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If you're invested in an index fund, wouldn't the only way to realize the loss during a recession be to sell? Anyone who stayed the course after 2008 would have
by gdubs 11y ago
If you're invested in an index fund, wouldn't the only way to realize the loss during a recession be to sell? Anyone who stayed the course after 2008 would have seen record gains in the years following.
- sadface 11y agoYou're right, but it would still be better to realize a small loss early in the crash and and buy back in at the bottom than just ride the whole thing out. Of course, that kind of timing is pretty much impossible so everyone suggests you don't do it.
- minnend 11y agoYes, but consider the "accumulation phase" (pre-retirement) vs. the "distribution phase" (retirement). At some point, you need to sell part of your portfolio to to pay your bills []. Check out "sequence of returns risks". Or buy annuities, setup a bond ladder, or hold dividend stocks, but these have their own, related issues. Early in the accumulation phase, however, I completely agree with you -- you're making the central argument for a long-term buy-and-hold strategy.