Market bounces

[jIM_Ohio]

Over the last 12 months I have received numerous mailers from T Rowe price reminding me to stay invested.

The current mailer shows the market performance in 1-3-5-10 years after big drops.


bottom June 1962 1yr 26.7% 3yr 15.4% 5yr 10.6% 10yr 6.9%
bottom June 1970 1yr 37.1% 3yr 13.0% 5yr 4.6% 10yr 4.3%
bottom September 1974 1yr 32.0% 3yr 15.0% 5yr 11.5% 10yr 6.9%
bottom July 1982 1yr 51.8% 3yr 21.3% 5yr 24.4% 10yr 14.8%
bottom November 1987 1yr 18.8% 3yr 11.8% 5yr 13.4% 10yr 15.3%
bottom Sep 2002 1yr 22.2% 3yr 14.7% 5yr 13.4% 10yr N/A
---
Pointing this out because the best returns usually come immediately following a big drop.

[maat55]

Yes, I recall this information recently.

[disneysteve]

As they say, the time to make money in the market is when there is blood in the streets. There have been numerous threads recently about people considering dumping stocks or looking for a bottom or stopping their 401k and Roth contributions until "the market gets better" or "stabilizes". October saw record outflow from equity funds. Sounds to me like the time to invest in stocks is NOW for those of us who aren't afraid to run against the herd.

[creditcardfree]

I'm glad we haven't stopped investing...and will continue to do so. I'll look forward to the bounce when it gets here.

[disneysteve]

Same here. My automatic monthly investments have continued. My wife's 401k contributions have continued. The only thing I regret in hindsight is that I front-load our Roths, maxing them out in the first half of the year. This is one year I wish I would have waited to do so, but in 12 days, I can start sending money in again for our 2009 contributions so as long as there isn't a big year-end rally, I'll still be getting in at a good time.

[Gjowers]

I opened a taxable account this month with Vanguard. Like Warren Buffett says, be greedy when others are fearful. The market is down about 40% or so now, it doesn't need to come up very much for me to make money. I like that. It may take some time, but I'm patient.

[srblanco7]

I continue to hang in there and invest - 401ks, Roths and taxable accounts.

Though I read an article titled "The End" by Michael Lewis (The End of Wall Street's Boom - National Business News - Portfolio.com) which made me want to bury my money in coffee cans in the backyard. As a note, it also provided the best explanation, that I've read, about the makings of our current financial crisis.

I'm resisting the backyard urge for two reasons - first, I'm trying to force myself to be an unemotional investor and second, we have about 2 feet of snow on the ground, which I don't feel like digging through.

[jIM_Ohio]

It is very possible the bottom has not been reached, if you watch 60 minutes or other programs and they refer to alt A or option arms... and those have not hit yet...

The more people can buy the more likely we reach our long term goals.

[maat55]

It is very possible the bottom has not been reached, if you watch 60 minutes or other programs and they refer to alt A or option arms... and those have not hit yet...

The more people can buy the more likely we reach our long term goals.

Glenn Beck is convinced that the worst is yet to come. He seems diligent in his research which keeps me digging in in preparation for it. I thought our bottom was around 10,000 earlier.

[Gjowers]

I saw that 60 minutes program last week. It scared the heck out of me. Isn't the worst case scenario with Alt A and Option Arms that there will be massive defaults when the teaser rate changes to the market rate?

[Goldy1]

I don't think the only problem is the fear of losing money in the market or going through the ups and downs.

There are other rreasons people stop investing. Lay offs were imentint at my dh's work a few months back so suggested he decrease his 401K contributions (btw the company gave up the match a couple years ago due to declining profits)
I did not decrease his amount due to fear of the market. It was to stock pile even more cash in case a good job did not come soon.
ALso for the first time ever we are not paying extra on our mortgage. WE owe very little on it so it's not a big deal, but we always paid $300 extra and did a couple dump payments on occasion.
I elected to stock pile more cash b/c of the job situation.

[Goldy1]

yea fidelity has e mailed and mailed me a lot encouraging me to continue investing etc etc. I heard that firms like Morgan STanley(I used to be with them and had a bad expereince by the way, basically they didn't want me if I didn't have hundreds of thousands was the sentiment I got) are laying off workers.

[disneysteve]

Goldy, I think that makes perfect sense. In difficult times, cash is king. Prepaying a mortgage doesn't help cashflow until the loan is totally repaid. Building a good emergency fund is extremely important.

[Like2Plan]

It is very possible the bottom has not been reached, if you watch 60 minutes or other programs and they refer to alt A or option arms... and those have not hit yet...

That is what I was thinking, but I didn't want to sound negative.

I was just looking back through historical data for my 401K for the S&P 500fund. While 2003 did enjoy a 28.54 increase, 2002 was the third year in a row that posted in negative territory. The trouble with finding the bottom is you don't know when it happens until later.

2000 -15.77
2001 -9.04
2002 -22.05

During that time, DH was 100% in the S&P. He started making contributions in OCT 1999. It was distressing to see the contributions being swallowed up by the losses month after month and year after year, but it was amazing how fast the value increased when the market started going up.

[Inkstain82]

As they say, the time to make money in the market is when there is blood in the streets. There have been numerous threads recently about people considering dumping stocks or looking for a bottom or stopping their 401k and Roth contributions until "the market gets better" or "stabilizes". October saw record outflow from equity funds. Sounds to me like the time to invest in stocks is NOW for those of us who aren't afraid to run against the herd.

Funny how when times are good, everyone considers themselves to be an aggressive investor with high tolerance for risk.