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The trick is, you don't invest during the downturn, hence all the cash hoarding. You invest after it bottoms out for a while. Macro economies do not recover li

The trick is, you don't invest during the downturn, hence all the cash hoarding. You invest after it bottoms out for a while. Macro economies do not recover like a rocket, the window to invest is very large, so large that if you only recognized the bottoming out a couple years later, you still haven't missed the opportunity.

petercooper 11y ago
That is a really interesting point. So I've never invested in stocks before (preferring to invest in my own business) but have decided to diversify and am only seeking returns in a 5-15 year bracket (but want to minimize 1-5 year downside so it could potentially work as an extra emergency fund too). I had assumed being 20%+ off of the highs, it'd be a good idea to start getting involved now, but.. maybe I should wait until a clear "bottom out" is showing?
- throwaway_1010 11y ago
  So long as you don't wait forever. The market bottom of any exchange or stock is $0.00. The market, will likely never actually "bottom out". Look into DCA Dollar Cost Averaging. I personally, and professionally, manage DCA strategies with applying additional infusions during obvious lows (example: markets are down 10% in a given period). The bottom of a cycle can undulate "sideways" a bit over a period of weeks, months, years, decades with few discernible entry or exit points. Sometimes after an "event" occurs, the market/stock jumps XX% and opportunities may not occur again in the near future (goes sideways at new level). I note sideways markets/stocks and calculate the risk/reward if I deem it an opportune time. In most markets stocks don't go sideways forever.
- kspaans 11y ago
  Don't try to time the market, it's a fool's game. Do regular purchases of a broad index ETF (exchange traded fund, low fees!), AKA dollar cost averaging as another child mentions. If you are worried about downswings, keep your portfolio balanced to roughly 50% equities and 50% bonds (there are broad bond index ETFs too).
- ScottBurson 11y ago
  I can only offer you my personal opinion, which could well be wrong. I can take no responsibility for what you do with your money. That said, my opinion is this: there's far more risk than potential reward in the market right now, even after this drop. This is probably the beginning of a bear market that could last, I don't know, anywhere from maybe 6 to 18 months. I would definitely not suggest buying until it's clearly over. EDITED to add: here's a good summary: http://seekingalpha.com/article/3825236-bear-market-phases-see http://seekingalpha.com/article/3825236-bear-market-phases-s...

petercooper 11y ago

That is a really interesting point. So I've never invested in stocks before (preferring to invest in my own business) but have decided to diversify and am only seeking returns in a 5-15 year bracket (but want to minimize 1-5 year downside so it could potentially work as an extra emergency fund too). I had assumed being 20%+ off of the highs, it'd be a good idea to start getting involved now, but.. maybe I should wait until a clear "bottom out" is showing?

throwaway_1010 11y ago
So long as you don't wait forever. The market bottom of any exchange or stock is $0.00. The market, will likely never actually "bottom out". Look into DCA Dollar Cost Averaging. I personally, and professionally, manage DCA strategies with applying additional infusions during obvious lows (example: markets are down 10% in a given period). The bottom of a cycle can undulate "sideways" a bit over a period of weeks, months, years, decades with few discernible entry or exit points. Sometimes after an "event" occurs, the market/stock jumps XX% and opportunities may not occur again in the near future (goes sideways at new level). I note sideways markets/stocks and calculate the risk/reward if I deem it an opportune time. In most markets stocks don't go sideways forever.
kspaans 11y ago
Don't try to time the market, it's a fool's game. Do regular purchases of a broad index ETF (exchange traded fund, low fees!), AKA dollar cost averaging as another child mentions. If you are worried about downswings, keep your portfolio balanced to roughly 50% equities and 50% bonds (there are broad bond index ETFs too).
ScottBurson 11y ago
I can only offer you my personal opinion, which could well be wrong. I can take no responsibility for what you do with your money. That said, my opinion is this: there's far more risk than potential reward in the market right now, even after this drop. This is probably the beginning of a bear market that could last, I don't know, anywhere from maybe 6 to 18 months. I would definitely not suggest buying until it's clearly over. EDITED to add: here's a good summary: http://seekingalpha.com/article/3825236-bear-market-phases-see http://seekingalpha.com/article/3825236-bear-market-phases-s...