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You shouldn't CARE what the stock market does on a day to day basis

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Herman Munster Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 08:48 PM
Original message
You shouldn't CARE what the stock market does on a day to day basis
especially if you are saving for retirement and won't be withdrawing the money for 10, 20, 30 years.

The smart investors see a 4% drop and think about buying cause good companies are on SALE.

Now, if you need the money next month or next year and freak out, you shouldn't be invested in stocks to begin with.

You should be in CD's. Stocks are only for long-term money with a >1 year time horizon.
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Kelly Rupert Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 08:52 PM
Response to Original message
1. However, signs of a Chinese slowdown are noteworthy to me, for two reasons.
1. I have invested strongly in China, and have been considering pulling out for the last year
2. The Chinese and American economies are strongly intertwined.
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jannyk Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 08:53 PM
Response to Original message
2. You really should care when it's global - nt
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Xipe Totec Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 08:53 PM
Response to Original message
3. Buying when it falls is called catching a falling knife
for a reason.

Wait until the price stabilizes. Then buy.

And always, diversify, diversify, diversify.
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Herman Munster Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 08:55 PM
Response to Reply #3
5. then dollar cost average on the way down
if you are scared.

The point is for investors with a long term horizon, this is meaningless. Ignore the Cramer's of the world.
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Xipe Totec Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:00 PM
Response to Reply #5
6. Not everyone is as sophisticated as you
Most of the people that buy on a drop are the naive investors.

Scared? You bet your ass.

Long term horizons are for people who already have a sizable nest egg and can weather the storm.

Not for the majority who are just trying to figure out the rules of the game.
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Herman Munster Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:11 PM
Response to Reply #6
10. It's not that hard
Develop a simple porfolio of very low fee vanguard index funds.

In fact, you can beat most mutual funds over the long term by using just 3.

Vanguard Total Stock Market
Vanguard Total International
Vanguard Total Bond

The percentage of each depends on an investor's age and risk tolerance.

It aint rocket science.

If you want to use academic research to boost returns. You can over weight "value" and "small caps" and add some funds for that.

You can also add REIT's and hundreds of other things.

But for most people that's too complicated. They can meet all their long term goals using just those 3 vanguard funds.
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Xipe Totec Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:17 PM
Response to Reply #10
12. Funds? No problem
It's the individual stocks that can kill the newbie investor.

I own Vanguard 500 Index. So far, the most stable investment over the long term.

I do have several missing fingers trying to catch falling stocks, though.
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Herman Munster Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:23 PM
Response to Reply #12
13. unless you know what you are doing
most investors shouldn't be investing in individual stocks, too risky.

Much easier to pick an asset allocation between stocks and bonds, pick a handful of good index mutual funds, set up a monthly investment plan so you are continually investing and dollar cost averaging whether the market goes up or down, and rebalance annually or when your asset allocation gets out of whack by more than 5 or 10 percent.

You won't get rich overnight doing this but cumulative 8-10% yearly returns can add up fast.
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AX10 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:08 PM
Response to Reply #5
7. I agree about Cramer.
As well as the rest of CNBC.
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The Anti-Neo Con Donating Member (402 posts) Send PM | Profile | Ignore Tue Feb-27-07 08:54 PM
Response to Original message
4. Well, saying that is like saying...
that everyone on October 29, 1929 shouldn't have cared.
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pitohui Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 10:27 PM
Response to Reply #4
20. right you didn't break even until 1952 and prob. no profit until 1982 (after 1929)
i wonder just how long the OP thinks some of us are going to live?

it's silly advice, even retirees are in stocks now, because NOTHING is predictably giving decent returns

retirees are sure as shit not holding out for 30 years to finally make a profit

at one point CDs were only paying 2 percent interest (around 911 days) people had no choice but to hope something else would work or else they would just have to commit harikari, after a certain age getting a job is not an option
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Jcrowley Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:10 PM
Response to Original message
8. And besides
the stock market isn't really anything than a measure of financial arrangements and does not correspond with economic reality. In fact a good argument could be made that Wall St. has a perfectly inverse relationship to economic well-being. One could not have constructed a more uneconomical system with even the best laid plans.

Paging Wendell Berry, Thorsten Veblen et al.
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Yavin4 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:11 PM
Response to Original message
9. What Major Drop?
400 points on a 12,000 Dow? Please. Spare me. Call me when it goes below 8,000 and we'll talk about panicking. Today's event should be yawned at.
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sweetheart Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:13 PM
Response to Original message
11. slaves vicariously pretending for 'the owners' plantations
You can pretend that wall street is related to you, or... perhaps
not, and related only to the plutocratic zealosy that has filled the
vacuum from the dissolution of the constitutional state.

Why do progressives give a toss about the owner's fortunes, its the
twists of media. Wall street is grossly antiquated given computing,
and still has not reformed to allow individual persons access to all
trading services by mobile telephone, walmart style including structured
derivatives issuance.

The dollar-petro-war economy must go down, and as nuclear war is not an
option, it leaves only devaluation of all dollar assets. Cheney
wants it that way.
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Fresh_Start Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:30 PM
Response to Original message
14. agreed but net negative performance over 6 years
isn't anything to ignore either.

Neither Dow nor S&P have kept up with inflation during Bush's entire term of office.
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Herman Munster Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:37 PM
Response to Reply #14
15. yes but anybody who invests in the Dow or S&P alone
is a moron

A diversified portfolio consisting of the S&P 500, mid and small caps, REIT's, international, emerging markets has done much better.
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bbinacan Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:44 PM
Response to Reply #15
16. You're exactly right
Herman. Follow Modern Portfolio Theory.
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gravity Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 09:51 PM
Response to Reply #14
17. Its been positive performance the past 4 years
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Fresh_Start Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 10:23 PM
Response to Reply #17
18. that would be great if I'd only started investing in last 4 years
BUT I already had a lot invested 1/2001.
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kineneb Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-27-07 10:26 PM
Response to Original message
19. its all a spectator sport to me- no money in mkt.
however, one does need to watch trends, not the day-to-day stuff. Personally, I have no iron in that fire, living as we do on the edge of poverty. Still, makes for an interesting spectator sport.
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