Don't sell the stocks in your retirement portfolio because of the drop in the market!

[TexasHusker]

True, but 98% of Americans are "mom and pop investors". Everyone can't be a business owner. And even most business owners own small businesses and still need to invest in the market to grow their money for the future. I think you'd have a tough time finding a lot of small business owners who don't have substantial money in the market.

1. Never said everyone could or should be a business owner.

2. I never have advocated against investing to grow one's money.

3. I'm not going to argue over who has got what money "in the market" because neither you nor I really know that.

4. Me cautioning about excess enthusiasm over "the markets" doesn't mean that I think they are a bad thing. That method didn't work for me to my satisfaction. But let's check back on everyone's enthusiasm when we are a year into the next bear market.

[TexasHusker]

This!

TH is talking about how the ultra-rich invest, and I don't disagree with him at all. But 98% of us are not the ultra-rich. We can't mirror what they do. We don't have the resources they have. So maybe the market is mainly for the average investor, but virtually all of us are the average investor so I don't see the problem.

I didn't advocate for mimicking what ultra rich do.

I never said the markets weren't appropriate for the average investor.

You are confusing what I do personally with my money versus what might or might not be appropriate for someone else.

If my opinion isn't useful to you, by all means disregard it. But please refrain from creating strawmen from what I post. I think it would be helpful to others that might be interested in discussing a variety of topics related to investments, besides index funds. There's a whole world out there.

[QuarterMillionMan]

Texas with the looming market crash scenario that you forecast if you don't mind me asking where do you park your money? Gold/silver, Bitcoin, cash, short positions?

[disneysteve]

Texas, so what do you suggest the average investor do?

I'm going to suggest that he means to not invest in the stock market at all.

That's correct. But to each his own.

I never said the markets weren't appropriate for the average investor.

That's exactly what you said.

Look, I agree with almost everything you've stated in this thread. I don't agree with your conclusion - to not invest in the market - but I think almost every point you made about potential risks with the market are true. The real problem is that far too many people invest in the market without understanding what they are doing and without having any plan. It isn't the fact that they are invested in stocks that gets them in trouble. It's that they don't know what the hell they are doing that gets them in trouble.

[TexasHusker]

Texas with the looming market crash scenario that you forecast if you don't mind me asking where do you park your money? Gold/silver, Bitcoin, cash, short positions?

I don't see a looming market crash. I don't expect a 75% correction like in 2000 and thereafter.

But this bull market is almost 10 years old, and a bear market always follows a bull, and on average, there is a 41% loss in a bear market. So if you ride it out, some will lose considerably less, some considerably more.

Back in my stock market days, I was never able to adequately hedge, sufficiently for me to feel comfortable with it all. That's why I quit investing in the stock market.

Precious metals tend to have an inverse relationship to the stock market, but just because you have 50% gold doesn't mean you're indemnified in the next bear market. You can also buy bear funds that short stocks. If you time it right, you make a lot of money in the bear market. Good luck with that.

Because the equities markets tend to rise and fall for years at a time on emotion, there is not predicting the eventual bear market and how deep the indices will sink. Few predicted that the NASDAQ would still not be back to its early 2000 levels yet here we are nearly 20 years later.

[TexasHusker]

That's exactly what you said.

Look, I agree with almost everything you've stated in this thread. I don't agree with your conclusion - to not invest in the market - but I think almost every point you made about potential risks with the market are true. The real problem is that far too many people invest in the market without understanding what they are doing and without having any plan. It isn't the fact that they are invested in stocks that gets them in trouble. It's that they don't know what the hell they are doing that gets them in trouble.

I think it would be prudent for you and I to simply not respond to one another's threads going forward. If there is an ignore function, I will employ it, and we can have meaningful dialogue on the board. I mean you no ill-will, I just don't care to argue.

[disneysteve]

I think it would be prudent for you and I to simply not respond to one another's threads going forward. If there is an ignore function, I will employ it, and we can have meaningful dialogue on the board. I mean you no ill-will, I just don't care to argue.

Not trying to argue. Like I said, I agree with almost everything you said. I just take a different approach.

[corn18]

Few predicted that the NASDAQ would still not be back to its early 2000 levels yet here we are nearly 20 years later.

The NASDAQ is 47% higher now than it was in 2000.

[disneysteve]

this bull market is almost 10 years old, and a bear market always follows a bull, and on average, there is a 41% loss in a bear market. So if you ride it out, some will lose considerably less, some considerably more.

Agreed. And that's why it is so important to be diversified and not have money in the market that you need in the near term, like because you are retiring next year.

Personally, I have backed off on our stock allocation because we are within 10 years of retirement and I agree that a market downturn is more likely with each passing day. I'm not timing the market but I'm not ignoring reality either.

[QuarterMillionMan]

Texas staying out of the stock market due to fears of a downturn is not a good strategy. During the 2007 collapse I made the mistake of staying in too long during the collapse. I got out at the bottom but I never reinvested until the market had made incremental strides back up. In the end I missed out on all the moves upwards. I would approximate that I missed out on about 40% in gains overall. To this day I never made back that 40%. I've made back some of it but not the full 40%.

[QuarterMillionMan]

When the next crash occurs, I know no one can time the market but I'm getting out and sitting on cash until I feel comfortable reinvesting. I don't have the stomach to sit back and wait it out. It's just my perspective. Do what's best for you.

[disneysteve]

I got out at the bottom but I never reinvested until the market had made incremental strides back up.

This is a very common mistake.
The market drops.
People panic.
They sell their holdings and sit on the sidelines and wait until the market is back to where it used to be or higher before they feel "safe" investing again.

So they suffered the loss and then compounded it by avoiding the recovery and not buying back in until the price ran up again. It's the "sell low, buy high" method. I don't recommend it at all.

[corn18]

Even if you only invested at all the market peaks, you would still make money.

http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

[disneysteve]

Even if you only invested at all the market peaks, you would still make money.

True, but if you buy at the peaks and sell at the bottoms, then not so much.

[corn18]

True, but if you buy at the peaks and sell at the bottoms, then not so much.

Affirmative. Buy and hold.