Brutal

I'm investing all the way down and I expect to reap the benefits in a couple decades...but this market is BRUTAL!!!!!!! I intend to be strong, though. -)

BTW, here's what to do if your broker fails (appropriate piece for today.)

Comments

[Mark]

The way I look at it, is it's a good opportunity if you're young. If you dollar cost average and are in it long enough, you're just bargain shopping now.

[FMF]

Mark --

You're right (of course), but what a ride down this is!!!! Even the strong can become faint of heart at these drops. ;-)

[Bronco]

Wow, glad I have NOT been dollar cost averaging into this misery. I think we have a looong way to go till this hellishness turns around.

[Richard]

ALLRIGHT!!! Time for some bargain basement shopping kids! buy buy buy!

[Bronco]

Thanks, Cramer!

[Pop]

Since the media trains everyone that "you can never time a market", how does staying in it all the way down jibe with what you said below about Warren Buffet in your last post:

"Be willing to be different. In other words, be willing to go against the flow. Especially the flow of what the media is saying."

Enjoy the ride down for the next 18-24 months!

[Bronco]

Exactly, Pops. The media (and government) is feeding us propaganda-- don't believe it.

[FMF]

Pop --

I disagree with your premise. I don't think the media feeds us the "you can never time the market." They are more along the lines of "the hot stock of the day" (going this way and that way) IMO.

And, if you look at what Buffett says about individual investors, he says to buy and hold index funds.

[Tim]

This is nothing yet compared to the Bear Market 2000-2003. We are only down a little more than ~20% from our highs which is a mild Bear Market.

[Bronco]

...and this one may be worse since many people are involved in housing which is leading this thing down versus the comparatively trivial dot com stocks

[kitty]

I am 49, so I am not laughing... At least I have 40% of my money safe. "4-5% and I get my money back" sounds a lot better than what I've been getting on all of my funds/equities. Might lose some to inflation, but still better than what is happening.... Max 401K contribution, generous company match and additional contribution (to compensate for freezing pensions) and I still have less in 401K than in the beginning of the year.

I have some individual stocks in my non-retirement accounts, and while none of them has anything to do with sub prime or is in any danger of going under, everything is still coming down. I have a bunch of companies that reported great results, great guidance and beat expectation and they are still down because of fear of "global slowdown". I am torn between searching for bargains or taking the profits, moving all of 401K into stable income and running for the hills.

[suze]

To my mind, this is a much worse financial market than 2000-2003. We are getting hammered on the home value front, on the credit front and in almost every sector of stock.

However FMF is right. Investing is a long term commitment and panic is not an option. We had a lot of good years and we will have some bad -- in this case probably very bad.

[FMF]

Bronco --

Time will tell what eventually happens.

For those of us who have covered the basics over the years, now's the time to make out BIG. That's one reason we're looking at BUYING a home now. Nothing like a good sale to get things rocking!

[Bronco]

FMF, you are right: time will tell. The important thing is to be diversified, so you make me nervous when you talk of buying a house. But as long as you don't have too high a percentage in real estate, no worries.

[FMF]

Bronco --

Even with a more expensive house, I'll still have only 25% in RE (and that at a low, low cost basis -- if I find the right place.) I've been looking for almost two years now, so I know what I'm after. Now I just need to find it!!!! ;-)

[Tim]

It is usually best to buy when everyone is freaking out. If you were smart and held cash during this bear market, it might be a good time to put some money to work (not all in, though). If you are fully invested, you unfortunately don't have many options and I would advise to ride it out. Keep in mind that even though today was a nasty day, the markets aren't as "oversold" as they were in July. I like to put cash to work in extreme oversold conditions. We are getting close.

[Dave]

If you are truly committed to buy and hold for a couple of decades, then you'll be fine. Just pretend your money doesn't exist--bury it deep in a closet and walk away. 20 years from now you'll be happy you did.

Having said that, I do strongly recommend that you put some (not a lot, maybe even just 5%) of your portfolio in SDS, EEV, or other shorts. There's no harm in hedging your portfolio with QID or TWM for the next 6 months and see where you're at. The best portfolio managers hedge their bets with both long and shorts. Think of it as a way of "diversifying your portfolio." In as much as you would diversify by adding a REIT, consider adding SRS for good measure. Personally, I think we're still working our way down and will continue to do so until the S&P 500 (which just broke below 1200 today) has a 10 or even a 9 in front of it.

[Pop]

"However FMF is right. Investing is a long term commitment and panic is not an option. We had a lot of good years and we will have some bad -- in this case probably very bad."

Funny, I'm having a great year, investment-wise. And very little panic on my part!

[Pop]

"I disagree with your premise. I don't think the media feeds us the "you can never time the market."

I can't count the number of times I've read and heard the story that goes "if you missed the 10 biggest days over the last decade, your return would've been 8% per year instead of 11%". That is plain and simple scaring people into staying in the market, no matter what.

[Ed]

I am not buying much 'more' that I already put in via 401(k), IRA, and monthly alotment in taxable account, but I do feel that this is a good time to buy, I have 10-15 years before I 'stop' buying and another 10 hopefully before pulling anything out.

It is frustrating though to watch the balances remain stagnet or drop while putting in a few grand a month

[kitty]

Dave - good idea. I'll certainly look into it.

Ed - this is how I feel too, especially since I was hoping to retire in 10 years or so.

[Double Journey]

Best of luck to you. I've been lucky, and stayed out of the market during most of this mess. Still have some investments in, and have taken an absolute beating on those, but probably more than 70% in cash.

Not trying to pick bottoms either, but still think this market has some room on the downside and so I'm not planning on being a hero in this market. There is easily another 20% down in the market. The financial problems aren't even close to over yet ...

[suze]

Funny, I'm having a great year, investment-wise. And very little panic on my part!

What's funny about that?

[MonkeyMonk]

I agree with FMF 100% on this issue. I've got a 2 decade+ time horizon and I'm fortunate enough to have sizable chunks of fresh money coming due every quarter from a series of laddered CDs I set up a few years back. I've been taking that money and putting abut 90% of it directly into my portfolio each quarter. It's a little disheartening to see my totals still continue to drop month to month but I've got a 1-year emergency fund and feel pretty confident that I'll be just fine when the time comes that I need this money.

[Pop]

"What's funny about that?"

That you can state matter of factly that FMF is right on this issue.