Author Topic: Buying funds after a bull run  (Read 2440 times)

Vitai Slade

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Buying funds after a bull run
« on: January 28, 2014, 01:46:58 PM »
I've been eyeing VEXMX to start a taxable account this year. I've already maxed out my ROTH IRA and am currently maxing out my 401k as well so I need a new place to stick my investments. My hesitance comes from the idea of buying high and selling low.

I plan to hold this fund until my (early) retirement and add $1,000/mo. to it. I know they say never to try and time the market, but after last years record bull run, is it wise to invest in this fund that has yet to have a significant correction in over a year?

My other question is in regards to tax efficiency. I know they say that index funds are usually pretty tax efficient, but sometimes that's not always the case. Is this fund efficient for a holding period of approximately 15 years?

Frankies Girl

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Re: Buying funds after a bull run
« Reply #1 on: January 28, 2014, 02:13:14 PM »
Corrections happen. Crashes happen. No one can predict them. What you're talking about is market timing, and that never ever ever works. If you're in the market long term, then you'll see lots of that over time, but the market will trend upwards. Last year was a super year, but that doesn't mean that there is no where to go but down now. Even if we do end up with a correction this year, it will only effect you short term. And if you are dollar cost averaging money in, then if the market is down, you're getting the fund "on sale."

I don't know much about the fund you're looking at other than a quick skim of the Vanguard page, but it is a high risk/high return fund, and that means it will be a roller coaster ride. As far as tax efficiency, if it has low turnover, that is one of the signs it is more tax efficient, and this one has a 10.9% turnover rate so it seems decent.

Eric

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Re: Buying funds after a bull run
« Reply #2 on: January 28, 2014, 02:16:39 PM »
I know they say never to try and time the market, but I'm going to go ahead and try to time the market.
Fixed the above for you.  :)

Check this link out:

http://jlcollinsnh.com/2013/05/22/stocks-part-xviii-investing-in-a-raging-bull/

This was back in May 2013.  People were afraid to invest because the S&P was at an unsustainable high of 1670.  Today it closed at 1792, 7% higher than in May 2013.  So I'll ask you, how do you know that the market will fall?  If every time the market was at an all time high you didn't invest, you'd have missed out on a lot of gains over the years.  Just look at the chart in that article!

Vitai Slade

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Re: Buying funds after a bull run
« Reply #3 on: January 28, 2014, 04:41:34 PM »
Thank you both for this! And thank you Eric especially for the link! I was looking for an article JUST LIKE THAT for about an hour on Google.

Allen

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Re: Buying funds after a bull run
« Reply #4 on: January 28, 2014, 05:11:20 PM »
I needed that link too, thank you.

wtjbatman

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Re: Buying funds after a bull run
« Reply #5 on: January 28, 2014, 10:34:32 PM »
It's all about time in the market, not timing the market. If you're doing index investing and your retirement horizon is decades away, you want to invest now and keep investing regularly. Don't even look at how the market is doing.