3 ms·

Twenty months is about the historical average: * https://awealthofcommonsense.com/2022/05/how-long-do-bear-markets-last/ https://awealthofcommonsense.com/2022/

Twenty months is about the historical average: * https://awealthofcommonsense.com/2022/05/how-long-do-bear-markets-last/ https://awealthofcommonsense.com/2022/05/how-long-do-bear-ma... * https://awealthofcommonsense.com/2022/07/investing-in-a-bear-market/ https://awealthofcommonsense.com/2022/07/investing-in-a-bear... If you have a long-term goal (e.g., retirement) then generally you shouldn't bother worry gyrations too much: * https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ https://awealthofcommonsense.com/2014/02/worlds-worst-market... Simply put away a little every month in an automated fashion and things will generally be okay: * https://ofdollarsanddata.com/just-keep-buying/ https://ofdollarsanddata.com/just-keep-buying/

RickJWagner 3y ago
Yes! Read more about effective, common-sense investing at bogleheads.org. Your future self will be glad you did!
barefeg 3y ago
If the recession is short lived compared to long term goals, would it make sense to invest more every month during that period? Or even shift capital into the market, expecting greater returns when the recession eventually ends?
- Gibbon1 3y ago
  There is a simple algorithm one can use to determine how much to put in or take out based on what the market is doing month to month. I don't remember the name of it. But if the market sector is going up you increase investment by X%. Going down decrease investment by X%. I think it works mostly because it avoids going all in at the top and all out at the bottom. Which is the strategy a lot of naive investors end up doing.
- IanCal 3y ago
  No, because to do that you have to have deliberately kept money out of investments, waiting for a downturn. It only works if you can predict the downturn before it happens, and how low things will go.
  - barefeg 3y ago
    It may depend on the investment profile of the individual. I’m not 100% invested which means there’s always some cash available at any point.
    - IanCal 3y ago
      Yes as I say, it means having funds deliberately not invested waiting for a crash, which is timing the market and relies on you predicting the market.
    - throw0101a 3y ago
      > I’m not 100% invested which means there’s always some cash available at any point. This is sub-optimal from a returns perspective: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/ https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...
      - deleted 3y ago
        [deleted]
  - throw0101a 3y ago
    > No, because to do that you have to have deliberately kept money out of investments, waiting for a downturn. Not wrong about always being fully invested, but an argument for perhaps have some portion (10-20%) being in bonds to (a) reduce volatility which may help with preventing panic when things inevitably (temporarily) downturn, and (b) having some 'dry powder' available for rebalancing (sell high, buy low). The returns of the S&P 500 was 0% between 2000 and 2010, but if you had ~20% bonds you actually got positive returns: * https://www.forbes.com/sites/investor/2010/12/17/the-lost-decade-was-a-golden-age-if-you-rebalanced/ https://www.forbes.com/sites/investor/2010/12/17/the-lost-de... See also Japan in 1980s: having some component in (even domestic JP) bonds allowed you to rebalance out of a rising market over time. Waiting for the dip is generally sub-optimal for returns: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/ https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...
fullshark 3y ago
> This is the purpose of capitalism (i.e. acquiring capital). Took me way too long into my professional career to realize this, and really COVID was a red pill for me. I thought my job was about acquiring status and accomplishments, but no, it's just a tool to acquire appreciating assets (stocks and a house). Keep your costs down, and buy as much as you can or you will end up on the rat race treadmill until you die.
- nick-of-time 3y ago
  > > This is the purpose of capitalism (i.e. acquiring capital). > Keep your costs down, and buy as much as you can or you will end up on the rat race treadmill until you die. This is a sad reality of the system. It's not built for people to prosper individually or societally, it's about getting people who have money more money. Sure, as a side effect this gives the lucky few the resources to acquire what they need reliably; but often that means giving up your enjoyment of life to pursue investment. > The less you eat, drink and buy books; the less you go to the theatre, the dancehall, the public house; the less you think, love, theorise, sing, paint, fence, etc., the more you save – the greater becomes your treasure which neither moths nor rust will devour – your capital. The less you are, the less you express yourown life, the more you have, i.e., the greater is your alienated life, the greater is the store of your estranged being. Everything which the political economist takes from you in life and in humanity, he replaces for you in money and in wealth. - Karl Marx
  - fullshark 3y ago
    There are worse things than saving I guess, like being utterly dependent on the state.
walleeee 3y ago
> Simply put away a little every month in an automated fashion and things will generally be okay The perpetually growing economy on which this strategy and associated worldview are based is not a safe assumption
- throw0101a 3y ago
  > The perpetually growing economy on which this strategy and associated worldview are based is not a safe assumption Why not? What is the counter-factual (i.e., what should we assume instead and what actions should be taken)? How do I organize my life, finances, and retirement investments otherwise?
- ericmcer 3y ago
  Neither is assuming it is going to come tumbling down all of a sudden. Bears have lost out over and over barring a handful of lucky and well timed bets. So far the economy growing during your lifespan has been the correct assumption.
- AeiumNE 3y ago
  Why not? It doesn't ultimately require increasing resources extraction. Increasing efficiency or technological capability could have the same outcome

RickJWagner 3y ago

Yes! Read more about effective, common-sense investing at bogleheads.org. Your future self will be glad you did!

barefeg 3y ago

If the recession is short lived compared to long term goals, would it make sense to invest more every month during that period? Or even shift capital into the market, expecting greater returns when the recession eventually ends?

Gibbon1 3y ago
There is a simple algorithm one can use to determine how much to put in or take out based on what the market is doing month to month. I don't remember the name of it. But if the market sector is going up you increase investment by X%. Going down decrease investment by X%. I think it works mostly because it avoids going all in at the top and all out at the bottom. Which is the strategy a lot of naive investors end up doing.
IanCal 3y ago
No, because to do that you have to have deliberately kept money out of investments, waiting for a downturn. It only works if you can predict the downturn before it happens, and how low things will go.
- barefeg 3y ago
  It may depend on the investment profile of the individual. I’m not 100% invested which means there’s always some cash available at any point.
  - IanCal 3y ago
    Yes as I say, it means having funds deliberately not invested waiting for a crash, which is timing the market and relies on you predicting the market.
  - throw0101a 3y ago
    > I’m not 100% invested which means there’s always some cash available at any point. This is sub-optimal from a returns perspective: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/ https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...
    - deleted 3y ago
      [deleted]
- throw0101a 3y ago
  > No, because to do that you have to have deliberately kept money out of investments, waiting for a downturn. Not wrong about always being fully invested, but an argument for perhaps have some portion (10-20%) being in bonds to (a) reduce volatility which may help with preventing panic when things inevitably (temporarily) downturn, and (b) having some 'dry powder' available for rebalancing (sell high, buy low). The returns of the S&P 500 was 0% between 2000 and 2010, but if you had ~20% bonds you actually got positive returns: * https://www.forbes.com/sites/investor/2010/12/17/the-lost-decade-was-a-golden-age-if-you-rebalanced/ https://www.forbes.com/sites/investor/2010/12/17/the-lost-de... See also Japan in 1980s: having some component in (even domestic JP) bonds allowed you to rebalance out of a rising market over time. Waiting for the dip is generally sub-optimal for returns: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/ https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

fullshark 3y ago

> This is the purpose of capitalism (i.e. acquiring capital). Took me way too long into my professional career to realize this, and really COVID was a red pill for me. I thought my job was about acquiring status and accomplishments, but no, it's just a tool to acquire appreciating assets (stocks and a house). Keep your costs down, and buy as much as you can or you will end up on the rat race treadmill until you die.

nick-of-time 3y ago
> > This is the purpose of capitalism (i.e. acquiring capital). > Keep your costs down, and buy as much as you can or you will end up on the rat race treadmill until you die. This is a sad reality of the system. It's not built for people to prosper individually or societally, it's about getting people who have money more money. Sure, as a side effect this gives the lucky few the resources to acquire what they need reliably; but often that means giving up your enjoyment of life to pursue investment. > The less you eat, drink and buy books; the less you go to the theatre, the dancehall, the public house; the less you think, love, theorise, sing, paint, fence, etc., the more you save – the greater becomes your treasure which neither moths nor rust will devour – your capital. The less you are, the less you express yourown life, the more you have, i.e., the greater is your alienated life, the greater is the store of your estranged being. Everything which the political economist takes from you in life and in humanity, he replaces for you in money and in wealth. - Karl Marx
- fullshark 3y ago
  There are worse things than saving I guess, like being utterly dependent on the state.

walleeee 3y ago

> Simply put away a little every month in an automated fashion and things will generally be okay The perpetually growing economy on which this strategy and associated worldview are based is not a safe assumption

throw0101a 3y ago
> The perpetually growing economy on which this strategy and associated worldview are based is not a safe assumption Why not? What is the counter-factual (i.e., what should we assume instead and what actions should be taken)? How do I organize my life, finances, and retirement investments otherwise?
ericmcer 3y ago
Neither is assuming it is going to come tumbling down all of a sudden. Bears have lost out over and over barring a handful of lucky and well timed bets. So far the economy growing during your lifespan has been the correct assumption.
AeiumNE 3y ago
Why not? It doesn't ultimately require increasing resources extraction. Increasing efficiency or technological capability could have the same outcome