4 ms·

Dollar cost average purchases of index funds, and slowly draw down your shares in retirement. Maybe rebalance every year or so as you get older. In other words,

Dollar cost average purchases of index funds, and slowly draw down your shares in retirement. Maybe rebalance every year or so as you get older. In other words, don't panic or try to time the market. Those are purely speculative and usually pro-cyclic movements that just introduce noise into price discovery. After all, when there's a market crash, did millions of machines in factories fall apart, or millions of workers in offices forget how to do their jobs? It's just a psychological overreaction. As to institutionalizing this stability, it would be nice if index funds offered fund choices that prohibited selling or trading for one, two, three decades. Since you as the investor would be adding information to the market ("I'm not an index fund band-wagoner, I understand buy-and-hold and I will practice what I preach") you would be rewarded with better returns in exchange for signaling your intentions and acting as a cushion when everyone else is panicking.

bb88 7y ago
> After all, when there's a market crash, did millions of machines in factories fall apart... In 2008, the crash happened because suddenly Wyle E. Coyote realized there was gravity when he ran off the cliff. Mortgages were actually defaulting on a very high rate, but people put blindfolds on and didn't want to see. It wasn't just a "psychological overreaction" but real fear and panic as those same investors were trying to squeeze through the same exit door as everyone else. There is still some reasonable fear in 2019 that large financial institutions will choose to make money at the expense of the economy.
- lonelappde 7y ago
  If you were invested in the broader market, and didn't move your whole portfolio in our out of cash in 1 year,the 2008 worldwide economic collapse was barely a blip in long term performance.
  - bb88 7y ago
    So you're point is exactly what again? It's okay for banks to manipulate the markets because in the end it all averages out?
- danw1979 7y ago
  > It wasn't just a "psychological overreaction" but real fear and panic as those same investors were trying to squeeze through the same exit door as everyone else. Panic is quite literally a psychological overreaction.
  - bb88 7y ago
    So if only people had acted rationally while they were losing billions of money, things would have been okay?

bb88 7y ago

> After all, when there's a market crash, did millions of machines in factories fall apart... In 2008, the crash happened because suddenly Wyle E. Coyote realized there was gravity when he ran off the cliff. Mortgages were actually defaulting on a very high rate, but people put blindfolds on and didn't want to see. It wasn't just a "psychological overreaction" but real fear and panic as those same investors were trying to squeeze through the same exit door as everyone else. There is still some reasonable fear in 2019 that large financial institutions will choose to make money at the expense of the economy.

lonelappde 7y ago
If you were invested in the broader market, and didn't move your whole portfolio in our out of cash in 1 year,the 2008 worldwide economic collapse was barely a blip in long term performance.
- bb88 7y ago
  So you're point is exactly what again? It's okay for banks to manipulate the markets because in the end it all averages out?
danw1979 7y ago
> It wasn't just a "psychological overreaction" but real fear and panic as those same investors were trying to squeeze through the same exit door as everyone else. Panic is quite literally a psychological overreaction.
- bb88 7y ago
  So if only people had acted rationally while they were losing billions of money, things would have been okay?