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Its ok to be concern but not enough to bail yourself out and be a loser. I never felt any pain from the 2008 crash. Actually I was happy that the stocks went so cheap and that I could buy more shares. Always take the down market as an opportunity.
I felt pain, but also saw opportunity. Unfortunately I was transferred in early 09, so I couldn't 'unload' my savings account as I needed a new house downpayment. With that said, I got some things (SLW, F, FCX, BARE, IR, GRA) and made excellent gains on stocks I bought in 4Q08 and 1/2Q09.
you mean to tell me that in 2008 crash, most people bailed out of 401k and ira's?
according to morningstar ,yep! the majority of small investors got less than 4% while markets averaged long term over 9% for the last 10,15,20 and 25 years
I felt pain, but also saw opportunity. Unfortunately I was transferred in early 09, so I couldn't 'unload' my savings account as I needed a new house downpayment. With that said, I got some things (SLW, F, FCX, BARE, IR, GRA) and made excellent gains on stocks I bought in 4Q08 and 1/2Q09.
Are we talking about 401K/IRA's. Opportunity is not pain.
Your savings account has nothing to do with the stock market crash of 2008.
Are we talking about 401K/IRA's. Opportunity is not pain.
Your savings account has nothing to do with the stock market crash of 2008.
Yes, one mans pain is anothers opportunity. Being that I had many funds in my IRA I felt both (down 40%). The stocks I purchased with my regular account and with the cash reserve in my IRA got me back above water.
Yes, one mans pain is anothers opportunity. Being that I had many funds in my IRA I felt both (down 40%). The stocks I purchased with my regular account and with the cash reserve in my IRA got me back above water.
You don't need those IRA money till you are 59.5. Why worry? You are young which means you are buying funds for a cheaper price and adding more shares. Can't get any better then that. Do you really want to buy the funds expensive when the market is bullish?
why worry??????? because built into our human logic is the fact that most hate loosing money more than they like making money.
all logic and planning goes out the window with the majority of folks out there. once their pain limit is hit on a drop the game is over and they run. they should be buying or rebalancing but they dont,they bail out and loose money.
thats why i say over and over age isnt a factor in planning,its your tolerance for the drops that counts most.
problem is until you get caught up in a big downturn you dont know your own tolerance so its always like locking the barn after the horse ran away.
I have a brother-in-law who is an investment advisor and we were talking about investing in different mutual funds. i brought up that i am thinking about putting money into an index fund. He thought that was crazy because index funds never beat the market. Which got me thinking, are there mutual funds that do beat the market regularly? I dont mean all the time but at least occassionally, or even better, on average?
I have always thought that index funds are better because they are cheaper and they only try to mirror the market, which is hard to beat. Any thoughts?
I understand that it is important to diversify, and that having only one mutual fund of any kind is not ideal.
Tricky subject. Most people think they can beat the market, aka riskless returns, aka alpha, etc. But then again, people gamble,buy lotto tickets and pray despite the futility. Also, take one look at CNBC and it gives you insights into the everyday investor: they're not too bright.
The evidence is that mutual funds long ago stopped beating the market (or providing alpha). Most of the brains went to hedge funds. But the markets have become so efficient that even they rarely beat the market when you consider the risks and fees. A strong case could be made that insider trading is rampant among HFs. Ironically, this isn't to produce huge returns but to produce a consistent marginal alpha over time to attract a bigger assets under management (AUM). This is where the real money is made -- attracting retirement money from clueless baby-boomers and charging exorbitant fees.
Many individual investors think they beat the market. Typically, this is the result of:
1) Sloppy bookkeeping - completely ignoring trading costs and more importantly, taxes.
2) Not understanding how volatility is destructive to their portfolio. For example, over two years Portfolio A makes 2% and 14% return. Portfolio B makes 8% each year. Both have an average return of 8%. However, Portfolio B has a compounded return that is 0.4% higher because of its lower volatility. In the long run, this is can mean retiring 5-7 years earlier.
3) Not being in the market long enough.
4) Placing a cheap value on their time.
Also, a lot of common sense goes a long way. If a fund manager can consistently beat the market, why does he need your money? There are plenty of institutional investors who can provide billions to invest. So why would a fund manager need your 50k? It makes zero sense. No one can answer that.
Your best bet is to create a tax efficient portfolio across different assets classes using ETF's or Index Funds. Naturally, this should accord with your age and cash needs. In the long run, it is hands-down the best alternative.
Last edited by mcredux; 06-29-2011 at 12:02 PM..
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. The stocks I purchased with my regular account and with the cash reserve in my IRA got me back above water
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