4 ms·

i was one of those that was just certain trump was going to tank the economy. my thinking was "he has no clue, and his bumbling around will ruin it". very wron

i was one of those that was just certain trump was going to tank the economy. my thinking was "he has no clue, and his bumbling around will ruin it". very wrong, and missed out on a lot of gains. and not too sure of when to start dollar cost averaging back in.

dkubb 6y ago
The only correct answer to this is now. Right now. No one knows if this is the top of the market and tomorrow everything will come crashing down, or if this is the very bottom of a 10 year bull market. On average you do better not trying to time the market and just contribute on an automated schedule. Set up monthly contributions and buy regardless of whatever is happening in the market and then try to forget about it for most of the year.
- bdavis__ 6y ago
  you are correct. very good advice. thank you.
- pashamur 6y ago
  That's not exactly true; market value does not exist in a vacuum, it's the discounted future cash flows of the component companies. You can certainly look at the earnings of the component companies, and see how much growth is being priced in with the current valuations (and whether you think that is reasonable or not over the long term). Now generally timing the market is not recommended; however, if the market has been going up for 5% a year for the previous 10 years versus going up for 20% a year (assuming same levels of inflation), it paints a very different picture, so at least in broad strokes you should be able to estimate where we are in a market cycle (telling the difference between 1998 and 2000 might be hard, but telling the difference between 1998 and 1994 should be fairly straightforward) http://people.stern.nyu.edu/adamodar/pdfiles/invphiloh/valuation.pdf http://people.stern.nyu.edu/adamodar/pdfiles/invphiloh/valua...
rubicon33 6y ago
My advice: - Never sell. Ever. (Until retirement). [1] The natural extension of this is... always buy. Buy now. Buy. - Keep a pool of cash on the side (whatever you can afford) to be ready to capitalize on any "fire sale" of stocks. This should be about 10% of your portfolio as a very liquid non-volatile asset (cash). [1] Obviously life hits you hard sometimes and you HAVE to sell to cover unexpected bills. I am obviously not suggesting in those situations that you hold your stock to the detriment of your healthy, of a family members health, etc.
- throwaway2245 6y ago
  I think this is fine advice for anyone who has money that they don't and won't really need. Positive expected value is positive expected value. This works great, as long as you have plenty of bankroll and can ride out any losses. As you say, this advice doesn't apply to people who might need the money.
  - stouset 6y ago
    If you might need the money, how is donating it to Wall Street through day trading on -EV plays somehow better? If you might need the money, it needs to be somewhere safe like a savings account or a CD. Once you have an emergency fund, you can start saving in higer-risk/higher-reward +EV investments like index funds.

dkubb 6y ago

The only correct answer to this is now. Right now. No one knows if this is the top of the market and tomorrow everything will come crashing down, or if this is the very bottom of a 10 year bull market. On average you do better not trying to time the market and just contribute on an automated schedule. Set up monthly contributions and buy regardless of whatever is happening in the market and then try to forget about it for most of the year.

bdavis__ 6y ago
you are correct. very good advice. thank you.
pashamur 6y ago
That's not exactly true; market value does not exist in a vacuum, it's the discounted future cash flows of the component companies. You can certainly look at the earnings of the component companies, and see how much growth is being priced in with the current valuations (and whether you think that is reasonable or not over the long term). Now generally timing the market is not recommended; however, if the market has been going up for 5% a year for the previous 10 years versus going up for 20% a year (assuming same levels of inflation), it paints a very different picture, so at least in broad strokes you should be able to estimate where we are in a market cycle (telling the difference between 1998 and 2000 might be hard, but telling the difference between 1998 and 1994 should be fairly straightforward) http://people.stern.nyu.edu/adamodar/pdfiles/invphiloh/valuation.pdf http://people.stern.nyu.edu/adamodar/pdfiles/invphiloh/valua...

rubicon33 6y ago

My advice: - Never sell. Ever. (Until retirement). [1] The natural extension of this is... always buy. Buy now. Buy. - Keep a pool of cash on the side (whatever you can afford) to be ready to capitalize on any "fire sale" of stocks. This should be about 10% of your portfolio as a very liquid non-volatile asset (cash). [1] Obviously life hits you hard sometimes and you HAVE to sell to cover unexpected bills. I am obviously not suggesting in those situations that you hold your stock to the detriment of your healthy, of a family members health, etc.

throwaway2245 6y ago
I think this is fine advice for anyone who has money that they don't and won't really need. Positive expected value is positive expected value. This works great, as long as you have plenty of bankroll and can ride out any losses. As you say, this advice doesn't apply to people who might need the money.
- stouset 6y ago
  If you might need the money, how is donating it to Wall Street through day trading on -EV plays somehow better? If you might need the money, it needs to be somewhere safe like a savings account or a CD. Once you have an emergency fund, you can start saving in higer-risk/higher-reward +EV investments like index funds.