Stock market gyrations

[brimic]

For the last few years, stocks have been increasing at 20-40%, which is a good deal more than inflation.

It depends on which year you select to start from.
If say you select 2009, the stock market has incredible gains.
If you select 2007, you might have broken even by now.

[Ben]

It depends on which year you select to start from.
If say you select 2009, the stock market has incredible gains.
If you select 2007, you might have broken even by now.

That's the point of the long haul. :)

[K Frame]

When the markets started taking a serious crap between 2007 and 2009 I didn't panic. I left everything I had pretty much as it was especially in my 401K, and started buying as often as I could in my personal accounts.

I made one serious mistake that ended up costing me a bunch of money, but overall?

BLING!

[charby]

I made one serious mistake that ended up costing me a bunch of money, but overall?

Me too, want to buy some Natural Gas funds?

I'm glad I don't retire for at least another 20 years.

[MillCreek]

I also practice a 'buy and hold' strategy in my 401(k).  I rebalance from time to time to maintain a 60-65 stock and 40-35 bond/short term ratio in my funds, but otherwise I do not move things around in response to market events.  I do hope to retire in the next 10-13 years, so I am conscious of less recovery time to come back from 'paper' losses, which are actually pretty real if they occur as you are retiring.

[K Frame]

Me too, want to buy some Natural Gas funds?

I'm glad I don't retire for at least another 20 years.

If you're selling them for 3 cents on the dollar, sure.

I took a bath on the Vanguard Precious Metals and Mining fund. It didn't have the best fundamentals, but I figured that it would be a good one to have because it had not only the metals, but also the mining aspect, and mining is always good in a recovering economy.

Or so I thought.

I compounded my initial mistake by hold on to it for far too long and not accepting the fact that I was going to lose money. I kept waiting for it to recover, but it never did.

I ended up losing about $4,500 on it. It's deductible, so it's not a complete loss, but that one still stings.

[Northwoods]

I also practice a 'buy and hold' strategy in my 401(k).  I rebalance from time to time to maintain a 60-65 stock and 40-35 bond/short term ratio in my funds, but otherwise I do not move things around in response to market events.  I do hope to retire in the next 10-13 years, so I am conscious of less recovery time to come back from 'paper' losses, which are actually pretty real if they occur as you are retiring.

I'm running close to 100% stock based mutual funds.  Mix of small/medium/large caps, domestic and international, growth and value.  When I'm a decade or so out from retiring I might go up a little from the maybe 1-2% bonds (and I only have those to get my adviser to not hassle me about how much better it is to have something in bonds).

[K Frame]

I'm turning 50 in a few months, and I've been slowly working bonds into my portfolio for the past couple of years. Nothing serious, right now about 10%, if that. Several of the Vanguard funds I have are from their Life Strategy portfolio. You pick ones that match up with when you intend to retire (they go in increments of 5 years, I think) and over time the investment strategy slowly shifts from stocks to bonds.  It's a good way of getting some bonds into your mix and not having to worry about active management.

They don't bring the best returns, but they are decent.

[K Frame]

"Does that chart account for even official inflation?"

That's a market index number, not a value of individual stocks, so no it doesn't factor in inflation (or lack there of).

There's a lot of controversy over whether inflation is a key component of market performance and value because analysis of the numbers over time is, at best, conflicted.

Here's a good article on the matter: http://www.investopedia.com/articles/investing/052913/inflations-impact-stock-returns.asp

The best advice is, as a personal investor, don't try to invest with inflation in mind. Come up with solid personal goals and time frames and invest with those in mind.

[MillCreek]

I'm running close to 100% stock based mutual funds.  Mix of small/medium/large caps, domestic and international, growth and value.  When I'm a decade or so out from retiring I might go up a little from the maybe 1-2% bonds (and I only have those to get my adviser to not hassle me about how much better it is to have something in bonds).

I did the same thing, in my 30's and early 40's.  Then came the massive market crash in the early 2000's, and my 401(k) went from $ 315 K to $ 157 K. So I have done more diversification since then.

[roo_ster]

"Does that chart account for even official inflation?"

That's a market index number, not a value of individual stocks, so no it doesn't factor in inflation (or lack there of).

There's a lot of controversy over whether inflation is a key component of market performance and value because analysis of the numbers over time is, at best, conflicted.

Here's a good article on the matter: http://www.investopedia.com/articles/investing/052913/inflations-impact-stock-returns.asp

The best advice is, as a personal investor, don't try to invest with inflation in mind. Come up with solid personal goals and time frames and invest with those in mind.

Thanks for the link & verbiage.

Looking at the link, the first three paragraphs are what could charitably called "relentlessly optimistic."  The rest makes some sense, but does slide around the issue of the individual investor.  Seeing stocks as a hedge against inflation is also optimistic but is born out quite a bit in the market.  Sort of like real estate, with similar caveats that can hammer current instantaneous value/price.

Of course, when it comes time to pay the tax man, inflation is not included in the profit calculation and you take it in the jimmy.  That may be one of the greatest disincentives to investing out there.

[roo_ster]

Oh, and since everyone else has done so I will expose my own super-dooper investment strategy, sure to leave me wallowing about on stacks of money in between catheterizations at the nursing home run by the nurses from Silent Hill.  In truth, I have two: Pessimistic and Optimistic.  Given: I have ~25 years or so until official retirement age as determined by gov't poo-bahs.

Pessimistic.
Assume it won't be there and I will have to work until the day I die, the last years a grinding struggle that eventually wears me out.  Why?  Any number of reasons, most tied to the short sighted perfidy of those in charge of gov't and finance.  Civilizational collapse, financial collapse, gov't confiscation, whatever.  Doesn't matter.  We in America have had a longer flight than most and our current vector indicates accelerating impact with reality.

Optimistic.
I assume it will be there, but this is definitely a triumph of hope over experience and reason.  As such, I put the minimum skull-sweat into it for the maximum rate of return.  That means almost all in a  market-following index fund (S&P500) with minimalist expenses (0.015% gross) for my 401k.  I have little faith in the long-term efficacy of managed funds and see no reason to pay for that ineffectual management.  The only fund available in my 401k with a smaller expense ratio is the company stock fund (0.006%).  I have a serious minority of my 401k in that.  Were I to leave the company I would roll it into something else as I would no longer be in the bubble.  After that the next lease expensive to manage funds are a "total stock index" and an index linked to the Russell 2000.  That gets up to 2x the expense ratio.  After that it gets supid, expense ratio-wise.  Given that the 401k options have expanded and contracted, but that there has always been a 401k index fund and a company stock fund, I park it there for a minimum of fuss.

Not saying either one of my "strategies" is applicable to anyone else.  Will start moving over to bond, real estate, and other indexes as I get closer to retirement.  Until then, I don't pay it much attention.

[MillCreek]

^^^ Darn you, Mr. Rooster!  Having never heard of the reference, I of course had to Google 'Silent Hill nurse', and my life was not improved by doing so.

[charby]

I'm making money this week!

[K Frame]

I'm making money back this week. ..

[TommyGunn]

I'm making money this week!

Can I have some?

[charby]

Making even more money this week.

[Ben]

Making even more money this week.

Yup, nice recovery the last couple of weeks. There was obviously a correction going on, but October is historically a "down month" for stocks. There then always seems to be a bit of a recovery in Nov-Dec.

[Scout26]

I thought I read that the Fed has ended QE4 (or whatever number we are on).  I expect stocks to begin to deflate and money ceases to be pumped into the market.

[Unisaw]

I also practice a 'buy and hold' strategy in my 401(k).  I rebalance from time to time to maintain a 60-65 stock and 40-35 bond/short term ratio in my funds, but otherwise I do not move things around in response to market events.  I do hope to retire in the next 10-13 years, so I am conscious of less recovery time to come back from 'paper' losses, which are actually pretty real if they occur as you are retiring.

Smart man.  Rebalancing is about the only free lunch there is -- as long as you're not rebalancing into German stocks circa WW2.

[MillCreek]

So to recap October 2014, my 401 (k) started the month at $ 579K, dropped down to $ 563K on 10/15, and finished the month at $ 592K.  No wonder I feel dizzy.

[K Frame]

Mine's been bouncing all over the place, too.

[lupinus]

Yep. Mines still reletivly small but as a percentage it's been all over the place.

[brimic]

Just had a look-see at apple (AAPL)- its been going up a buck or two every day for the last few weeks.  I've made about $15k on this stock in the last year and a half. I added a trailing stop loss onto that stock in case it decides to tank while I'm too busy to watch it.