Should I transfer funds into S&P now at a discount? (401k)

[Thinking-man]

Originally Posted by Mr. Zero

How many different ways can the market move? What if stocks keep dropping for the next two years? Then you've bought in way higher than you could have. By maintaining your allocation and rebalancing, you could dollar cost average on the way down and potentially see better returns than if you were to just dump it all in now. That's one scenario where you could be worse off.

Originally Posted by John7777

My advice: wait until the market drops a lot further. And it will. It's all very much overpriced right now.

John,
that to me is a dangerous concept, precisely because of what Mr. Zero mentioned above.

Mr. Zero, the 20k isn't a huge portion of my bond/cash chunk. I've been doing exactly what you mentioned since the 'correction' started. Yes, i've lost some potential gains as opposed to if i had gone all in when dow dropped 1000 points, but it's also possible that the dow would have dropped another 3k points and i would have missed out. (it didn't of course, so i'm worse off than if i had done that...but it would have been difficult to predict).

I reallocated most of my 401k money into cash when Dow was at 18k and have been buying back into S&P slowly. I now have 40k left in cash, with which i'll be doing the same as time goes by, as well as 20k in bonds (half of which i transferred to S&P today. could have done better of course, but S&P is still down 6% from when i sold).

[mark85]

Originally Posted by John7777

My advice: wait until the market drops a lot further. And it will. It's all very much overpriced right now.

If you use P/E as a gauge, the numbers suggest there's still a lot of downside risk. However, using P/E alone doesn't mean much, because it ignores interest rates.

Current S&P 500 PE Ratio: 19.84 +0.49 (2.51%)
4:04 pm EDT, Tue Sep 8
Mean: 15.55
Median: 14.60
Min: 5.31 (Dec 1917)
Max: 123.73 (May 2009)

[sholomar]

We're probably going to test the 200 day moving average which means several percent to the upside yet. Yes it's overvalued but that's never stopped people before... go by technicals, not fundamentals and don't fight the fed. There's no guarantee we test the 200 day though unless we break above around 1990 on the S&P which would break us out of this pennant formation. Probably do it this morning but that's my emotions talking though the futures are already at 1985.

I timed the last bottom pretty well, better than I ever have. Learning to look at the charts and data and not use my emotions. Tools like the VIX and the bullishness indicator came in handy... while everyone else panics and runs for the exits the technical investor gambles that things are not different this time, and tries to find a bottom.

http://stockcharts.com/h-sc/ui?c=$BPindu,uu[w,a]dacanyay[df][p][vc60][i]&pref=G


Catching a falling knife can work for the broad market.. when else are you going to buy.. after it's already rebounded half the losses? I did end up selling early and missing some nasdaq upside in the first 6 months of 2015 however.