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How do you "miss" 10 days? Unless you are a day trader (aka gambler), "normal person investing" is about trickling cash into an account slowly over time into l

How do you "miss" 10 days? Unless you are a day trader (aka gambler), "normal person investing" is about trickling cash into an account slowly over time into low-cost funds/etfs, covering the grid, and pretty much never selling until retirement. Maybe a rebalance here or there over the decades, but you're never "out" unless you're paranoid and liquidate into a cash position, but refer to point A. This is the strategy myself and many of my college friends took when we graduated in the late 80's. And we're all pretty comfy right now. We had a few buds that went all day-trader and they lost their shirts, with one and only one exception.

azemetre 6y ago
When the 2008 crashed happened the office I worked in had lots of people take their money out of their 401ks, IRAs, or brokerages for years. In hindsight it may have been irrational but from what I remember, people were scared. Some people lost their job for years (remember the various news stories about 99-week unemployment people?), you needed whatever money you could get. If that meant cashing out everything you had, so be it. There were other people that weren't fazed by it and obviously had the chance to not miss the "days." Guessing this type of anecdote may be more common than people think.
- kqr 6y ago
  Not only more common -- that is effectively what crashes are: demand for liquidity exceeds the supply, and the way markets are set up, this condition causes an even greater demand for liquidity, in a feedback loop. Most of the time, you can get liquidity, but only at a price that really hurts. Sometimes you can't get it at all.
  - azemetre 6y ago
    That makes sense, growing up my parents never contributed or had a 401k and I myself didn't start taking investing or contributing to anything until last year.
johnwheeler 6y ago
I agree with this except I think if you know a stock or two is good, diversification is unnecessary. I’ve only had two stocks in my portfolio for the last ten years.
- SCUSKU 6y ago
  I am happy for you that your 2 picks have been good. But most likely you have been lucky (maybe you picked AMZN, TSLA). Modern portfolio theory states that diversification gets you closer to better returns on average with lower risk. [1] https://en.wikipedia.org/wiki/Modern_portfolio_theory#Diversification https://en.wikipedia.org/wiki/Modern_portfolio_theory#Divers...
  - SavantIdiot 6y ago
    Methinks 'johnwheeler' is full of it and probably just discovered reddit, WSB, and stonks
  - johnwheeler 6y ago
    I would say people who picked amzn and Tesla are lucky. The jury is out on amzn. Bezos did something no public company ever did to the extent he did. He put customers before profits in an extreme way. Then, he built another multi billion dollar unit from scratch with AWS. So far, it’s worked out but the PE makes it speculative nonetheless. But the gap is quickly closing making it an investment grade issue. I don’t know so I leave it alone knowing I’ll regret it one day. That’s fine. I stay away unless I’m 95% sure. I would say s&p 500 represents 100% certainty overtime, because if it wasn’t, life as we know it wouldn’t be the same anyway we’d have bigger problems. Tesla is just a dumb gamble. There’s no justification at all for its price and history shows us what can happen with auto stocks.
- kevincrane 6y ago
  Same for the lottery, if you just know which numbers are good then you only have to buy one or two tickets ever and you're set for life.
  - 6y ago
nO0b 6y ago
> This is the strategy myself and many of my college friends took when we graduated in the late 80's. And we're all pretty comfy right now. I wonder if your Japanese peers in a Nikkei 225 fund over the same time period would agree with your strategy. Buy-and-hold for them is still down 50% over the last few decades.
- lixtra 6y ago
  Not if they were slowly and continuously trickling in as the gp suggested. Still Japan is a cautionary counter example to the stock market always goes up.
- thethimble 6y ago
  Why would expect the Nikkei 225 to provide similar returns to the S&P 500? Company quality varies greatly between these indexes.
  - blaser-waffle 6y ago
    Japan has a population of 125 million people and is one of the largest economies in the world (3rd / 4th largest depending on if you're using GDP or PPP). Why wouldn't they have similar companies? Lots of well known global brands in Glorious Nippon, too.
  - tasuki 6y ago
    > Why would expect the Nikkei 225 to provide similar returns to the S&P 500? Why would you expect them to be different? > Company quality varies greatly between these indexes. Can you elaborate on that? Has the "company quality" differed between the two indexes 30 years ago and was the market mispricing it? Is the market pricing these indexes correctly now? Do you think the S&P 500 is going to provide better results than Nikkei 225 going forward?
- x3sphere 6y ago
  Lot of people bring up the Nikkei but averaging in money in was still better than holding cash over a long enough time period. I highly doubt anyone bought at the peak and then never bought again afterwards.
pwarner 6y ago
My old job 401K was shifting into the new job 401K, so for a week or so my $ was in a check in the mail between companies, and I think I missed like 2% gain. It's semi real $. It's annoying.
- SavantIdiot 6y ago
  The investment horizon for the average American is 45 years, 2 weeks doesn't mean diddlysquat.
  - feteru 6y ago
    Except that the grandparent comment was showing how missing the best 2 weeks of days over 45 years really does wipe out a significant amount of gain.
- owenversteeg 6y ago
  This is one reason why paying for a wire transfer, ACATS transfer or other ways to move money faster can make sense: like the top comment said, you lose the top 10 days and you lose half your return. Unfortunately for a 401k transfer there's no wire or ACATS (or even ACH) options, so you're basically screwed there. As far as I know you're basically forced to wait around for the money to move by check. However, you can insure yourself against the "risk" that the market jumps while you're out of it by using a smaller, separate account and options.

azemetre 6y ago

When the 2008 crashed happened the office I worked in had lots of people take their money out of their 401ks, IRAs, or brokerages for years. In hindsight it may have been irrational but from what I remember, people were scared. Some people lost their job for years (remember the various news stories about 99-week unemployment people?), you needed whatever money you could get. If that meant cashing out everything you had, so be it. There were other people that weren't fazed by it and obviously had the chance to not miss the "days." Guessing this type of anecdote may be more common than people think.

kqr 6y ago
Not only more common -- that is effectively what crashes are: demand for liquidity exceeds the supply, and the way markets are set up, this condition causes an even greater demand for liquidity, in a feedback loop. Most of the time, you can get liquidity, but only at a price that really hurts. Sometimes you can't get it at all.
- azemetre 6y ago
  That makes sense, growing up my parents never contributed or had a 401k and I myself didn't start taking investing or contributing to anything until last year.

johnwheeler 6y ago

I agree with this except I think if you know a stock or two is good, diversification is unnecessary. I’ve only had two stocks in my portfolio for the last ten years.

SCUSKU 6y ago
I am happy for you that your 2 picks have been good. But most likely you have been lucky (maybe you picked AMZN, TSLA). Modern portfolio theory states that diversification gets you closer to better returns on average with lower risk. [1] https://en.wikipedia.org/wiki/Modern_portfolio_theory#Diversification https://en.wikipedia.org/wiki/Modern_portfolio_theory#Divers...
- SavantIdiot 6y ago
  Methinks 'johnwheeler' is full of it and probably just discovered reddit, WSB, and stonks
- johnwheeler 6y ago
  I would say people who picked amzn and Tesla are lucky. The jury is out on amzn. Bezos did something no public company ever did to the extent he did. He put customers before profits in an extreme way. Then, he built another multi billion dollar unit from scratch with AWS. So far, it’s worked out but the PE makes it speculative nonetheless. But the gap is quickly closing making it an investment grade issue. I don’t know so I leave it alone knowing I’ll regret it one day. That’s fine. I stay away unless I’m 95% sure. I would say s&p 500 represents 100% certainty overtime, because if it wasn’t, life as we know it wouldn’t be the same anyway we’d have bigger problems. Tesla is just a dumb gamble. There’s no justification at all for its price and history shows us what can happen with auto stocks.
kevincrane 6y ago
Same for the lottery, if you just know which numbers are good then you only have to buy one or two tickets ever and you're set for life.
- 6y ago

nO0b 6y ago

> This is the strategy myself and many of my college friends took when we graduated in the late 80's. And we're all pretty comfy right now. I wonder if your Japanese peers in a Nikkei 225 fund over the same time period would agree with your strategy. Buy-and-hold for them is still down 50% over the last few decades.

lixtra 6y ago
Not if they were slowly and continuously trickling in as the gp suggested. Still Japan is a cautionary counter example to the stock market always goes up.
thethimble 6y ago
Why would expect the Nikkei 225 to provide similar returns to the S&P 500? Company quality varies greatly between these indexes.
- blaser-waffle 6y ago
  Japan has a population of 125 million people and is one of the largest economies in the world (3rd / 4th largest depending on if you're using GDP or PPP). Why wouldn't they have similar companies? Lots of well known global brands in Glorious Nippon, too.
- tasuki 6y ago
  > Why would expect the Nikkei 225 to provide similar returns to the S&P 500? Why would you expect them to be different? > Company quality varies greatly between these indexes. Can you elaborate on that? Has the "company quality" differed between the two indexes 30 years ago and was the market mispricing it? Is the market pricing these indexes correctly now? Do you think the S&P 500 is going to provide better results than Nikkei 225 going forward?
x3sphere 6y ago
Lot of people bring up the Nikkei but averaging in money in was still better than holding cash over a long enough time period. I highly doubt anyone bought at the peak and then never bought again afterwards.

pwarner 6y ago

My old job 401K was shifting into the new job 401K, so for a week or so my $ was in a check in the mail between companies, and I think I missed like 2% gain. It's semi real $. It's annoying.

SavantIdiot 6y ago
The investment horizon for the average American is 45 years, 2 weeks doesn't mean diddlysquat.
- feteru 6y ago
  Except that the grandparent comment was showing how missing the best 2 weeks of days over 45 years really does wipe out a significant amount of gain.
owenversteeg 6y ago
This is one reason why paying for a wire transfer, ACATS transfer or other ways to move money faster can make sense: like the top comment said, you lose the top 10 days and you lose half your return. Unfortunately for a 401k transfer there's no wire or ACATS (or even ACH) options, so you're basically screwed there. As far as I know you're basically forced to wait around for the money to move by check. However, you can insure yourself against the "risk" that the market jumps while you're out of it by using a smaller, separate account and options.