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Old 09-01-2015, 07:44 AM
 
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Good morning,
i have about 20k of my 401k (about 10% of total) in VBMFX. it has lost very little during the recent 'correction'. i was wondering if it would be wise to switch these into VFINX now that i'd be getting a 10% discount from the highs, or if at 34, i should have some exposure to bonds and safe investments?

(of course i'm not going to use this money until retirement, and as some of you already know, i'm a bit of a risk taker... )

thoughts?
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Old 09-01-2015, 07:49 AM
 
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no one knows . we thought low in 2008 was when we fell 2000 points . who knew that we had 4000 more to go . many who bought ended up throwing in the towel bailing out and licking their wounds trying to preserve that powder to fight another day . no one knows if the ride back is 15 years away again or 15 days .

few things are really at a discount . markets have no memory . they only know this is what it is worth right now . it may be worth less tomorrow .
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Old 09-01-2015, 08:41 AM
 
4,196 posts, read 6,276,288 times
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Quote:
Originally Posted by mathjak107 View Post
no one knows . we thought low in 2008 was when we fell 2000 points . who knew that we had 4000 more to go . many who bought ended up throwing in the towel bailing out and licking their wounds trying to preserve that powder to fight another day . no one knows if the ride back is 15 years away again or 15 days .

few things are really at a discount . markets have no memory . they only know this is what it is worth right now . it may be worth less tomorrow .
True, but if the assumption is that markets always increase over time, then you are essentially buying at a discount (from where they were 2 months ago). if one's assumption is that the markets will never reach or exceed 18k however, then one shouldn't be in the market in the first place.
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Old 09-01-2015, 10:06 AM
 
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It is all relative. Before the dot coms crashed everyone thought when they fell 10% they were on sale.

Only hindsite determines if it fell because it shoild never have been at that price in the first place or it was an under priced asset.

I thought i over paid buying face book the first day it came out but inretrospect it was over priced at that price
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Old 09-01-2015, 10:26 AM
 
Location: Tip of the Sphere. Just the tip.
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Quote:
Originally Posted by Thinking-man View Post
Good morning,
i have about 20k of my 401k (about 10% of total) in VBMFX. it has lost very little during the recent 'correction'. i was wondering if it would be wise to switch these into VFINX now that i'd be getting a 10% discount from the highs, or if at 34, i should have some exposure to bonds and safe investments?

(of course i'm not going to use this money until retirement, and as some of you already know, i'm a bit of a risk taker... )

thoughts?
I'd do it. Absolutely. I just put some more cash into a total stock market ETF (VTI) a few minutes ago.

In the short term it's anybody's guess. In the long term I've just locked in a significant discount. 10% is a full year's return for a lot of investments. Hard for me to pass it up.

And I have limit orders in place to buy more if the market continues to slide

Last edited by turkey-head; 09-01-2015 at 10:55 AM..
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Old 09-01-2015, 10:44 AM
 
Location: Taos NM
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I think I am going to as well, just $2500. I figure I might make $250 and I might lose about that much, but it isn't going to hurt if I lose it and it will be a neat little gain if I get it. All my money in the market I'm going to cash out at Januaryish for a downpayment on a house, which I'll be able to make about 10% of the total value for the down payment, so my gains or losses will just be a few extra or a few less months paying for mortgage insurance.
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Old 09-01-2015, 11:03 AM
 
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Originally Posted by Phil P View Post
I think I am going to as well, just $2500. I figure I might make $250 and I might lose about that much, but it isn't going to hurt if I lose it and it will be a neat little gain if I get it. All my money in the market I'm going to cash out at Januaryish for a downpayment on a house, which I'll be able to make about 10% of the total value for the down payment, so my gains or losses will just be a few extra or a few less months paying for mortgage insurance.
I would be careful with this strategy. Its usually not a good idea to invest in the stock market if you have a near-immediate need for your cash.
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Old 09-01-2015, 11:08 AM
 
4,196 posts, read 6,276,288 times
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Quote:
Originally Posted by mathjak107 View Post
It is all relative. Before the dot coms crashed everyone thought when they fell 10% they were on sale.

Only hindsite determines if it fell because it shoild never have been at that price in the first place or it was an under priced asset.

I thought i over paid buying face book the first day it came out but inretrospect it was over priced at that price
that may be, but the reality is that in your example, even those who bought at -10% (and missed the additional x% drop) did better than those who stayed the course, or did not buy until years later.

wouldn't you agree with that?
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Old 09-01-2015, 11:18 AM
 
Location: Taos NM
5,335 posts, read 5,062,082 times
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Originally Posted by aus1ander View Post
I would be careful with this strategy. Its usually not a good idea to invest in the stock market if you have a near-immediate need for your cash.
But why is that so? From my standpoint, the marginal utility of my cash to me is similar whether it goes up or down. It's not like I will be losing more value if I lose $400 vs the value I will gain if I gain $400. In other peoples circumstances this may not be true though... And the probability the market goes up is greater than the probability it goes down, so why does the time horizon matter, except for that I won't be guaranteed positive values that I would be if I lengthened the horizon to 20 years? From a purely mathematical stance, I don't see why time horizon matters.
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Old 09-01-2015, 11:26 AM
 
906 posts, read 1,758,323 times
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Quote:
Originally Posted by Phil P View Post
But why is that so? From my standpoint, the marginal utility of my cash to me is similar whether it goes up or down. It's not like I will be losing more value if I lose $400 vs the value I will gain if I gain $400. In other peoples circumstances this may not be true though... And the probability the market goes up is greater than the probability it goes down, so why does the time horizon matter, except for that I won't be guaranteed positive values that I would be if I lengthened the horizon to 20 years? From a purely mathematical stance, I don't see why time horizon matters.
Nobody knows the probablity of anything related to the market in the short to medium term. We are experiencing very high volatility right now. You could have a 10-20% swing in one week to the downside (or worse).

It wasn't clear how much of your down payment money is exposed to market risk (I had assumed a signficiant amount) but imagine what you would do if we had a market crash similar to 2008/9 when the Dow tumbled 7000 points...you need this cash within 4 months. Keep it out of the market.
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