9 ms·

Sad to think that investing in the stock market, which I have only been able to financially over the last 5 years might have been much riskier than I might have

Sad to think that investing in the stock market, which I have only been able to financially over the last 5 years might have been much riskier than I might have previously thought. What I previously thought as "okay I just leave it in the stock market for a bit of time to recoup" is something I am now realizing would likely have to be 10+ years. It's kind of funny because I was getting shaky about having money in the stock market back in December, and I held onto investing some of my money there. But I ultimately relented 4 months later to lose 10% within about two weeks (and after just index funds). Now it's much worse, and I guess I'll just leave it all there. And in 15 years I'll be back to where I was when I originally invested it.

chii 4y ago
you have to take risk to earn returns. Sometimes that risk actually eventuates, and you have to either keep going, or take the loss. That's why you must know the time horizon for your investments - if you know you need the money "soon", you cannot actually invest in the stock market.
- bequanna 4y ago
  You have to take calculated risks to earn returns. FOMO at your own risk. If you are 30 and don’t need the money you put in SPY until 70, don’t sweat it. You’ll be fine. But let’s not pretend blindly taking risk is OK because some return is expected. Time horizon and some relative valuation context is important. Buying into the stock or housing market at extreme historic levels of valuations like those in late 2021 and now GREATLY reduces your expected return over 5/10 years. If you don’t have the (extremely) long view, expect to lose some sleep watching your net worth over the next couple years.
  - deleted 4y ago
    [deleted]
  - srean 4y ago
    > But let’s not pretend blindly taking risk is OK because some return is expected. Exactly. I have seen this idea float around that just because they have taken a risky position they will be able get better rewards. Risk may be necessary for above market rate returns, but it is not sufficient. A proportionate amount of those taking the risk will be cleaned off the amount that was risked. Why do you think its not going to be you ! Of course when you use time effectively or use other hedges one can reduce the exposure.
refurb 4y ago
My grandfather had $3M invested in the market in 2007. Lost $1M at the bottom in 2008, but didn't do anything other than rebalance. Now worth $8M. Either you fret over every price move and likely buy/sell at the worst times, or you invest with a long-term vision and stop tracking the price moves everyday.
- danielmarkbruce 4y ago
  Unfortunately for every one of these folks, there are a handful of folks who panic sold and still haven't made it back...
- bagacrap 4y ago
  yes but in that case the Fed rode to the rescue and delivered the greatest bull market in US history. There's absolutely no way the next decade looks like the last so this is a poor comparison. As far as rebalancing --- you may have noticed stocks and bonds falling in unison this year, so rebalancing is not much help.
  - bushbaba 4y ago
    Why not l? If the market returns don’t keep up at 6-7% annualized government pensions will run out of cash. If rates go up drastically, government debt payments go up. The game must go on! *until the us empire collapses, taking down with it the western world
    - landemva 4y ago
      Yes, pensions and Illinois are cooked. But EU has had negative interest rates for years, and will collapse (break up the eu monetary union) before USA goes under. Dollar strength confirms capital is moving into USA.
  - refurb 4y ago
    Take a gander at the PE ratio for the S&P500 over time. A substantial amount of those gains are backed by increased profitability. https://www.multpl.com/s-p-500-pe-ratio/table/by-year https://www.multpl.com/s-p-500-pe-ratio/table/by-year And not sure what your comment on rebalancing not being much "help" is. Rebalancing is not about "help" it's about sticking to an investing approach. And I can recall back in the early 2000's when people said "Equity growth will never be like it was the 90's". Glad I never listened to them.
anonporridge 4y ago
Are you ignoring dividend reinvestment creating compounding growth? Even god couldn't beat dollar cost averaging, https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/ https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...
- mberning 4y ago
  Buy all the time. Only reliable way to win.
  - slaw 4y ago
    Past performance is not indicative of future results. Japan stock market JP225 didn't recover yet from 1990 crash.
    - rubidium 4y ago
      Yea so buy land if you’re so paranoid about becoming Japan. It’s an island nation with a very unique history. Not a great counterpoint to current US and global economics.
      - argomo 4y ago
        As the saying goes, there are four types of economies: developed, undeveloped, Argentina, and Japan.
        hanniabu 4y ago
        Why Argentina?
        astrange 4y ago
        Argentina's economy is a series of endless crises from the government choosing the worst possible ways to intervene in it at every opportunity. Like a reverse South Korea.
newshorts 4y ago
Don’t worry friend, it’s about the savings rate, not the savings return. Just keep putting a little in here and there. Don’t put in anything you can’t afford to lose and it’ll turn out alright
- nly 4y ago
  If person A invests monthly and achieves a 7%/yr return, how much more does person B have to invest every month to get the same pot after 30 years? 50% more
- qeternity 4y ago
  > Don’t worry friend, it’s about the savings rate, not the savings return. Yikes, please reconsider your advocacy of this. As Einstein said: "Compound interest is the eighth wonder of the world."
jokethrowaway 4y ago
I was pissed because I didn't invest in my portfolio to buy a house during the pandemic and missed out on pandemic gains - but checking how much money my portfolio lost, I made more money to keep those in cash.
- SturgeonsLaw 4y ago
  It was hard to predict that real estate would see pandemic gains. It's an asset that people need to leave their homes to inspect, and comes with face-to-face time with multiple parties. In a locked down society, there were plausible reasons to assume that the real estate market would be dampened.
  - matwood 4y ago
    Predictions are always hard. I bought my house during the last housing 'crash'. It was my first house so I didn't have one to sell, so it was easier. But, I was being told by friends and online that things could drop more, wait, etc... At the end of the day, I needed a place to live, I could afford it, and my job was reasonably secure. Now people ask how I timed it perfectly and the fact is I didn't. I simply made personal financial decisions based on my situation at the time.
jrumbut 4y ago
> What I previously thought as "okay I just leave it in the stock market for a bit of time to recoup" is something I am now realizing would likely have to be 10+ years. I am wondering where you previously got your information? At one point ten years was considered about the minimum time window for investing in stocks. To give an example, an old rule of thumb was to have 100 minus your age percent of your retirement savings in stocks and the rest in less volatile investments such as bonds (so a 50 year old would be half and half between stocks and bonds).
- nly 4y ago
  It's been easy to promote bonds when we've been in 40 year bond bull run
thathndude 4y ago
This is a large part of why I’m feeling so negative about this draw down. In the last 5ish years I paid off my student loans and started banking real cash. I put it in the market and now am down tremendously. Crap timing.
ProjectArcturis 4y ago
What are you buying that you've lost "much worse" than 10%? There's no guarantee each individual stock will go up over time.

chii 4y ago

you have to take risk to earn returns. Sometimes that risk actually eventuates, and you have to either keep going, or take the loss. That's why you must know the time horizon for your investments - if you know you need the money "soon", you cannot actually invest in the stock market.

bequanna 4y ago
You have to take calculated risks to earn returns. FOMO at your own risk. If you are 30 and don’t need the money you put in SPY until 70, don’t sweat it. You’ll be fine. But let’s not pretend blindly taking risk is OK because some return is expected. Time horizon and some relative valuation context is important. Buying into the stock or housing market at extreme historic levels of valuations like those in late 2021 and now GREATLY reduces your expected return over 5/10 years. If you don’t have the (extremely) long view, expect to lose some sleep watching your net worth over the next couple years.
- deleted 4y ago
  [deleted]
- srean 4y ago
  > But let’s not pretend blindly taking risk is OK because some return is expected. Exactly. I have seen this idea float around that just because they have taken a risky position they will be able get better rewards. Risk may be necessary for above market rate returns, but it is not sufficient. A proportionate amount of those taking the risk will be cleaned off the amount that was risked. Why do you think its not going to be you ! Of course when you use time effectively or use other hedges one can reduce the exposure.

refurb 4y ago

My grandfather had $3M invested in the market in 2007. Lost $1M at the bottom in 2008, but didn't do anything other than rebalance. Now worth $8M. Either you fret over every price move and likely buy/sell at the worst times, or you invest with a long-term vision and stop tracking the price moves everyday.

danielmarkbruce 4y ago
Unfortunately for every one of these folks, there are a handful of folks who panic sold and still haven't made it back...
bagacrap 4y ago
yes but in that case the Fed rode to the rescue and delivered the greatest bull market in US history. There's absolutely no way the next decade looks like the last so this is a poor comparison. As far as rebalancing --- you may have noticed stocks and bonds falling in unison this year, so rebalancing is not much help.
- bushbaba 4y ago
  Why not l? If the market returns don’t keep up at 6-7% annualized government pensions will run out of cash. If rates go up drastically, government debt payments go up. The game must go on! *until the us empire collapses, taking down with it the western world
  - landemva 4y ago
    Yes, pensions and Illinois are cooked. But EU has had negative interest rates for years, and will collapse (break up the eu monetary union) before USA goes under. Dollar strength confirms capital is moving into USA.
- refurb 4y ago
  Take a gander at the PE ratio for the S&P500 over time. A substantial amount of those gains are backed by increased profitability. https://www.multpl.com/s-p-500-pe-ratio/table/by-year https://www.multpl.com/s-p-500-pe-ratio/table/by-year And not sure what your comment on rebalancing not being much "help" is. Rebalancing is not about "help" it's about sticking to an investing approach. And I can recall back in the early 2000's when people said "Equity growth will never be like it was the 90's". Glad I never listened to them.

anonporridge 4y ago

Are you ignoring dividend reinvestment creating compounding growth? Even god couldn't beat dollar cost averaging, https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/ https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

mberning 4y ago
Buy all the time. Only reliable way to win.
- slaw 4y ago
  Past performance is not indicative of future results. Japan stock market JP225 didn't recover yet from 1990 crash.
  - rubidium 4y ago
    Yea so buy land if you’re so paranoid about becoming Japan. It’s an island nation with a very unique history. Not a great counterpoint to current US and global economics.
    - argomo 4y ago
      As the saying goes, there are four types of economies: developed, undeveloped, Argentina, and Japan.
      - hanniabu 4y ago
        Why Argentina?
        astrange 4y ago
        Argentina's economy is a series of endless crises from the government choosing the worst possible ways to intervene in it at every opportunity. Like a reverse South Korea.

newshorts 4y ago

Don’t worry friend, it’s about the savings rate, not the savings return. Just keep putting a little in here and there. Don’t put in anything you can’t afford to lose and it’ll turn out alright

nly 4y ago
If person A invests monthly and achieves a 7%/yr return, how much more does person B have to invest every month to get the same pot after 30 years? 50% more
qeternity 4y ago
> Don’t worry friend, it’s about the savings rate, not the savings return. Yikes, please reconsider your advocacy of this. As Einstein said: "Compound interest is the eighth wonder of the world."

jokethrowaway 4y ago

I was pissed because I didn't invest in my portfolio to buy a house during the pandemic and missed out on pandemic gains - but checking how much money my portfolio lost, I made more money to keep those in cash.

SturgeonsLaw 4y ago
It was hard to predict that real estate would see pandemic gains. It's an asset that people need to leave their homes to inspect, and comes with face-to-face time with multiple parties. In a locked down society, there were plausible reasons to assume that the real estate market would be dampened.
- matwood 4y ago
  Predictions are always hard. I bought my house during the last housing 'crash'. It was my first house so I didn't have one to sell, so it was easier. But, I was being told by friends and online that things could drop more, wait, etc... At the end of the day, I needed a place to live, I could afford it, and my job was reasonably secure. Now people ask how I timed it perfectly and the fact is I didn't. I simply made personal financial decisions based on my situation at the time.

jrumbut 4y ago

> What I previously thought as "okay I just leave it in the stock market for a bit of time to recoup" is something I am now realizing would likely have to be 10+ years. I am wondering where you previously got your information? At one point ten years was considered about the minimum time window for investing in stocks. To give an example, an old rule of thumb was to have 100 minus your age percent of your retirement savings in stocks and the rest in less volatile investments such as bonds (so a 50 year old would be half and half between stocks and bonds).

nly 4y ago
It's been easy to promote bonds when we've been in 40 year bond bull run

thathndude 4y ago

This is a large part of why I’m feeling so negative about this draw down. In the last 5ish years I paid off my student loans and started banking real cash. I put it in the market and now am down tremendously. Crap timing.

ProjectArcturis 4y ago

What are you buying that you've lost "much worse" than 10%? There's no guarantee each individual stock will go up over time.