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Then a year after the lows it was back over 1200, and it's basically been straight up since then. Unless you timed things very accurately you were better off si

Then a year after the lows it was back over 1200, and it's basically been straight up since then. Unless you timed things very accurately you were better off simply holding.

codingdave 8y ago
Over the long run, that is always true. Just hold and grow, until you are within 10 years of retiring. Then move to a more conservative position.
- timr 8y ago
  "Over the long run, that is always true. Just hold and grow, until you are within 10 years of retiring." No, it isn't. It's quite possible to lose money with a buy-and-hold strategy if you get unlucky, particularly if you aren't diversified. It's probably the most reliable way of investing, but you can still lose money. Stocks are not guaranteed to go up over all possible 50-year intervals. Monte carlo simulations of S&P500 investments illustrate this: https://seekingalpha.com/article/4109617-buy-hold-just-works?page=2 https://seekingalpha.com/article/4109617-buy-hold-just-works...
  - Retric 8y ago
    Monte carlo simulations don't model reality very well here. Years are not independent of each other. For buy and hold to fail for something like the S&P500, companies would need to fail to make money or pay dividends for 50 years. If that's going on retirement is the least of your concerns.
    - timr 8y ago
      Did you even read the link? The year you enter the market is the random variate. It is a simple, uncontroversial fact that the stock market is not guaranteed to return your money over a randomly chosen N-year period. LTBH merely minimizes the chance that you'll lose money; it doesn't eliminate the chance.
      - timr 8y ago
        It's a fact, folks. Downvoting doesn't change it, and you don't get to have opinions about it. If you believe the stock market guarantees you safe returns, you are wrong. No matter what strategy you use, no matter what outlook you choose, you can lose money in the stock market. Don't invest what you can't afford to lose.
        sciurus 8y ago
        You say "don't invest what you can't afford to lose". If you want to eventually retire, what's the alternative? Editing as clarification for downvoters: This was a sincere question. Since no one can afford to lose their retirement savings, but few people will generate enough income to retire without making long-term investments in the stock market, I was curious what strategy timr was actually advocating. My own approach is to invest in index funds that automatically adjust their investments to be more conservative as my retirement date nears.
        timr 8y ago
        If you can't afford to lose it, you should put it in a savings account, a CD or another guaranteed asset until you've accumulated sufficient wealth that you can afford to take risks. This is investing 101. Any financial planner will tell you the same thing. Most will tell you that you shouldn't have money in the stock market if you're going to need it within the next five years. Ten years is a better number.
        Retric 8y ago
        If your 20 you have up to 100 years worth of investing horizons to consider. Money put to retirement really is something you can lose while young. Investing in low enough to be zero yield instruments like CD's or savings accounts is terrible advice. As is treating investment savings as actual savings you can spend. Sure, keeping ~3 years income outside of the market if your actually retired is a good idea idea. But, just because the market tanked does not mean you lost money. You have the same share of the same companies if the market goes up or down.
  - davej1024 8y ago
    True, past performance is no guarantee for future returns. Worth taking a look at the worst market timer of all time. http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
    - timr 8y ago
      No, it's not just about "market timing". You can do everything "right", and still lose money. Long-term buy and hold investing is not a guarantee. An entire generation of young investors has never lived through a serious market decline, and have only been rewarded for HODL. HN skews young. There are a lot of people here who are going to find their worldview painfully challenged when the market does finally turn. The surest sign of a market bubble in an asset is when I find myself arguing with people that yes, the price of the asset can indeed go down.
  - samsonradu 8y ago
    I really don't understand why you are being downvoted. I've been checking /r/investing for a while now and the general advice is to put all you have into the stock market (diversify) and HODL. Everyone says there's no way the market can underperform on a longer run and you can't time it so don't bother. When someone brings back 2008 they downvote it to death and reply that it went back up so it will be all fine. When the market goes south just keep buying. Japan would like to have a word with you.
    - timr 8y ago
      "Japan would like to have a word with you." Indeed. But more prosaically, many of these HODL types are discounting how much they'll actually freak out at a market correction. They've never seen a 30% drop, or lived through a five-year correction (let alone an extreme situation, like Japan). Even if you have the stomach to handle the drop, things happen on a five-year horizon that people don't consider: extended unemployment (which tends to happen during recessions), children, houses, etc. I made that comment thinking it would be a completely uncontroversial statement of fact. It's amazing to me that I'm getting downvoted, as if I've expressed an opinion of some kind.
      - samsonradu 8y ago
        It's worrying indeed how most people just take growth for granted and don't want to at least consider alternatives. Btw, here's a talk I found interesting regarding growth and the future of the economy: https://www.youtube.com/watch?v=KKLDevYyE9I&index=13&t=0s&list=LL60XAnYR5NWk1eI9brmJ-jQ https://www.youtube.com/watch?v=KKLDevYyE9I&index=13&t=0s&li... One part I liked regarding the Madoff scandal: Obviously, you were like how could these people be so stupid to give this person all this money? Didn't they read the details? ... But one of the reasons it happened, psychologically, was because people thought 8-10% with 0 risk was perfectly normal. That's why nobody asked any questions. EDIT And regarding my Reddit rant, also scared me that many people don't pay off their mortgage because they get a better return from the stock market, something I find quite wrong unless you're living in a hyper-inflation economy (which is not the case in the developed world)
- Latteland 8y ago
  Suppose you were planning to retire in 2018, and you sold in 2008 or 2009 after the economy crashed. Bad things would happen. No one knew if or how fast the stock market would come back. Better to sell a little bit over time and move to safer investments. But there are many studies showing no one can time the market.
  - fjsolwmv 8y ago
    If you pre-retired in 2008, you enjoyed decades of previous gains, even if you sold at the trough.
  - codingdave 8y ago
    Agreed - perhaps I phrased it incorrectly, but I meant to say the you start moving investments out of the market 10 years prior to your retirement date, not that you sell everything in one huge move at the 10 year mark.
rubicon33 8y ago
Housing markets in many areas didn't recover for 8+ years.
- paulddraper 8y ago
  The supply of developed real estate has much more inertia than most of the market. It takes most of a decade to see the full effects of a temporary surplus or shortage.
ISL 8y ago
One could have bought again at 1100 and still reduced losses significantly.

Then a year after the lows it was back over 1200, and it's basically been straight up since then. Unless you timed things very accurately you were better off simply holding.

codingdave 8y ago

Over the long run, that is always true. Just hold and grow, until you are within 10 years of retiring. Then move to a more conservative position.

timr 8y ago
"Over the long run, that is always true. Just hold and grow, until you are within 10 years of retiring." No, it isn't. It's quite possible to lose money with a buy-and-hold strategy if you get unlucky, particularly if you aren't diversified. It's probably the most reliable way of investing, but you can still lose money. Stocks are not guaranteed to go up over all possible 50-year intervals. Monte carlo simulations of S&P500 investments illustrate this: https://seekingalpha.com/article/4109617-buy-hold-just-works?page=2 https://seekingalpha.com/article/4109617-buy-hold-just-works...
- Retric 8y ago
  Monte carlo simulations don't model reality very well here. Years are not independent of each other. For buy and hold to fail for something like the S&P500, companies would need to fail to make money or pay dividends for 50 years. If that's going on retirement is the least of your concerns.
  - timr 8y ago
    Did you even read the link? The year you enter the market is the random variate. It is a simple, uncontroversial fact that the stock market is not guaranteed to return your money over a randomly chosen N-year period. LTBH merely minimizes the chance that you'll lose money; it doesn't eliminate the chance.
    - timr 8y ago
      It's a fact, folks. Downvoting doesn't change it, and you don't get to have opinions about it. If you believe the stock market guarantees you safe returns, you are wrong. No matter what strategy you use, no matter what outlook you choose, you can lose money in the stock market. Don't invest what you can't afford to lose.
      - sciurus 8y ago
        You say "don't invest what you can't afford to lose". If you want to eventually retire, what's the alternative? Editing as clarification for downvoters: This was a sincere question. Since no one can afford to lose their retirement savings, but few people will generate enough income to retire without making long-term investments in the stock market, I was curious what strategy timr was actually advocating. My own approach is to invest in index funds that automatically adjust their investments to be more conservative as my retirement date nears.
        timr 8y ago
        If you can't afford to lose it, you should put it in a savings account, a CD or another guaranteed asset until you've accumulated sufficient wealth that you can afford to take risks. This is investing 101. Any financial planner will tell you the same thing. Most will tell you that you shouldn't have money in the stock market if you're going to need it within the next five years. Ten years is a better number.
        Retric 8y ago
        If your 20 you have up to 100 years worth of investing horizons to consider. Money put to retirement really is something you can lose while young. Investing in low enough to be zero yield instruments like CD's or savings accounts is terrible advice. As is treating investment savings as actual savings you can spend. Sure, keeping ~3 years income outside of the market if your actually retired is a good idea idea. But, just because the market tanked does not mean you lost money. You have the same share of the same companies if the market goes up or down.
- davej1024 8y ago
  True, past performance is no guarantee for future returns. Worth taking a look at the worst market timer of all time. http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
  - timr 8y ago
    No, it's not just about "market timing". You can do everything "right", and still lose money. Long-term buy and hold investing is not a guarantee. An entire generation of young investors has never lived through a serious market decline, and have only been rewarded for HODL. HN skews young. There are a lot of people here who are going to find their worldview painfully challenged when the market does finally turn. The surest sign of a market bubble in an asset is when I find myself arguing with people that yes, the price of the asset can indeed go down.
- samsonradu 8y ago
  I really don't understand why you are being downvoted. I've been checking /r/investing for a while now and the general advice is to put all you have into the stock market (diversify) and HODL. Everyone says there's no way the market can underperform on a longer run and you can't time it so don't bother. When someone brings back 2008 they downvote it to death and reply that it went back up so it will be all fine. When the market goes south just keep buying. Japan would like to have a word with you.
  - timr 8y ago
    "Japan would like to have a word with you." Indeed. But more prosaically, many of these HODL types are discounting how much they'll actually freak out at a market correction. They've never seen a 30% drop, or lived through a five-year correction (let alone an extreme situation, like Japan). Even if you have the stomach to handle the drop, things happen on a five-year horizon that people don't consider: extended unemployment (which tends to happen during recessions), children, houses, etc. I made that comment thinking it would be a completely uncontroversial statement of fact. It's amazing to me that I'm getting downvoted, as if I've expressed an opinion of some kind.
    - samsonradu 8y ago
      It's worrying indeed how most people just take growth for granted and don't want to at least consider alternatives. Btw, here's a talk I found interesting regarding growth and the future of the economy: https://www.youtube.com/watch?v=KKLDevYyE9I&index=13&t=0s&list=LL60XAnYR5NWk1eI9brmJ-jQ https://www.youtube.com/watch?v=KKLDevYyE9I&index=13&t=0s&li... One part I liked regarding the Madoff scandal: Obviously, you were like how could these people be so stupid to give this person all this money? Didn't they read the details? ... But one of the reasons it happened, psychologically, was because people thought 8-10% with 0 risk was perfectly normal. That's why nobody asked any questions. EDIT And regarding my Reddit rant, also scared me that many people don't pay off their mortgage because they get a better return from the stock market, something I find quite wrong unless you're living in a hyper-inflation economy (which is not the case in the developed world)
Latteland 8y ago
Suppose you were planning to retire in 2018, and you sold in 2008 or 2009 after the economy crashed. Bad things would happen. No one knew if or how fast the stock market would come back. Better to sell a little bit over time and move to safer investments. But there are many studies showing no one can time the market.
- fjsolwmv 8y ago
  If you pre-retired in 2008, you enjoyed decades of previous gains, even if you sold at the trough.
- codingdave 8y ago
  Agreed - perhaps I phrased it incorrectly, but I meant to say the you start moving investments out of the market 10 years prior to your retirement date, not that you sell everything in one huge move at the 10 year mark.

rubicon33 8y ago

Housing markets in many areas didn't recover for 8+ years.

paulddraper 8y ago
The supply of developed real estate has much more inertia than most of the market. It takes most of a decade to see the full effects of a temporary surplus or shortage.

ISL 8y ago

One could have bought again at 1100 and still reduced losses significantly.