predict the market, and those who claim to be able to and get it right (luck) also get it wrong just as many times if not more.

Instead invest in low cost, broad market index funds, with the bulk of it in an S&P 500 Index fund or a whole US market index fund.  Keep putting money into the fund bi-weekly or monthly, no matter what the market does.  If you do this long term, 10 to 30 years, you can't lose...unless you really need all of that money right as the market is losing 20% to 80%.  

[Thin Lizzy]

I respectfully disagree. Market timing never works.  Nobody can accurately predict the market, and those who claim to be able to and get it right (luck) also get it wrong just as many times if not more.

Instead invest in low cost, broad market index funds, with the bulk of it in an S&P 500 Index fund or a whole US market index fund.  Keep putting money into the fund bi-weekly or monthly, no matter what the market does.  If you do this long term, 10 to 30 years, you can't lose...unless you really need all of that money right as the market is losing 20% to 80%.  

It’s not about timing the market. It’s about crash insurance. The get out point is arbitrary. It has nothing to do with any sort of forecasting.

The market went down 90% in the 1920s. There’s been 2 50% drops in the last 20 years. There’s no guarantee that it won’t happen again. I know people who had to delay their retirement because of those crashes.

[loco]

It’s not about timing the market. It’s about crash insurance. The get out point is arbitrary. It has nothing to do with any sort of forecasting.

The market went down 90% in the 1920s. There’s been 2 50% drops in the last 20 years. There’s no guarantee that it won’t happen again. I know people who had to delay their retirement because of those crashes.

I'm one of those who believe NEVER get out, and stay the course.  Many "common folk" saw their market investments drop drastically in the most recent recession.  But those who stayed the course, continued to buy stocks via broad, low cost index funds no matter what, became millionaires just a few years later when the market recovered, and are still today adding to their wealth.

Yes, some of those had to delay retirement, but it paid off many times over for them.

Those who got out, then got back in later missed out on an opportunity that comes only once in a life time for many.

[Thin Lizzy]

I'm one of those who believe NEVER get out, and stay the course.  Many "common folk" saw their market investments drop drastically in the most recent recession.  But those who stayed the course, continued to buy stocks via broad, low cost index funds no matter what, became millionaires just a few years later when the market recovered, and are still today adding to their wealth.

Yes, some of those had to delay retirement, but it paid off many times over for them.

Those who got out, then got back in later missed out on an opportunity that comes only once in a life time for many.

At the end of the day there’s no perfect strategy. They all have drawbacks. The drawback of the one I recommend is that you can get whipsawed. The problem with yours is that if the market crashes you crash with it.

[loco]

At the end of the day there’s no perfect strategy. They all have drawbacks. The drawback of the one I recommend is that you can get whipsawed. The problem with yours is that if the market crashes you crash with it.

Yeah, I suppose the strategy I speak of, in many people's opinion, is the best possible strategy for the average professional.  And of course, even if this is indeed the best possible strategy for the average professional, there are no guarantees.

Like you said, some unfortunate guy in his late 50s who is getting ready to retire with a million dollars in his account and some debilitating illness forcing him to retire could see his million drop to 500K or 250K overnight.  For that one person, in this one case, that would be tragic.  For this person it's probably too late to benefit from a market recovery.

One way for a market investor to prepare for this, again no guarantees, is to invest one third or more in bonds.  That's specially true for older investors.

[Primemuscle]

I don't think anybody will argue that the market will take a big hit sometime.

No one knows when.

It's like riding a hot streak in craps.  Sooner or later the dice roll against you.

If you keep all your money riding eventually you lose it.

Craps was my step-dad's game. After months of him rolling the dice at home, we'd head to Vegas. A few hours later, he was crapped and tapped out of a couple thousand dollars and ready to head home.   

[loco]

The Dow just busted out of its longest stint in correction territory in nearly 60 years

The Dow Jones Industrial Average on Monday catapulted out correction territory for the first time in more than six months, ending its longest period in that phase since a 223-session run in 1961, according to Dow Jones Market Data.

Monday’s broad-market rally was underpinned by signs of progress toward resolving nettlesome trade disputes that have whipsawed markets. Specifically, President Donald Trump said the U.S. has reached an agreement with Mexico to enter into a new trade deal, calling it the U.S.-Mexico trade pact.
https://www.marketwatch.com/story/dow-on-verge-of-busting-out-of-its-longest-stint-in-correction-territory-in-nearly-60-years-2018-08-27?siteid=yhoof2&yptr=yahoo


S&P 500, Nasdaq jump to record highs as US and Mexico strike trade deal
https://www.cnbc.com/2018/08/27/us-stocks-to-open-higher-after-powell-signals-further-rate-hikes.html

[chaos]

Thanks Obama

[IroNat]

I'm no genius but I try not to make the same mistakes twice.

John Bogle, founder of Vanguard, one of the most respected investment managers in history, recommends an asset allocation to equities of 100 minus your age.  Simple.  Some more aggressive use 110-age for stocks.
Bogle recommends broad market index funds for most investors.

For someone age 60...

Stocks 100-60 = 40%
Bonds/cash = 60%

In addition keep an emergency fund of cash available.

Don't be lulled into over-confidence and get caught with your pants down.

[loco]

I'm no genius but I try not to make the same mistakes twice.

John Bogle, founder of Vanguard, one of the most respected investment managers in history, recommends an asset allocation to equities of 100 minus your age.  Simple.  Some more aggressive use 110-age for stocks.
Bogle recommends broad market index funds for most investors.

For someone age 60...

Stocks 100-60 = 40%
Bonds/cash = 60%

In addition keep an emergency fund of cash available.

Don't be lulled into over-confidence and get caught with your pants down.

Solid advice.

[IroNat]

Solid advice.

For morons like us it is a good plan.

No offense intended.

[loco]

For morons like us it is a good plan.

No offense intended.

Actually, this is great advice for professionals (surgeons, IT, engineers, nurses, teachers, etc.) and business owners, who have neither the time nor the desire to bother with how/when/where to invest in the stock market and protect hard earned money from inflation, taxes, and high investing fees.   Just set it and forget it, have peace of mind and sleep better at night.

[IroNat]

Actually, this is great advice for professionals (surgeons, IT, engineers, nurses, teachers, etc.) and business owners, who have neither the time nor the desire to bother with how/when/where to invest in the stock market and protect hard earned money from inflation, taxes, and high investing fees.   Just set it and forget it, have peace of mind and sleep better at night.

Good points all.

[loco]

Down, down down.....more to come.

Enjoy!


-NT

Dow jumps more than 250 points after the US and Canada secure a deal to replace NAFTA

https://www.cnbc.com/2018/10/01/us-markets-us-and-canada-trade-deal-economic-data-eyed.html

[IroNat]

The smart play is to allocate your portfolio properly between "safe" assets (bonds/cash/cash equivalents) and equities (stocks).

Don't be all stocks.  Don't be all bonds/cash.

It's not complicated.

The experts want to convince you it's complicated.  That's the game.  They want control of your money.

See my post above about John Bogle and his recommendation about asset allocation.  Very simple.

[Dos Equis]

Dow jumps more than 250 points after the US and Canada secure a deal to replace NAFTA

https://www.cnbc.com/2018/10/01/us-markets-us-and-canada-trade-deal-economic-data-eyed.html

Hahaha!   

[Neurotoxin]

It’s STILL 2018..... correct?

Enjoy the show.


-NT

[Dos Equis]

It’s STILL 2018..... correct?

Enjoy the show.


-NT

 

[Neurotoxin]

Margin calls/leveraged positions are unwinding.

 Enjoy the show.


-NT

[Agnostic007]

I'll make a prediction that within the next year a plane will crash. I'm pretty smart. 

[polychronopolous]

It’s STILL 2018..... correct?

Enjoy the show.


-NT

Crawls out from under his rock 4 months later.