Stock Market Top Appears In (9 months in, and 750 points lower.)

[techboy]

You are 55 years old. You hope to retire soon.

If you're 55 and hope to retire soon, you're a nutcase if you have money you need in the next 10 to 20 years in the stock market, "stop loss" or not.

[TD_washingtonredskins]

Should I really be reacting to these types of things if I have 25+ years before I can even think about retiring? Isn't a long-term investment supposed to ultimately weather the storm and make you money in the LONG-RUN?

[McD5]

That's a myth. Why Your Portfolio Should Be Near an All Time High:



Of course, you'd have to be disciplined, buy, hold, and rebalance.

And, of course, no "buy and hold" strategy is for only 10 years.

What's more, the research is conclusive, as bad as buy and hold is, market timing is worse.

If you are 55, deciding whether to invest funds now, and hoping to retire within ten years, then the next ten years is extremely important.

We'll check back in a few weeks, months, whatever.

I say the year high was yesterday. To the exact day.

And the following drop will be brutal.

After we see what happens, then we can discuss again which strategy was better.

[techboy]

Should I really be reacting to these types of things if I have 25+ years before I can even think about retiring?

No.

Isn't a long-term investment supposed to ultimately weather the storm and make you money in the LONG-RUN?

Yes! Bouncing around now just adds unneeded costs (like to the tune of 9 and one half trillion dollars).

[McD5]

If you're 55 and hope to retire soon, you're a nutcase if you have money you need in the next 10 to 20 years in the stock market, "stop loss" or not.

You absolutely have to have money in the stock market in that case.

Cds and fixed income don't cut it these days.

They don't generate enough income, and people are living longer than they planned for.

You absolutely have to be invested in stocks.

[techboy]

After we see what happens, then we can discuss again which strategy was better.

We can discuss your prediction on January 1, 2011. We can discuss my strategy and how it worked in like 30 years.

Hope we're both still around, hopefully having many more Super Bowl victories to discuss between now and then.

[techboy]

They don't generate enough income, and people are living longer than they planned for.

Notice that I said "money you need in the next 10 to 20 years". Money for when you're 75 to 80 can (and should, probably), still be in stocks.

The money you have to have though, shouldn't be. Far too risky.

[zoony]

I am predicting a correction as well over the coming months. I think 2010 will be relatively flat. I think the market will finish up the year between 10500 and 11k after a few peaks and valleys along the way.

However, I really don't think we'll see anything close to 6500. That's crazy.


If anyone is looking for a good short term strategy in stocks (1-2 years) I would suggest picking stocks that pay good dividends. CD's aren't paying jack-**** right now, so a stock with a high credit rating that pays 3% or so is actually a pretty good bet.

[Destino]

Yes! Bouncing around now just adds unneeded costs (like to the tune of 9 and one half trillion dollars).

Sure... assuming you didn't plan your retirement party in the middle of a massive stock market crash that you would have no way to see coming. Most of the research you are posting is on information prior to this crash. They write off impossible to avoid crashes by saying "well you should have rebalanced" after telling you to hold.

Ultimately buy and hold is market timing. The only difference is you are timing your exit blindly and if you happened to turn 65 one year ago, you lose. You get rolled up into an "average" and on average the people that retired the 7 years previous to you outnumber you and the dart board strategy lives on.

[McD5]

Notice that I said "money you need in the next 10 to 20 years". Money for when you're 75 to 80 can (and should, probably), still be in stocks.

The money you have to have though, shouldn't be. Far too risky.

That makes no sense.

65 yr old.

Has 200k.

Cds are a joke. Their only option is to invest in high-dividend ets for example.

And yes, they need that money.

[zoony]

Ultimately buy and hold is market timing. The only difference is you are timing your exit blindly and if you happened to turn 65 one year ago, you lose. You get rolled up into an "average" and on average the people that retired the 7 years previous to you outnumber you and the dart board strategy lives on.

I think the point is that as you approach the age of 65 you are slowly ratcheting down your participation in the market and investing more in treasuries and other static returns.

You don't wait until you are 65 and then sell all of your stocks.

[techboy]

Most of the research you are posting is on information prior to this crash.

The research includes periods that are as bad, or worse, than this last one, like the 1970s.

What's more, the article I just posted shows how a simple 60/40 buy and hold portfolio is down just 6%.

That's the key. You should never have money you need in the next 10-20 years in stocks, so even if you do retire into a period like this, you still have what you need in other safer assets, like bonds, and your stocks have time to recover.

And again, market timing won't save you (unless you're lucky). On average, you'll do worse.

Of course, 90% of people seem to think that they are above average drivers.

[NattyLight]

I was going to waif until 11k, but I think I'm going to dump everything into bonds soon. I really got burned in 2008. Thanks.for the heads up mcd.

[zoony]

I was going to waif until 11k, but I think I'm going to dump everything into bonds soon. I really got burned in 2008. Thanks.for the heads up mcd.

I don't think that's a good strategy. Interest rates will be rising soon, and your bonds will be de-valued.

I think in a couple of years when the FED has jacked interest rates to temper inflation during the economic recovery, bonds are going to be a great buy.

.....

[Popeman38]

I think the point is that as you approach the age of 65 you are slowly ratcheting down your participation in the market and investing more in treasuries and other static returns.

You don't wait until you are 65 and then sell all of your stocks.

Thank you! Stock heavy early while you have time to recover and as you age you slowly start getting more conservative.