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I understand this but realize that there are dips of almost 25% I invest in Index funds for peace of mind as well. That the market remains reasonably happy/sad

I understand this but realize that there are dips of almost 25% I invest in Index funds for peace of mind as well. That the market remains reasonably happy/sad and I can be for the long run. People discount this fact but imagine your concerns if you feel like 25% of your savings just evaporated because a guy ten layers detached from you burnt all the money on AI compute and there is no moat (Ahem ahem) If you don't want peace of mind, people should angel invest or build their own side hustles but then you are getting some savings anyway and its better to invest than keep it in banks (once you have a safe amount saved) But if you are saving money and still facing 25% crisis. Yeah... I understand where you are coming from but if you can expect a 50-75% dip in market this time (some companies are 2-5x overvalued just because they slap AI, their P/E ratio's straight up just don't make any sense at all!) So if you are willing to consider such dip for unforseen amount of time for unforseen returns in future when you can get a pretty safe investment for X amount of years being very liquid and historically in such times there are times when bond prices have been larger than stock prices If I remember correctly, Intelligent Investors suggests an intelligent approach towards this (in one of the starting chapters of the book)

deadbabe 9mo ago
P/E ratios rarely seem to make sense and yet people have been making money for a long time buying stocks with crazy P/E.
- Imustaskforhelp 9mo ago
  Just because people have been making money with stocks with crazy P/E historically doesn't mean that its meant to continue Especially when you realize on aggregate, Companies long term have to reflect profit and less P/E otherwise if your stock index fund has larger P/E ratio, then you are absolutely taking on higher risk There is no free lunch. You are also forgetting that the reason the extrapolation of stock markets growth from historical data correlates to future data is that there is a benchmark of productivity underneath it all. Stock markets theoretically grows when productivity of all businesses in an economy improve which can improve due to scientific and economic reasons and the faith in the system that it does improve Quite frankly, if you can't observe this, do not invest in index funds but rather something else which can reflect some amount of productivity (Short term bonds are needed by govt to improve life of the people so that they can pay more taxes in aggregate and improve conditions thus improving productivity as well) I recommend the book Intelligent Investing and The little book of common sense investing by the legendary John Bogle (May he rest in peace)
andsoitis 9mo ago
> but realize that there are dips of almost 25% Does that change the basic logic and strategy? I don't think so, given that it isn't possible to predict WHEN the market will drop, by HOW MUCH, and for HOW LONG.
- Imustaskforhelp 9mo ago
  Yes I agree, I mean in the sense to stop investing in S&P 500 entirely and much rather focus on international market index funds There is no free lunch, people who argue that S&P 500 historical returns and the over concentration into tech stocks has more risk than people believe leading to thinking of free profit I would still call it a foolish errands if you are unable to keep your calm and composure if american stocks can fall 50% - 75% If you are okay with that and then sticking your profits for 10 years or so afterwards to then get your money equal then sure People forget that japan's markets got into a stand still for 30 years to make net profit. Researching about japanese documentaries pre and after that time can just show you the devastation I personally recommend investing into world index funds if possible. Its your savings not your gambling money. Even 25% is devastating. Even John bogle says that the difference between S&P (US) and international is minimal giving fairly similar but he was more nationalistic but seeing the current geopolitical and economical blunders by america, I wouldn't be surprised if he might change his stance Rest in peace John Bogle, you will be missed.

deadbabe 9mo ago

P/E ratios rarely seem to make sense and yet people have been making money for a long time buying stocks with crazy P/E.

Imustaskforhelp 9mo ago
Just because people have been making money with stocks with crazy P/E historically doesn't mean that its meant to continue Especially when you realize on aggregate, Companies long term have to reflect profit and less P/E otherwise if your stock index fund has larger P/E ratio, then you are absolutely taking on higher risk There is no free lunch. You are also forgetting that the reason the extrapolation of stock markets growth from historical data correlates to future data is that there is a benchmark of productivity underneath it all. Stock markets theoretically grows when productivity of all businesses in an economy improve which can improve due to scientific and economic reasons and the faith in the system that it does improve Quite frankly, if you can't observe this, do not invest in index funds but rather something else which can reflect some amount of productivity (Short term bonds are needed by govt to improve life of the people so that they can pay more taxes in aggregate and improve conditions thus improving productivity as well) I recommend the book Intelligent Investing and The little book of common sense investing by the legendary John Bogle (May he rest in peace)

andsoitis 9mo ago

> but realize that there are dips of almost 25% Does that change the basic logic and strategy? I don't think so, given that it isn't possible to predict WHEN the market will drop, by HOW MUCH, and for HOW LONG.

Imustaskforhelp 9mo ago
Yes I agree, I mean in the sense to stop investing in S&P 500 entirely and much rather focus on international market index funds There is no free lunch, people who argue that S&P 500 historical returns and the over concentration into tech stocks has more risk than people believe leading to thinking of free profit I would still call it a foolish errands if you are unable to keep your calm and composure if american stocks can fall 50% - 75% If you are okay with that and then sticking your profits for 10 years or so afterwards to then get your money equal then sure People forget that japan's markets got into a stand still for 30 years to make net profit. Researching about japanese documentaries pre and after that time can just show you the devastation I personally recommend investing into world index funds if possible. Its your savings not your gambling money. Even 25% is devastating. Even John bogle says that the difference between S&P (US) and international is minimal giving fairly similar but he was more nationalistic but seeing the current geopolitical and economical blunders by america, I wouldn't be surprised if he might change his stance Rest in peace John Bogle, you will be missed.