Is the US Stock Market due for a correction? (bonds, fund, investment)
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I thought it would 5 months ago so Ive been hoarding cash. Shows you what I know as the market is at a high.
You cant time the market.
Oildog, I went back and found a million posts from the past yr or two of people doing the exact same thing......there were gold bugs, there were people who thought stocks were dead and called it a lost decade lol, there were people hoarding cash because they thought Obama would wreck the market...
All those people were WRONG.
That's why its a losers game to think you know how the markets will work in the short term...
Most people have inflated egos and can't admit when their wrong. That's why you never see people come back after they make their lousy guesses....
Diversify to your risk tolerance and take what the markets will give you...Simplicity works...
Reminds me of a line from the movie war games: The only way to win is not to play. In terms of investing and saving for retirement, the way "not to play" is to invest in the market as a whole, to claim your portion of the growth of the economy as a whole.
The dollar index has significantly decreased, yet the Dow Jones is reaching an all-time high in points. If you are an investor, would this be the right time to sell your stocks and lock up on your gains?
General wisdom among traders is that when sentiment indicators are all at their best, the market is ready to go down.
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Originally Posted by bmw335xi
Don't try to time the market. If you want to invest, do it now.
This works as long as you have a *very* long term horizon, and are willing to wait through potentially prolonged bear markets. Won't work ifyour horizon is only on the order of a handful of years. Case in point, let's look at a random example in history: The DJIA closed on May 30, 1965 at 912. Sixteen years later, it was at the same level.
But, that said, I basically agree with what you and the others are saying. Don't try timing the market. If you're going to invest at all, just stick it out for the long haul.
General wisdom among traders is that when sentiment indicators are all at their best, the market is ready to go down.
The problem is that that wisdom does not include how long after the sentiment indicators are all at their best that that happens, and it is as common as not that the market continues to increase so much after the indicators reach that point that even the inevitable correction doesn't knock it all the way back down past where it was when sentiment indicators all first reached their best. (Translation: You cannot reliably time the market.)
General wisdom among traders is that when sentiment indicators are all at their best, the market is ready to go down.
This works as long as you have a *very* long term horizon, and are willing to wait through potentially prolonged bear markets. Won't work ifyour horizon is only on the order of a handful of years. Case in point, let's look at a random example in history: The DJIA closed on May 30, 1965 at 912. Sixteen years later, it was at the same level.
But, that said, I basically agree with what you and the others are saying. Don't try timing the market. If you're going to invest at all, just stick it out for the long haul.
No one I knew threw all of their money in the the Dow Jones on 5/30/65 and withdrew sixteen later....do you?
What were the average rolling periods for that time? That would be a much better indicator.
No one I knew threw all of their money in the the Dow Jones on 5/30/65 and withdrew sixteen later....do you?
Oh I'm sure there's a whole bunch of people who did very similar to that
Quote:
What were the average rolling periods for that time? That would be a much better indicator.
Indicator of what? How your stock market investment would have been flat 16 years later? The point is that you can put your money in the markets, and many years later find them at exactly the same level they were when you put them in.
The problem is that that wisdom does not include how long after the sentiment indicators are all at their best that that happens, and it is as common as not that the market continues to increase so much after the indicators reach that point that even the inevitable correction doesn't knock it all the way back down past where it was when sentiment indicators all first reached their best. (Translation: You cannot reliably time the market.)
Oh I'm sure there's a whole bunch of people who did very similar to that
Indicator of what? How your stock market investment would have been flat 16 years later? The point is that you can put your money in the markets, and many years later find them at exactly the same level they were when you put them in.
That is certainly true. Here is a chart of rolling 20 yr periods that is pretty interesting to see...(its 5 yrs old, but still relevant)
There are rolling periods where you have low growth, however you have to do what's best with what you think that gives you the BEST CHANCE of reaching your financial goals. Having a diversified portfolio tailored to your risk tolerance, taking what the markets give you, and rebalancing is a proven method of giving you the best chance. Yes, there will be some fat tails that outperform, but those are far and few between.....just ask John Bogle/Warren Buffett...
There are rolling periods where you have low growth, however you have to do what's best with what you think that gives you the BEST CHANCE of reaching your financial goals. Having a diversified portfolio tailored to your risk tolerance, taking what the markets give you, and rebalancing is a proven method of giving you the best chance.
Yes, good summary and a good chart. I think anyone considering investing ought to review a chart like that and see if it makes sense for them, taking time to consider the implications. For some people it may make sense to stick a portion of their capital into the markets for 30 or 40 years. For others, it may make more sense to not put anything into the markets, and instead use it for education, career advancement, their personal business, or whatever might give them better returns over the long run.
The real issue, I think, isn't whether we'll have an impending correction (10%) decline or even a cyclical bear market (20%) decline; these things come and go, and always will. The real issue is whether the secular bear market of 2000-onwards ended in 2009, or if it persists, with the 2009-2013 gains being a bear-market rally. In that scenario, we may find ourselves in 2020 with stocks essentially back to their present level.
Secular cycles are long-term, on the order of decades. In 1982-2000 we had a secular bull market, despite the crash of 1987 or the "Asian flu" of 1998. None of these sporadic and sharp crashes are reasonably predictable, to say nothing of mere corrections. But what about decades-long trends. What, sitting here today, can we reasonably predict about secular cycles?
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