Posted on Aug 24, 2015
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I have invested since the late 80s and find the severe down drafts as unsettling but ultimately I do not change my portfolio allocation. I am a Dollar Cost Averager, I purchase consistently into a diversified set of investments via 401K.
I have stocks (US, Intl), bonds, REITs, alternate investments (commodities)
When we have huge down days, I watch but ultimately I don't change allocation because my lifetime is my planning horizon. I am using working, but sometimes I will just sit and home, grab the popcorn and watch the gnashing and wailing on CNBC or Fox Business.
What do you do?
http://www.nbcnews.com/business/markets/stock-market-turmoil-dow-plummets-more-1-000-points-open-n414746
I have stocks (US, Intl), bonds, REITs, alternate investments (commodities)
When we have huge down days, I watch but ultimately I don't change allocation because my lifetime is my planning horizon. I am using working, but sometimes I will just sit and home, grab the popcorn and watch the gnashing and wailing on CNBC or Fox Business.
What do you do?
http://www.nbcnews.com/business/markets/stock-market-turmoil-dow-plummets-more-1-000-points-open-n414746
Finance
Portfolio Manager
Financial Services
Edited >1 y ago
Posted >1 y ago
Responses: 4
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Sounds like you understand the markets John. It's all about the proper allocation, as you know. I literally been rolling my eyes for the past two weeks. It's sickening what some people do to themselves financially, especially during the pullbacks and corrections.
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Buy on fire sale days, selling on plunge is a loser. If you think it is going to adjust, unload early, wait for it to go down and then wait some more for the fallout, then buy when everything is devalued. The average recession actually only lasts 6 months. When the stocks you buy recover, then move up you are in the catbird seat!
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1SG (Join to see)
Like John said, easier said then done. Unfortunately, this is the thinking of the average 'do-it-yourself" investor (no offense to anyone). Stick with a strategy. Start young and stay in for the long haul. Please, do not try to sell anything thinking you can get out then back in. I can rattle facts and stats all day. DCA from start to finish in a properly allocated portfolio. When the market dives, and IF you have the spare cash, then try to get in at the bottom.
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Most retail investors have the majority of their assets in vehicles that do not carry any costs to reallocate. Market drops can represent a great buying opportunity for equities specifically. Of course it's no reason to take any money out of the market, but metaphorically changing lanes when the opportunity presents itself can sometimes help you get ahead of some traffic on the road to your financial goals. Pick a road and stick to it, but changing lanes from time to time can often work in your favor.
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LTC John Shaw
2LT (Join to see) Agreed! The reallocation between asset classes is typically based on age and risk tolerance. I find that after a 'big event' I need to check in with my spouse and make sure her risk tolerance is still good. Don't want to join the crowd and sell at the bottom, which is the opposite of good long-term investing strategy.
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