It is the time to start and invest in the markets?

[isralexba]

Hi,
after the recent 4 weeks fall (the last 2 days did correct some of the damage...) who still thinks it is now the time to enter the market will full strength?

[mcfroggin]

With a 3 day break, I think Tuesday will be a day to watch. I'm not quite sure the correction is over.

[moneyclass]

i think we all want the market to start going up. but theres still some stocks that are doing good just have to find them. im not buying much now but doing alot of watching and waiting.

[KTP]

Europe is about to default, US housing market is still in terrible shape, Linkedin IPO put it at 500+ PE ratio...

Sure, I think it is just a perfect time to go all in. Party like it is 1999.

[disneysteve]

Originally Posted by isralexba

who still thinks it is now the time to enter the market will full strength?

I think it is always the time to be in the market with a systematic investment plan, dollar cost averaging each month into a diversified portfolio that you rebalance periodically. Don't let short term issues influence long term investing decisions. The money that we're putting into the market is for retirement 20 and 25 and 35 years from now. I don't really care if it goes up or down tomorrow or next week or next month.

[isralexba]

Originally Posted by disneysteve

I think it is always the time to be in the market with a systematic investment plan, dollar cost averaging each month into a diversified portfolio that you rebalance periodically. Don't let short term issues influence long term investing decisions. The money that we're putting into the market is for retirement 20 and 25 and 35 years from now. I don't really care if it goes up or down tomorrow or next week or next month.

I actually agree with you, even though investing in a red market is one of (my) hardest things to do .... However, the economic situation, poor real estate market condition in the US and the ending of QE2 in the coming month are not good symptoms ....
I have actually sold out most of my stocks in March and since then returned only 2/3 of them into the market (mainly ETFs), and i am now checking the historical P/E ratios and other economic factors ....
I always prefer to invest in inflaction protected bonds with YTM of 6-10% but they are quite hard to find (at least in economically stable companies)

[kork13]

Originally Posted by disneysteve

I think it is always the time to be in the market with a systematic investment plan, dollar cost averaging each month into a diversified portfolio that you rebalance periodically. Don't let short term issues influence long term investing decisions. The money that we're putting into the market is for retirement 20 and 25 and 35 years from now. I don't really care if it goes up or down tomorrow or next week or next month.

What he said.

The best time to start investing is right now, as soon as possible, as consistently as possible, for as long as possible. The random swings between days, weeks, or even a few months will have very little impact on your overall performance over the course of 20-30 (or more) years. Start investing today, and you'll thank yourself for years to come.

[SteveBlissLaw]

IDK.....I'm holding off for a little while still. I just don't fully trust that things are back to normal

[disneysteve]

Originally Posted by SteveBlissLaw

IDK.....I'm holding off for a little while still. I just don't fully trust that things are back to normal

Not to pick on you personally but the problem with this mindset is that people tend to get out of stocks at the worst possible time, after the market has plummeted and then not get back in until prices are back up to lofty levels and things look rosy. That is the exact opposite of what you want to do - buy low and sell high.

Stop paying attention to the daily gyrations of the market. Turn off CNBC and Cramer and all of the other talking heads. Set your investments on autopilot so that a set amount of money goes in each and every month from now until retirement.

[Scanner]

While I always look to find a contrarian viewpoint, I have to fully agree with DisneySteve on this one.

I would not go in "full strength". . .I would get in any market (stocks, bonds, commodities, real estate) slow and steady that if it drops, you are getting good deals as stocks drop and if it goes up, great.

If you have some money to drop, I'd either go with the standard 100 - age mix right off the get go with stocks/bonds or if you want to invest 100% stocks, then I'd buy in slow, like maybe 10% of your cash over the next 20 weeks. (like if you had $20,000. . .buy $2000 every 2 weeks of a total market index).

Then, you can always fiddle/faddle with your portfolio when you are in.

[dczech09]

Anytime is a good time to enter the market. You're simply thinking too hard if you're worried about when to enter the market and when to leave. Do yourself a favor and stop thinking; act! Systematically throw some money into the market, even something as little as $50 a month to start.

"When" to get into the market is far less important than "being" in the market.

[mcfroggin]

Originally Posted by dczech09

Anytime is a good time to enter the market. You're simply thinking too hard if you're worried about when to enter the market and when to leave. Do yourself a favor and stop thinking; act! Systematically throw some money into the market, even something as little as $50 a month to start.

"When" to get into the market is far less important than "being" in the market.

While I agree that any time is a good time, the type of investments you make are different. If the market is too high in one area, you may want to be shorting stocks vs purchasing them outright. Do not systematically throw money into the market blindly. Research, analyze, and make decisions based on your knowledge.

[disneysteve]

Originally Posted by mcfroggin

If the market is too high in one area, you may want to be shorting stocks vs purchasing them outright.

Wouldn't it be nice if we all had a crystal ball that told us when a stock had peaked and was going to fall so that we could short it? Since that doesn't exist, stay away from attempts at market timing. Invest regularly and consistently over time in a diversified portfolio and rebalance periodically. In essence, that accomplishes the same thing because it allows you to lock in gains by selling shares that have shot up in price and redeploy the money into underperforming areas which are selling at a discount, but it removes the emotion and guessing from the equation.

[mcfroggin]

Originally Posted by disneysteve

Wouldn't it be nice if we all had a crystal ball that told us when a stock had peaked and was going to fall so that we could short it? Since that doesn't exist, stay away from attempts at market timing. Invest regularly and consistently over time in a diversified portfolio and rebalance periodically. In essence, that accomplishes the same thing because it allows you to lock in gains by selling shares that have shot up in price and redeploy the money into underperforming areas which are selling at a discount, but it removes the emotion and guessing from the equation.

By your own definition, you are also using a crystal ball. How do you know underperforming areas are at a discount? Maybe underperforming areas are just poor areas to invest period. You time the market just like anyone else - you just choose a random day to do it on. It does not remove guessing from the equation at all - you just guess randomly.

There is no perfect way to invest. If there was, everyone would be doing it and becoming millionaires.

I'm merely stating that there is ALWAYS a way to be making money regardless of the market rising or falling. Sure it takes some research, foresight, luck, risk, and knowledge of the market. I don't dispute that.

Every investment possibility has potential to produce gains. Some have more or less risk than others. It is for each individual to assess one's own risk tolerance and knowledge of the investment strategy.

[humandraydel]

Personally, I hope the market goes down again so some of you will sell me your stocks for cheap!

[disneysteve]

Originally Posted by mcfroggin

By your own definition, you are also using a crystal ball. How do you know underperforming areas are at a discount? Maybe underperforming areas are just poor areas to invest period. You time the market just like anyone else - you just choose a random day to do it on. It does not remove guessing from the equation at all - you just guess randomly.

That's a valid point. Any time you buy or sell an investment whether it is stock, bond, mutual fund, ETF, painting, coin, stamp or anything else, you are making some "guess" about the current value of the item and the potential future value.

My point is that nobody knows for sure what is going to happen - otherwise we'd all be wealthy as you said. That's why most advisers support the method that I'm suggesting. Investing a set amount on a regular schedule, also known as dollar-cost-averaging, and periodically rebalancing to return your allocation to your desired levels, greatly reduces the chances that you will buy at the peak or sell at the trough. It enables you to pick up more shares when prices or low and fewer shares when prices are high. It also enables you to lock in gains rather than deciding to hold on because you've decided the price will keep going up, only to see it crash soon after. Yes, rebalancing does have an element of randomness because if I rebalance on January 1 I'll get a different result than if I rebalance on July 1 or November 15. But it does remove the urge to gamble and "let it ride" even if one holding has grown to be an out of proportion holding in my portfolio. If my intent was to be 80% stocks and 20% bonds and a big rally has left me at 93% stocks and 7% bonds, I'm taking a lot more risk than I had planned. It is very easy to be blinded by rising prices. If you stick to a set rebalancing plan, you won't make the mistake of hanging in there and getting greedy.

Is it perfect? Nope. Nothing is. But I think if everyone followed this, they'd be a lot better off. I don't have stats in front of me but I've often read that the average investor's return is quite a bit lower than the stated return of the market or of individual funds because of how much they jump in and out of things without a good plan. It doesn't do you any good if the market returns 12% but your portfolio only returns 4% because you bought and sold at the wrong times.

[mcfroggin]

Originally Posted by disneysteve

But I think if everyone followed this, they'd be a lot better off. I don't have stats in front of me but I've often read that the average investor's return is quite a bit lower than the stated return of the market or of individual funds because of how much they jump in and out of things without a good plan. It doesn't do you any good if the market returns 12% but your portfolio only returns 4% because you bought and sold at the wrong times.

Some individual investors will return less than the market and others will return much more.

I know that many advisors recommend rebalancing at random times. That is good advice for some and bad advice for others. If I was advising someone who knows nothing about the market and wishes to keep it simple, rebalancing is excellent. It is simple to understand and easy to implement. You have a broad range of investments that is closer to the general market. There is little emotion involved. You just stick to the plan and coast. It isn't a bad plan, but you are also much less likely to beat average returns.

For example, I have a brother that invests in 80% entertainment/electronic industries. He stays at the forefront of technology in only those fields. It is what he enjoys. No rebalancing because there is no balance at all. He kills the market yearly - averaging 50% even during the depression. This year he is up nearly 100%. He now emails me his transactions before they occur - at my request .I don't advise that others try to be like him. You can't just magically start pulling in returns of 50%. It takes a lot of time, effort, research, and RISK. On a bad day, he can lose tens of thousands of dollars. I've seen it happen. He is comfortable with those risks, and he is young enough to recover if needed. If he followed your rebalancing plan he would currently be MUCH worse off.

I personally merge rebalancing + funds in fields where I am more knowledgeable like biotechnology. I know that increases my risk, but it also increases my returns when I'm right.....or diminishes them when I'm wrong. I'm ok with this.

Every investment form is risky. Some people are more risky than others and prefer it that way for a reason. Random rebalancing definitely has its place, but it would not make everyone better off.

[disneysteve]

Originally Posted by mcfroggin

Random rebalancing definitely has its place, but it would not make everyone better off.

Fair enough. I won't disagree with that. There is a minority of investors who can and do beat the market over time and for them, active management beats passive investing. I would still maintain, though, that for the average Joe, trying to time the market and beat the market is a recipe for failure, or at least sub-par performance.

[couchrobt]

If you believe that you can do it and afford it and manage it.. then by all means just go for it. A few tips here and there and a good financial advisor and you will be fine.

[MaxPowers]

What do you think about regularly putting money into ETFs like Vanguard energy/REIT/Tech/Finance? I want to invest but do not have the time to constantly research and keep up with individual companies. I know I may not get as much gain, but at least it has a chance to work its way up.