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Mistakenly I have been. Have not moved any money into equities the last year or so...kind of holding serve. May be a mistake on my part, but I haven't lost anything. Only things I'm looking at are solid, out of favor, good dividend plays.
Pick the index of your choice or just look at performance of the DJIA for the past 5 years. The increase is remarkably consistent at about 1500 points/year increase. The Fed continues to maintain low interest rates and continues to buy bonds. It is clear that there will be no sudden or large change in this policy. The Shiller PE index might be a bit high, but not exceptionally so and there seems to be room for both increased earnings and a continued upward SPE index.
None of us can predict the performance of the stock market, but I just do not see any cause for concern over the next year or so. As always the stock market can react to some current event. Often news events seem to set off corrections which have little to do with actual corporate profits. We just have to accept that the wise, big time investors are just as fickle as teenage girls. We need to ignore the fickleness and look at the bigger picture of events.
I retired at the end of last year & took my 401k & rolled it over to a IRA. It's all in a money market account because looking at the charts they been going up consistently for a few years & I don't want to start my retirement by losing 10%+ at the beginning so I'm waiting on a correction. But this is a weird market now.
So I haven't lost money the last 6 months but I've missed the uptick, and I find myself in the regrettable position of timing the market with this lump sum.
You have higher and higher prices on less and less volume. Of course, you also have the Fed pumping in billions of dollars every month, but that is decreasing month by month. Take those two things to the logical conclusion and it pays to be a little cautious up here.
History shows that any strong market will eventually experience a major secular correction, like a -30%er. History also justifies a likelihood of an 8 - 12% correction over the short term of this current uncorrected 4 1/2 year bear cycle. I see it as likely but not a certainty.
Though the news blares loudly every time the Dow or the SP500 or NASDAQ hits a new high, these new highs aren't crashing dramatically upward; instead these markets are rather flat, but slowly increasing. Not completely flat, but more flat than sloped. I'll guess that any of a number of negative world news events could trigger a short term correction if bad things escalate strongly (Syria, Iraq, Ukraine, Moldova, Russian supply blockage of nat'l gas to Europe, North Korea, South China Sea, major terrorist attack).
It doesn't seem to me that it would be wise to make major changes to holdings right now because of this possibility. Minor stuff like DCA rather than lump sum into equities with new money, taking some profits here and there and holding the cash a few months - stuff like that. If somebody is DCAing in over the next 12 months, an 8-12% correction would be a good time for doing a partial lump sum before returning to the DCA pattern.
Well, it doesn't seem like they want to let the market drop just yet. Today all the indices have gone up ballistically from the open. Everytime the market pulls back a bit, huge buy orders have been coming in from institutions. They must know something we don't.
You can always invest and place a trailing stop order. Perhaps adjust it every 2 weeks or something. So it just sells when it goes down too much. You still have at least some profits then.
You have higher and higher prices on less and less volume. Of course, you also have the Fed pumping in billions of dollars every month, but that is decreasing month by month. Take those two things to the logical conclusion and it pays to be a little cautious up here.
Don't you have more mom and pop investors buying index funds that do less trading and thus could be lowering volume?
I retired at the end of last year & took my 401k & rolled it over to a IRA. It's all in a money market account because looking at the charts they been going up consistently for a few years & I don't want to start my retirement by losing 10%+ at the beginning so I'm waiting on a correction. But this is a weird market now.
So I haven't lost money the last 6 months but I've missed the uptick, and I find myself in the regrettable position of timing the market with this lump sum.
Clearly you were to use a kind phrase -- overly conservative. There can be 5%, 10%, or perhaps greater "corrections" at anytime. Mostly I just view them as being due to investors who seem to control the market but also seem to behave like fickle teenage girls. You need to ignore the noise and look at the big picture. The economy continues to strengthen. Energy prices are helping. Manufacturing is starting to return to the US. Unemployment is improving. There are NO other reasonably secure investments that have any considerable yields. Stock prices and PE ratios will continue to increase for at least for the short term...a year or more. Even the Fed is saying this. This is definitely not a WEIRD market. It has and continues to be very predictable. A few years ago the market was weird with worry about Greece. The Greek economy is like nothing but that made the situation even more weird. Now look at the difference. There are some very serious issues in the middle east and the Ukraine or Romania or whatever. No matter the stock market just keeps going up. With an economy that is still recovering and with lots and lots of conservative investors, we are still a long way from the TOP. Think about some stocks in your portfolio. And, if the market drops 5-10% or more, then great, buy more.
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