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Let's stipulate that you are correct. Let's further stipulate that this isn't some "flash crash", or "V-shaped recovery", but a significant, severe and protracted decline.
1. How do we know that such a decline is actually impending, as opposed to being merely hypothetically possible?
2. Suppose that a decline has begun. How do we distinguish between another snafu, like February of this year (or say the summer of 1998), and "the real thing"?
3. Suppose that the market has declined by 20%. What do we do then? Do we buy on the dip?
4. Suppose that the market starts to recover. How do we distinguish a "sucker's rally" from the real thing?
5. While all of the above is transpiring, if we're out of the market, what do we do with our cash?
All of them good questions and if I knew all of the answers I would be on a beach instead of working for the man, 40 hours a week.
All I'm saying is that it's beginning to see like there are a lot more reasons for the market to decline 20%, than there are for it to go up 20%.
What reasons can you give to remain fully invested at this time and hope for Dow 30,000 ?
I've hedged my bets. 50% of what I have is in the following: cash, govt. bonds, and SDOW. The other 50% is invested in stocks and anyone who reads me on these boards knows that I move in & out of stocks and am never afraid to take a profit. I'm keeping this set up for a while, until the dust settles a bit.
What reasons can you give to remain fully invested at this time and hope for Dow 30,000 ?
1. My time-horizon is infinite.
2. I place zero credence in my intuitive capacity to notice any impending trends or to predict any particular movements.
3. Over the proverbial long term, the US stock market always goes up. The DOW may not reach 30,000 until 2030; or it might reach it next month. Or anything in between. But name any number, no matter how large, and the DOW will eventually reach it; the only question is, when.
4. The only alternative to stocks which comes to mind, is bonds. I've not done well in bonds. And because of my tax-situation, I need to rely on tax-free bonds, for which the options are limited. I'm fazed and befuddled by real estate, though I am trying to learn more about REITs.
5. I feel a deep psychological self-vindication, whenever I do absolutely nothing, but good things eventually still come my way. Whereas if I do somehow predict a trend, and turn out to be right, it feels like undeserved luck - and ominously, it feels like I've set myself up for a grotesquely cruel recompense, by way of reversion to the mean.
2. I place zero credence in my intuitive capacity to notice any impending trends or to predict any particular movements.
3. Over the proverbial long term, the US stock market always goes up. The DOW may not reach 30,000 until 2030; or it might reach it next month. Or anything in between. But name any number, no matter how large, and the DOW will eventually reach it; the only question is, when.
4. The only alternative to stocks which comes to mind, is bonds. I've not done well in bonds. And because of my tax-situation, I need to rely on tax-free bonds, for which the options are limited. I'm fazed and befuddled by real estate, though I am trying to learn more about REITs.
5. I feel a deep psychological self-vindication, whenever I do absolutely nothing, but good things eventually still come my way. Whereas if I do somehow predict a trend, and turn out to be right, it feels like undeserved luck - and ominously, it feels like I've set myself up for a grotesquely cruel recompense, by way of reversion to the mean.
# 3 is dangerous thinking. Take a look at what happened in Japan, a flat stock market for decades. Our own stock market came back from the lows of 2008/2009 only because of government intervention. Don't count on it happening next time around.
After pretty much a year with one stock at the same price, I sold... then it went up $10 per share. Yup. But I made a small profit on the stock so I am happy. Tomorrow it will be back down.
My money is going back into savings accounts. Over the last yer I made about 3% in the market. And sometimes lost money. I am putting that into savings.
The problem for me is seeing stocks never move from their price points for years. Up down up down every day but they stay about the same. That feels like the masters of the universe know when things are going up and down.
# 3 is dangerous thinking. Take a look at what happened in Japan, a flat stock market for decades. Our own stock market came back from the lows of 2008/2009 only because of government intervention. Don't count on it happening next time around.
we ain't japan nor do have a central bank that makes the blunders japan did that left them in a deflationary spiral. so we strictly need to deal with what goes on here in terms of a japan style spiral
How many times since about 2013 have we had posters on this forum saying this? Clearly someone's belief that the stock market is "simply due" for something isn't a good barometer of future performance.
Quote:
Originally Posted by BeerGeek40
* Weather patterns that may be reminiscent of the dust bowl of the 1930's
How many times since about 2013 have we had posters on this forum saying this? Clearly someone's belief that the stock market is "simply due" for something isn't a good barometer of future performance.
Seriously?
Something to think about, that's all. I'm not saying it means anything at all, but there have been some severe drought conditions in recent years. The dust bowl happened once, why could it not repeat itself?
There has been "severe drought" in the West for almost a decade
I thought you didn't believe in climate change...
Not what I said at all. The climate has been changing for millions of years. I'm simply not convinced we have any control over it, regardless of whether or not everyone buys a hybrid car and puts solar panels on their roof. The earth is going to do what it's going to do, and we are going to have to live with the consequences.
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