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That is the old adage "when the shoe shiner starts giving you stock tips get out"... but you cant time when it will crash or when it will correct and go back up
by auspex 7y ago
That is the old adage "when the shoe shiner starts giving you stock tips get out"... but you cant time when it will crash or when it will correct and go back up. You might save yourself from the single event "the crash" but over a lifetime of trying to do this you actually will lose more money by not exiting and entering at the right time.
For example you convert to cash because you hear a family member talking about their stock. The market continues to go up another 20% before crashing 30%. You really only saved yourself 10%... now hopefully you rebuy before it goes back up... if you misread the entry point you might actually lose more than just staying in the market. Unless you have a crystal ball you will likely not time it correctly.
I prefer "time in the market beats timing the market"
- deleted 7y ago[deleted]
- orev 7y agoYou also need to couple this approach with a “target date” style strategy. If you’re 100% in stocks and getting ready to retire when a crash comes, you’re screwed. Have fun working at Walmart the rest of your life. You need to rebalance between risky investments and “safe” ones, with the percentage of safe ones going up as you age. This does two things: 1) allows you to keep your gains safe in a crash, and 2) give you a reserve you can use to buy back into stock “cheap” after the crash.
- Balgair 7y agoJust a reminder here to everyone about the shoe-shiner story: You are the shoe shiner, not Joe Kennedy. https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#1929_Wall_Street_Crash https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#1929_Wal...