Tweet
I dugg this remix of the wassup videos. YouTube - Wassup 2008 One of the scene is a guy seeing his stocks plummet, and he attempts to kill himself. I was wondering, I know it is upsetting when your stocks go down, but do you react like this? I would see it as a chance to buy in more at a cheaper price. Like someone here said, Google is a great company that just has been affected by the bad market, and will bounce back once this blows over. Do you see it as an opportunity or a disaster?
-
-
Opportunity, all the way. And for anybody not needing their invested monies within the next 5 years or so should also see it as the same. It will bounce back, it's only a matter of when. Could be next week, could be 3 years from now. But in the meantime, I'm squeezing every free dollar I can find into my MF's. -
I don't do anything. I don't buy or sell right now. I am just trying to save as much cash as possible in case my dh is out of work for a while.Comment
-
That is precisely what the last person to own Enron said, "Enron is a great company that just has been affected by the bad market, and will bounce back once this blows over." If you invest without an Exit Strategy you will lose. Averaging down in a bear market exacerbates your loses. Stop Loss orders below your purchase price always guarantees a loss.
The best investment you can make is in a good financial education!
Dan ClemonsComment
-
When my stocks go down, I usually buy more of that stock because I am getting a better value for my stocks and I'm in it for the longtermComment
-
Assuming you are properly diversified, investing in economic downturns is not like investing in Enron. If Enron failed, life as you know it goes on. If the economy as a whole fails, the value of your retirement account will be the least of your worries.Originally posted by MYOM View PostComment
-
I retired in 2005. Since then my 401(k) has gained very little and of course lost even more in the last year, but fortunately the original balance with which I started my retirement with is still intact.
My reaction to these losses (I have several funds in my plan, almost all of which took a beating) was to exercise patience. And that was the problem. Before the economy went south, I held on to the losing funds (my former employer's company stock for example) for way too long. There was no excuse for that as it would have been very easy to shift to other funds in the 401(k) main plan that were still prospering.
A few weeks ago I finally moved all my 401(k) money into the fund's "guaranteed" fund which pays 3.50% per annum. If I had invested all my plan funds into that account in 2005, I would have been considerably better off than I am now. But thanks to my other reaction to when my stocks went down--misplaced hope--I screwed myself.Comment
-
Compounding your losses is never a good idea. If a train is headed downhill the best thing you can do is get out of the way. The idea is to sell when your financial train starts to roll downhill. No investment plan should be without an Entry and Exit Strategy. When your financial cake is done, take it out of the oven.Originally posted by disgruntable View Post
Dan Clemons retired Certified Financial PlannerComment
-
But if it's done for (i.e., you've already taken significant paper losses due to an unexpected turn), then what? The economy isn't like baking--when you screw up a cake, it's over. When your investments in the economy get screwed up, give it time and in nearly all cases (assuming appropriate diversification), your 'cake' will fix itself. It you "take it out of the oven" before that recovery can manifest itself, you're only shooting yourself in the foot.Originally posted by MYOM View PostComment
-
I jump up and down and scream!Comment
-
I log out of my account and grab a cookie. If it's a -/+ 400 point change in the DOW, I call my SO and we have a good chortle over it.Comment
-
'Zactly. When my stocks go down, I buy more :-)Originally posted by kork13 View Post
Mind you, I'm 24 years away from retirement, so I have time for them to recoup...Comment
-
Agreed completely. I got out last year, and I'm SO glad. I don't see things improving for a long while (I think they've got a ways to go down yet, and there will be some sucker rallies, but the economic climate is not cheery and won't be for some time). This market is insane right now, and the last place I want my money. I don't understand the mindset of not getting out, then keeping on buying while things are still going down? I know that bottoms are hard to time, but I sure don't see that we're there yet. I protect my money as much as possible, and if you think stocks are a bargain now, wait until they fall some more, then you'll have a better "bargain". I personally think that a lot of stocks were overvalued. This is how I feel about the housing market, and it's got a way to go down too IMO.Originally posted by MYOM View Post
I am 30 years (probably) from retirement - but I still don't want to lose my money.Comment
-
When market goes down, I keep buying. When it goes up I take profits and move them to safer investments, while still buying more.
Let's say a stock cost $100 at market peak and I invest $100 per month into that stock.
Month 1 I get 1 share for $100 and my basis is $100.
Month 2 stock drops 20% to $80. I still invest $100 and now have 2.25 shares worth $180 and a basis of $200 (avg price $88.89). An 11% gain is break even.
Month 3 stock drops another 20% to $64. My $100 purchase buys 1.5625 shares. I now own 3.8125 shares valued at $244. My cost basis is $300 ($78.69/share). I need a 23% gain to break even.
Month 4 stock drops another 20% to $51.20. My $100 purchases 1.9531 shares. I now own 5.7656 shares worth $295. My cost basis is $400 ($69.39/share). I need a 36% gain to break even.
It might appear I am asking for more (higher returns to break even)... realize a few things-
If I sold without buying more when the first 20% drop happened I cannot recover that loss- meaning selling after the drop is "giving up". No way to recover the loss.
If I just hold the original 1 share after the first 20% drop, I need a 25% gain to break even. When I bought more, I needed a lower return (11%) to get same result.
If the market dropped again (second drop) that original share would need a 56% gain to break even. By buying more I lowered the gain I needed to 23%.
If the market dropped the third time, that original share would need a 95% gain to break even. If I bought more I would only need a 36% gain.
Each additional purchase actually lowers what I need to break even- relative to the original share I purchased. When market is at 51.20 after the 3rd drop, if I see an upward trend I may choose to reallocate deposits... and once I turn a profit of around 20% I will certainly sell some things to rebalance. Because right now I have directed all new monies to equities, so I know my bond funds will be hurting on the next upward trend... that will probably coincide with higher interest rates and lower bond prices, so there is some timing and predicting I am doing to make money in this regards as well.Comment
-
100% agreed with jIM Ohio - that's my strategy too. In this case, however, my concern is unemployment and our mortgage payments so I've lowered the amount of contributions to keep more cash on hand. I have enough cash to survive for 2 years without a job but if DW loses her job too then that cuts it down to a little over 1 year worth of savings.
My overall investments declined about 50% and my reaction was a few colorful words to myself. A lot of my friends said that it happened to everyone but it doesn't ease the pain. No matter what I do I've lost 50% of my money even if I have another 30 years before I retire. My account has been reset back to 5 years ago which is discouraging. It's like a little bird trying to build a nest one straw at a time for hours and days and all of a sudden finds it's nest on the ground.
I feel for those that are closer to their retirement and lost money. Yes they should've moved from equity to bonds or other options but not many people do (or even know).Comment
Comment